Too much choice is seriously undermining the nation’s confidence when it comes to planning for retirement, according to a new study.
Nearly half of people do not have courage in their own convictions to make a final decision on their pension, researchers found, while 43 per cent continue to have doubts after they have choose a strategy.
The research of almost 2,000 people by Willis Towers Watson and Nottingham University Business School suggests that there is a danger of the UK workers falling into “pension paralysis”.
“Instead of encouraging people to save more, increased choice seems to have created a decision roadblock,” said Minh Tran of Willis Towers Watson.
The crisis of confidence is further compounded by lower for longer interest rates – a concern for 48 per cent of those surveyed.
“Coupled with economic uncertainty and conflicting financial priorities, this is creating a kind of pension paralysis where most employees end up in the default option,” said Tran.
Nottingham University Professor James Devlin agreed that despite the increasing amount of support to help workers plan for their retirement, commitment is a challenge.
“The findings reveal a significant ‘confidence pinch-point’ which occurs when savers are faced with the decision making ‘moment of truth’.
“Although savers like the idea of having options and want to shop around, when faced with too much choice and complexity the decision becomes overwhelming and this can cause inertia,” he said.
The news comes as the government today unveils its pension dashboard that it hopes will tackle Britain’s estimated £400m of lost pension savings.
The dashboard – a pilot scheme in conjunction with 11 large pension providers – means that Britain’s workers can see all of their schemes in one place.
Working on average for 11 different employers means that employees are faced with having multiple schemes with different providers, increasing the chance of losing or even forgetting details of one or more schemes.
“The pensions dashboard will become a vital tool to help consumers, and their advisers, manage their pension pots. It will provide, arguably for the first time, a comprehensive and clear picture of a saver’s current financial position, which will help them to create a realistic plan for their retirement,” said Fiona Tait of Royal London, one of the groups signed up to the pilot.