Over half of people saving into a defined contribution pension dont believe their scheme will deliver an adequate retirement income, according to research published by Hymans Robertson today.
The results of a survey carried out on behalf of the actuarial consultants reveal that 57% of savers don't have confidence their savings will be sufficient.
At the same time, 23% said they didn't know how much of their current monthly salary they needed to contribute to their DC pension in order to maintain an acceptable standard of living in retirement.
According to Hymans Robertson, a lack of effective communication is hampering savers' understanding and confidence in DC schemes. Over half (54%) of those surveyed said the information they received on their scheme was too complicated and full of jargon they don't understand.
In addition, 38% people said they never got around to making proactive decisions on their pension. Almost two-thirds (57%) said this would change if the information they got was clearer.
Lee Hollingworth, a partner at Hymans Robertson, said: 'A step change is required in the way DC is delivered for savers as in its present form it's not fit for purpose. The majority of those DC savers who took part in our research have taken a conscious decision to save for retirement and if these people are not engaged with their pension, it will be a huge struggle to engage the millions of people enrolled into a DC scheme through automatic enrolment.
'Current methods based on education to facilitate a "DIY" approach are doomed to fail as the majority of savers are not well placed to manage their own plan and need stronger direction and supportive guidance.'
In particular, member communications from trustees and employers should focus on the desired savings target, progress to date, what needs to be done to meet that goal and the consequences of it not being met.
'By following this approach, both employers and Trustees can help members improve their level of pension at retirement, while also better meeting their respective strategic objectives and governance responsibilities,' Hollingworth said.