Pension savers do not want to take any kind of risk with their money and would rather not pay extra to guarantee higher returns, new research from National Employment Savings Trust suggests.
Published today, NEST's Improving confidence is savings for retirement report, which drew on focus groups discussions, suggested that there was very low appetite for volatility in pensions and consumers don't understand the reasoning or need for taking risk with their retirement savings.
Pension savers generally have a strong desire for steady growth and many people would prefer an option offering predictable returns even if it didn't keep up with inflation over the long term, according to the report.
Furthermore, in the mind of the consumer, pensions are already guaranteed and discovering that this is not the case is 'shocking' to many.
'It's a struggle for consumers to accept that volatility over the lifetime of their pension won't necessarily mean an outcome of less than they contributed. They see volatility as inextricably linked with risk, and risk is seen as synonymous with loss,' the report said.
'While experts will recognise both an upside and a downside to investment risk, for consumers the downside of investment risk dominates.'
NEST chief executive Tim Jones added: 'Our research suggests that a key missing element is how we bring this new generation into a conversation that has previously excluded them.
'As an industry we need to find innovative ways of providing greater certainty for savers, but without high charges and without foregoing inflation-beating growth.'
The report noted that the top three concerns pension savers have were: what's happened to my money; is my money safe; and what do I get in the end.
NEST suggested that pension savers could benefit from practical information providing the 'real' picture of what goes into their pot, what happens to their pension contributions and what they can do to influence better outcomes.