Workplace pension providers can no longer rely on cost alone to stand out, as employers and advisers increasingly place greater value on retirement support when assessing providers, according to new research from People’s Pension.
Nearly two thirds (64 per cent) of independent financial advisers believe workplace pension providers still look too similar, suggesting there remains considerable scope for providers to differentiate themselves. Almost half (48 per cent) believe retirement support is becoming the key differentiator between providers, while more than a third (35 per cent) expect retirement income solutions to be among the biggest areas of differentiation over the next five years.
Cost remains an important consideration, with 59 per cent agreeing it is still a defining factor when businesses engage with workplace pension providers. However, as the industry increasingly focuses on Value for Money, advisers appear to be taking a broader view of what constitutes value. Almost six in ten (58 per cent) believe member outcomes and support matter just as much as cost, suggesting providers will increasingly be judged not just on charges but on the overall value they deliver throughout a member’s savings journey and into retirement.
Advisers also expect the retirement experience providers offer members to become an increasingly important differentiator. Alongside retirement income solutions (35 per cent), almost a quarter identified digital engagement and AI-enabled support (24 per cent), guided retirement pathways and guidance (23 per cent) and greater personalisation (23 per cent) as features that will increasingly set workplace pension providers apart.
The findings also highlight why advisers believe retirement support is becoming increasingly important. More than half (54 per cent) say workplace pensions struggle to generate meaningful engagement because most employees disengage from their pension until later life, while 45 per cent point to employees prioritising immediate financial needs over longer-term retirement planning.
When employees do begin thinking about retirement, advisers believe many would benefit from greater support. Nearly four in ten (39 per cent) say most employees do not engage with retirement until it is very close, while almost a quarter (24 per cent) believe employees underestimate how complex retirement decisions can be.
The findings suggest advisers increasingly expect workplace pension providers to demonstrate how they can support members throughout their savings journey and into retirement. As the market continues to evolve, retirement support is emerging as an increasingly important part of the overall workplace pension proposition.
“Supporting people at retirement is a very different challenge to helping them save,” said Stuart Reid, Distribution Director at People’s Pension. “Automatic enrolment has brought millions of people into pension saving through a relatively simple framework, while retirement is much more individual. Members arrive with different pot sizes, circumstances, priorities and expectations of what retirement will look like.
“That diversity is one of the reasons retirement has been a much tougher challenge for the industry to crack. There isn’t a single journey that will work for everyone, particularly for providers serving millions of members from across the UK.
“Scale also gives providers an opportunity,” he adds. “As more members reach retirement, we’re building a much richer understanding of the choices people make, where they need support and how those needs differ across our membership. That experience can help us develop retirement propositions that better reflect how people actually want to use their pension savings.
“That’s why retirement support is becoming such an important differentiator. The providers that stand out will be those that can use what they learn from their members to give people the right support, at the right time, whatever their circumstances,” Reid concludes.
