A report in industry newspaper, Money Marketing, has covered a suggestion by actuaries, the number crunchers behind insurance, that instead of the consumers being given projections with assumed investment growth returns of say 5%, 7% and 9% per year to deliver them a pension fund of £X, they may be better served and easier to understand if they are given odds.
E.g. Your pension fund has a 3 in 10 chance of growing to £100,000 in 10 years when compared to a deposit account of 1 in 10.
Our view
We believe this will be even more confusing. The industry needs to introduce the idea of stability and safer investment to encourage people to start saving for their retirement. We do not believe that telling people you have a 1 in 5 chance of a decent pension is going to give that confidence although it may make people understand more greatly the real risks of not saving enough.
Perhaps a focused marketing campaign along these lines might work as a test?