Jonathan Stapleton analyses the key findings of research conducted among members of the CIPD and PMI - and finds there is a strong desire for increased contributions, compulsion, and further tax-relief reforms
The inaugural Joint Institute Pensions Survey 2014 - conducted in association with Professional Pensions - was designed to examine what needs to change within the pensions system to deliver good pension outcomes for both employers and their employees.
It was distributed by email to the Chartered Institute of Personnel and Development (CIPD) and the Pensions Management Institute (PMI), who in turn promoted and distributed it to their respective members.
The survey was completed by 326 respondents, 60% of whom work in human resources. Some 10% of respondents were trustees.
Surprisingly, just 24% of respondents believe auto-enrolment will deliver on the Pension Commission's goals of providing a pension of 15-18% of earnings for a median earner at the point of retirement. A further 46% of respondents said AE will not deliver income at this level and 30% were undecided.
Worse still, of those who 24% of respondents who believed AE would deliver on its goals, over half (55%) felt this was not a sufficient income to retire on even when combined with state pension provision.
Of the 76% of respondents who believed AE would not deliver on its targets or who were unsure, many felt further work needed to be done. Of this group 79% believed minimum AE contribution rates for employers should increase and 72% believed minimum AE contribution rates for employees should rise.
In addition, some 71% of this group felt the government should look at automatically increasing contributions for employees over and above the increases already planned.
Of all respondents, 57% believed the government should consider compulsion.
The survey also asked respondents for their view on whether tax-relief on pensions savings needed to be reformed further to make the system simpler, more affordable and fairer. Some 70% of respondents said tax-relief needed further reform.
When this group was asked how tax relief should be reformed further; 44% said they just needed to be simplified but 27% said tax-relief on all pensions savings should be scrapped and replaced with an increased ISA allowance or a matched savings system. Of the remainder 11% felt higher-rate relief should be scrapped, 7% said the tax-relief limit should be reduced further and 11% felt that the tax-free lump sum should be limited or phased out.
The survey also canvassed views on how to better educate employees on general financial matters - asking respondents to rank their top three in order of importance.
Respondents felt the best way to improve financial education was start earlier - noting financial education should begin in the classroom. The next most popular choice was for the financial services industry to take on a greater responsibility for educating scheme members.
Others felt government funding should be made available to improve workplace financial literacy; or that employers should run and pay for financial literacy classes for staff.
However some respondents felt people should take on more personal responsibility - saying it should be down to individuals to improve their own financial understanding.
Respondents were also asked what needs to be the main focus of restoring trust in pensions. Complexity was the most important area identified - with respondents urging the government to strip much of it out to restore trust in pensions.
However respondents also felt charging was an issue - with demonstrating value for money and providing greater transparency around charges - the second and third highest ranked options respectively.
Other popular options included offering employers greater scope to provide information and allowing greater access and flexibility to pensions at key points in a working life.
Despite all of the work to implement auto-enrolment, respondents were unsure as to whether or not employees would be much better able to organise their retirement savings by 2020 than they are now.
While 64% of people believed people would be much better organised, two-thirds of these only partly agreed with this sentiment. Some 28% disagreed that people would be better able to organise their retirement altogether.
Flexible retirement - where people work, perhaps on a part-time basis at the same time as receiving an pension - was an area where most respondents felt there would be significant change by 2020.
Some 78% of respondents said more people would be retiring in a more flexible way, with 28% strongly believing this to be the case. Only 13% of respondents thought flexible working would not increase.
Click here to read the Joint Institute Pensions Survey results in full.
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