Public Expectations of Pension Provision

This study is based on analysis of data on trust in pensions from the 2002 British

Social Attitudes survey, specially-commissioned focus group interviews and literature

review. It shows:

Current government policies in the field of pensions lead to a dilemma between the

goals of an expanded private sector (which means more private and less state

provision) and guaranteed adequate benefits underwritten by a means-tested

government scheme (which may lead to more state provision). It is difficult to resolve

this without an increase in the resources applied to at least one of the sectors.

Trust in both private and state pensions is low; this makes a solution to the

dilemma more difficult, because it weakens individual propensity to invest and voter

willingness to pay higher taxes.

Trust is socially divided: better educated, more middle class groups tend to have

higher levels of mistrust in both private and state sectors. More working class

groups on lower incomes tend to have higher trust overall, and to report a kind of

grudging trust in the state sector because they believe that they cannot afford an

alternative: ‘They won’t let you starve, will they?’

Middle class people prefer investments which offer a high degree of user control

and are transparently advantageous. More flexible pension contracts are likely to

be more attractive. Returns which investors believe are superior to and more

secure than those from alternatives (such as buy-to-let or small business), increase

the attractiveness of pensions. These depend on fiscal and regulation regime and

the extent to which contributions from employers are compulsory.

Those on lower incomes will continue to require state support.