3 November 2005 - Publication of DWP Research Report No293: Combined Pension Forecasts – A Survey Of Their Impact on Recipients
Today the Department for Work and Pensions (DWP) published new research on the effectiveness of the Combined Pension Forecast (CPF) scheme. DWP works with employers and pension providers, on a voluntary basis, to supply forecasts of an individual’s state pension alongside their annual personal/occupational statements to create a Combined Pension Forecast. To measure the effectiveness of this initiative, this research investigates levels of CPF recall amongst recipients and the extent to which it has impacted their retirement planning activities.
The research was carried out by BMRB and is based on a telephone survey of 5,092 people known to have a received a CPF within 18 months prior to interview.
Impact on savings behaviour:
Analysis shows CPF recall has the strongest correlation with both “soft” actions such as discussing arrangements with others or requesting pensions information, and the likelihood of taking more than one retirement planning action. It also accounts for a limited amount of variation in “harder” increased saving actions specifically, although increased saving is more likely to be associated with other variables such as respondent’s income and existing savings provision. There are some significant indicators that recallers who have taken action found the CPF useful.
These include:
- Half of respondents who recalled the CPF and carried out planning activity said they had been prompted to do so by the CPF.
- Of those who recalled receiving a CPF and said that it had prompted increased saving, four out of 10 said they would not have done so without the CPF.
- Strong agreement from all respondents that CPFs are useful and should be issued.
- Those who have received more than one CPF were both more likely to recall it and to have undertaken retirement planning activity.
Recall of the Combined Pension Forecast:
Thirty-eight per cent of respondents remembered having received a CPF. Levels of recall may have been affected by potentially long periods of time between receiving CPF and interview. Awareness of the CPF was higher among those known to have been issued more than one CPF by their employer or pension provider (45 per cent recalled). Similarly, those who have been issued a CPF by more than one employer or personal pension provider were more likely to remember the CPF (60 per cent recalled).This increase in recall is indicative of a positive cumulative effect.
Without a comparable group of scheme members who have not received a CPF in this research, we cannot be certain of the extent to which CPF recall alone caused increased retirement planning, although survey results are encouraging. There was positive reaction among respondents to the concept of Combined Pension Forecasts, even among recipients who do not remember having received one in the past. Planning activity is associated with CPF recall, and both recall and planning activity appear to increase as subsequent CPFs are issued.
Notes To Editors
- Respondent Profile: the target audience for the research study was known CPF recipients. This profile does not reflect that of the general population, or the wider population of pension scheme members. In total, DC scheme membership accounts for 66 per cent of respondents, of these 98 per cent of CPFs sent were issued by one personal pension provider. Employer led Defined Benefit (DB) pension scheme membership accounts for 34 per cent of individuals. Ninety-one per cent of employers provided a DB scheme. The profile of CPF recipients can be expected to change with time as new employers and pension providers join the initiative. Interviews were carried out by BMRB between March and May 2005.
- The report is published on November 3 by Corporate Document Services. The research was conducted on behalf of DWP by BMRB. The authors are Graham Kelly, Warren Linsdell and Dawn Scanlon. The report is DWP Research Report No.293. A free summary is available from Paul Noakes at the DWP Social Research Branch (4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT, 020 7962 8557). The report and summary are available free on the DWP website: http://www.dwp.gov.uk/asd/asd5
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Prepared by the Department for Work and Pensions Pensions Analysis
Directorate