3 August 2006 - Publication of DWP Research Report No 374: Evaluation of Automatic State Pension Forecasts for the over-50s
Research published today by the Department for Work and Pensions presents the findings of a survey of people aged over 50 who received an Automatic State Pension Forecast (APF) in the first half of 2005. The survey looks at recipients’ views of the APF; it also assesses the extent to which the APF improved recipients’ knowledge and understanding of pensions, and whether there had been any impact on recipients’ retirement planning activities. Telephone interviews were conducted between May 2005 and July 2005 with 3,000 people who had received a forecast, and with an additional 1,000 people as a control sample of non-recipients.
The main findings were:
- levels of recall (around 80 per cent) and readership (over 75 per cent read/glanced at) of, and trust in, the APF were all high;
- the majority (85 per cent) of those who recalled receiving the APF said it had improved their understanding of pensions;
- those who recalled receiving the APF generally had a good understanding of the information it was providing about their state pension. Two-thirds either definitely knew or at least thought the APF was an estimate, whilst seven in ten either definitely knew or thought the APF was based on their own personal circumstances;
- almost eight in ten of all those surveyed had taken some type of action with regard to planning for their retirement in the three to four months after they received an APF, whilst a further 13 per cent had not, but were intending to in the future;
- however, only 37 per cent had taken any ‘hard’ actions (changes to their savings behaviour) as opposed to ‘soft’ actions (reviewing their situation or seeking advice and information);
- only ten per cent of respondents had not and were not intending to take further action. This was mainly because they were happy with their current arrangements;
- APF readers were significantly more likely to have taken some sort of retirement planning action(s) than the control sample and the APF group as a whole, but analysis shows that pensions knowledge, rather than APF readership, was the main driver of such actions. Overall, analysis indicates a positive, albeit slight impact of readership on understanding and knowledge;
- comparing the findings for those who were sent the APF mailing and the control sample of non-recipients indicates that the mailing had relatively little net impact on retirement planning behaviour amongst recipients overall. At the same time, 55 per cent of those who recalled the APF and who took (or intended to take) any form of action, i.e. 40 per cent of all recipients, said that the APF had played some role in these actions;
- further analysis showed there was evidence that the APF was an influence on some, less knowledgeable, groups in deciding to take action.
Note for editors
- Automatic State Pension Forecasts (APFs) are being sent to all people aged 20 and over who have not received or requested a pension forecast(s) from other sources. Since December 2004 the DWP has sent over 13 million APFs to individuals, on a rolling-programme basis, with people aged over 50 comprising the first groups of recipients. Under the current Public Service Agreement with the Treasury, running from April 2005 to March 2008, the DWP is committed to sending out forecasts (of any type, including APFs) to 15.4 million individuals.
- The aims of the APF are to inform people of the estimated amount of State Pension they will receive; improve understanding of pensions more generally; and enable them to make informed choices about the different options for saving for retirement and plan accordingly.
- A second report, to follow in 2007, will report on evaluation of the impact of APFs for the under-50s.
- “Evaluation of Automatic State Pension Forecasts for the over-50s” by Bunt K., Leo C., and Barlow J. IFF Ltd. 2006. The report is published in the Department for Work and Pensions Research Report Series (Report No. 374).
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Prepared by: Department for Work and Pensions Pensions Analysis Directorate