Speaking at a Good Money Week event yesterday (September 30), Dithfield discussed the complexities of sustainable pensions and how difficult it can be for savers to fully understand them.

“What should savers look for in a pension? I think it is very difficult really,” he said.

“The real problem for people is the complexity of understanding what’s going on in any investment product.

“The UK market is now dominated by workplace schemes, everyone who has a job is now in a workplace scheme, and they have a cost cap.”

As a result of this, Dithfield thinks there has been quite a lot of downward pressure on the fund route and often the more ‘simpler’ products do not lend themselves to communication around these kinds of complex issues.

“There’s an enormous amount of work here really,” he added.

Dithfield believes this is not an issue that can be easily resolved by the industry, saying: “I don’t think you can get anywhere without government action.”

While he acknowledged that there’s talk from the Labour government about taking action around workplace pensions, Dithfield pointed out this action would be most likely around bringing self employed people into schemes because they are currently left out.

“What they really should do in my view is introduce an advanced duty of care from the employers in providing workplace education because the problem is there is no incentive at all for large firms to look at pension schemes,” he explained.

“It is a big cost to them, it’s costing around 9 per cent of payroll per annum, they’re already spending a fortune on it, they don’t want to go the extra mile.”

Dithfield pointed out this issue was of critical importance due to the demand of savers, saying: “Overwhelmingly, people want more action.

“The introduction of workplace schemes mobilised a lot of that activity but it falls down quite often as there isn’t much of a push in terms of regulation for the employer to then do anything.”

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