Informed choice: consumer preferences for information on pensions

Date01 September 2005
Publication Date01 September 2005
AuthorBarbara Summers,Christine Ironfield-Smith,Darren Duxbury,Robert Hudson,Kevin Keasey
SubjectAccounting & Finance,Financial risk/company failure,Financial compliance/regulation
Informed choice: consumer preferences for
information on pensions
Barbara Summers, Christine Ironfield-Smith, Darren Duxbury, Robert
Hudson and Kevin Keasey
Received: 18th April, 2005
Members of the International Institute of Banking and Financial Services, Leeds University Business
School, The University of Leeds, Leeds, LS2 9JT
KEYWORDS: pensions, consumer, under-
standing, information, informed choice.
The lack of understanding of pensions amongst
a large proportion of the UK adult population,
combined with low levels of financial literacy
generally, have been identified as significant
barriers to saving for retirement.
This article draws on the findings of the
International Institute of Banking and Financial
Services Financial Well-being Survey (IIBFS
FWS) to examine consumer understanding of
pensions and to identify the sources from which
they would like to receive more information on
pensions. The programme of initiatives being
delivered under the auspices of the Govern-
ment’s Informed Choice strategy are considered
in the context of consumer preferences for
sources of pension information.
The results from the IIBFS FWS support
the view that there is a lack of understanding of
pensions, particularly amongst women. They
also show that initiatives for Government to
provide more information and to encourage
courses in schools and colleges about saving for
retirement would be welcomed. However,
people show less support for receiving informa-
tion about saving for retirement from their
employer, perhaps because of growing job inse-
curity and recent problems with company pen-
sion schemes.
Improvements in socio-economic condi-
tions (for example, incomes, housing, sani-
tation and food) and advances in medical
science, have contributed to rising longev-
ity. In 1950, the average male life expec-
tancy in England & Wales at age 65 was 12
years. By 2004, this had risen to 19 years.
Average male life expectancy in England &
Wales at age 65 is expected to rise to 20.4
years by 2020, and to 21.7 years by 2050.
Meanwhile, the fertility rate in England &
Wales is below the replacement rate of
2.07 children per woman, at around 1.7
children per woman, and is expected to
remain broadly at this level for the foresee-
able future.
These developments together are leading
to a skew in the UK population towards a
much older profile. In 1971, 13% of the
UK population was aged 65 and over. By
mid-2003 this had risen to 16%, and is
forecast to increase to 20% by mid-2021.
The percentage of 16-64 year olds, is
meanwhile, projected to decline from
around 64% of the total UK population at
mid-2003, to around 62% by mid-2021. In
addition, the Office for National Statistics
projects that the number of people aged 65
and over will exceed the number of under
16’s from 2013.
Taking a longer-term view, the Pensions
Page 260
Journal of Financial Regulation and Compliance Volume 13 Number 3
Journal of Financial Regulation
and Compliance, Vol. 13, No. 3,
2005, pp. 260–267
#Emerald Group Publishing
Limited, 1358–1988

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