10 November 2005 - Publication Of DWP Research Report 289 - Advice on pensions and saving for retirement: Qualitative research with financial intermediaries.
New research published today by the Department for Work and Pensions investigates the role played by financial intermediaries (IFAs and financial advisers employed by banks, building societies and insurance companies) in the provision of advice on saving for retirement. The findings will contribute to government consideration of how to promote pensions and savings products to individuals.
The report presents findings from in-depth interviews conducted with a range
of financial intermediaries in four areas of the country. The research was
conducted on behalf of DWP by the Personal Finance Research Centre, University
of Bristol.
The main findings are:
- The research highlights that the clients of financial intermediaries include very few people on lower incomes. This is not because they are systematically excluded by financial intermediaries, but because people on lower incomes do not tend to approach them for advice.
- Changes in the marketplace for advice on saving for retirement have raised the quality of advice offered, although the availability of advice for people on lower incomes has declined. The research shows that IFAs do not market their services to people on lower incomes because the commission they can earn in this sector of the market is too low to make it worthwhile.
- The research found that, partly because their customer base tends to be people with middle-to-high incomes, financial intermediaries rarely (if ever) discuss Pension Credit (or the additional State Pension) with their clients.
- The research provides very little evidence to suggest that Pension Credit makes financial intermediaries reluctant to advise people on lower incomes. Nor did financial intermediaries think Pension Credit plays an important part in clients’ decisions regarding saving for retirement.
- Financial intermediaries felt that by far the biggest barrier to the take-up of personal pensions among people on lower incomes is inertia, underpinned by a loss of confidence in the pensions industry. In the opinion of the financial intermediaries’ interviewed, concerns about affordability and a lack of understanding about pensions and how they work are also significant barriers to taking out a personal pension.
Notes for Editors
- The research was carried out on behalf of DWP by the Personal Finance Research Centre at the University of Bristol. Qualitative, in-depth interviews were conducted with 45 financial intermediaries involved in providing advice to the public at a local level and 11 interviews were held with senior staff working at the headquarters of pension providers. Interviews were carried out in four areas of the country between January and July 2005.
- Research Report 289: Advice on pensions and saving for retirement: Qualitative
research with financial intermediaries, is published on 10th November by
Corporate Document Services. A free summary is available from Paul Noakes,
4th Floor, The Adelphi, 1-11 John Adam Street, London WC2N 6HT. The report
and summary are available free on the DWP website: http://www.dwp.gov.uk/asd/asd5
Media enquiries: Ben Lloyd, 020 7238 0758
Press office: 020 7238 0866
Out of hours: 07659 108 883
Textphone: 020 7238 0788
Public enquiries: 020 7712 2171
Website: www.dwp.gov.uk