A gap in trust and engagement in pensions has emerged, notably at its widest among younger savers, according to new research from Broadstone.

The UK consultancy firm analysed the Financial Conduct Authority’s (FCA) financial lives survey, which asked pension savers with at least one defined contribution (DC) pension that hadn’t been accessed how much trust they had in their pension provider on a scale of one to 10.

Over a third (36%) of savers answered with a six or less, with just 15% saying that they had complete trust in their provider.

However, the data revealed that younger pension savers trusted the industry least, with 43% of 25–34-year-olds ranking their trust at a six of below. This fell to just under a third (32%) among savers in 55-64 age bracket and just over a fifth (22%) for 65–74-year-olds.

The FCA also calculated an “engagement” score among adults with at least one DC pension into which they were making contributions. It was found that over a quarter (27%) had a very low engagement with a further 24% quantified as “low engagement”.

Once again, Broadstone suggested the younger the pension saver, the more worrying the results as without trust and engagement, younger members, who will rely almost entirely on DC savings for their retirement income, aren’t likely to take the action needed to ensure they have adequate retirement savings, or worse, opt-out entirely.

Nearly half of those aged 18-24 were said to have very low engagement, remaining at a third (33%) of those 25-34 and, well along their pension accumulation journey.

Head of DC workplace savings at Broadstone, Damon Hopkins, said: “Funnelling millions more employees into DC pensions as soon as they start earning a salary was brilliant in kickstarting a new era of pension saving – but the sector now faces the downside of inertia.

“The FCA findings suggest a significant proportion of this new cohort struggle to trust the industry and have low engagement. This is a problem because we need these employees to be looking at their pension and working out how much they are likely to need in retirement so they can make the right decisions as early as possible.”

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