According to a survey of 2000 UK workers conducted by Willis Towers Watson and Nottingham University Business School, some 47 per cent of people are suffering from a ‘crisis of confidence’ over choices relating to their long-term financial planning and their health.
Significantly, the research shows that early confidence in the initial stages of financial planning evaporates when it comes to making the final decision – and 43 per cent of people still have doubts even after a choice has been made.
Among the reasons cited for the hesitancy are the issue of “too much choice” when it comes to options to save for retirement, with over a third (34 per cent) of respondents identifying this as a factor.
Long term economic issues were also given as a reason for the lack of confidence by those surveyed, with poor interest rates (48 per cent), a lack of certainty over rate return (22 per cent) and a lack of understanding of investment risk (16 per cent) bringing decision-making to a halt.
Amongst the other reasons given for inaction were a lack of knowledge and information (35 per cent), the complexity of investment choices available (25 per cent) and a general mistrust of financial institutions (25 per cent).
Minh Tran, director in Tower Watson’s wealth and retirement practice said: “The results highlight a savings problem, that has become more pertinent with the introduction of auto-enrolment.
“Instead of encouraging people to spend more, increased choice seems to have created a decision roadblock. Coupled with economic uncertainty and conflicting financial priorities, this is creating a kind of pensions paralysis where most employees end up in a default option.”
Scottish Widows retirement expert Lynn Graves highlighted the opportunity for employers to help address these issues: “We know people tend to associate pensions with employment, so the workplace is an ideal source of information and guidance.
“Educational material can be made available very easily and at no cost – even links to the right tools or videos can make a big difference.
“While pensions can be confusing for many people, there’s a lot of work going on in the industry to help cut through the complexity and guide people through their decisions. Employers can really help by giving their employees access to this kind of support.”