Consumers don’t trust the financial services industry to a run low-cost retirement savings scheme in their best interest, Which? can reveal today.
‘Personal Accounts’ are set to be introduced in 2012 to encourage employees to save for their retirement. Details of who will be running the schemes are expected to form part of a White Paper later this year.
Ahead of this decision, Which? surveyed the public on who they would trust to run it. The poll of more than 500 people found the public don’t believe the private sector is the best place to manage this savings scheme.
The scheme will be primarily aimed at low to medium wage earners to increase their overall pension savings.
Employees will be enrolled into the scheme automatically and they’ll contribute 4 per cent of their earnings.
Savings will be topped up with employer contributions of 3 per cent and tax relief of 1 per cent.
Only 10 per cent of those we asked said they would most trust the financial services industry to manage Personal Accounts in their best interest.
This is less than the government – supported by 17 per cent of respondents – and independently run financial organisations, who gained 15 per cent support.
The survey also found that 85 per cent of consumers think it is important or very important to be able to trust the organisation charged with running their pensions scheme.
Which? personal finance campaigner Doug Taylor said: ‘As financial services companies argue amongst themselves about who could provide a Personal Accounts system offering the most bewildering array of marketing materials or the biggest choice of funds, Which? is calling for the consumer voice to be heard.
‘Consumers want a fair framework for Personal Accounts that is simple, low-cost and sustainable and which they can trust. Ceding control to the financial services industry on this essential issue would create a hostage to fortune. We have a once-in-a-generation opportunity to create a pension system which consumers can have confidence in.
‘The industry could not be trusted to deliver on the government’s flagship stakeholder pensions policy a couple of years ago and it can’t be trusted now.’