Defined contribution (DC) saving pots should not be referred to as pensions as they fail to meet the key definition, Pension Insurance Corporation (PIC) has said, suggesting alternatives such as 'retirement funds' or 'later life savings'.

Research from the provider found that even those who work in pensions feel unhappiness and disappointment at DC pensions’ fundamental inability to provide them with certainty about their retirement.

In addition to this, the provider revealed that many focus group participants described feeling powerless over their retirement outcomes, because DC pensions do not deliver a predictable or guaranteed income.

However, it argued that it is possible to shift the savings culture, suggesting that smart interventions can help people to engage with their retirement savings.

The provider highlighted its own campaign as demonstration of this, revealing that its Pension Power campaign was able to deliver "significant increases in the share of staff who update their records and start actively managing their pots".

Indeed, the research showed that the percentage of employees who reviewed their pension arrangements within the previous month doubled over the course of the campaign, going from 16 per cent to 32 per cent of employees.

At the same time there was a seven-point fall in employees who have never reviewed their pensions, to 18 per cent.

In addition to this, the there was an eight-point rise in staff who knew what fees they pay on their PIC DC pension, from 45 per cent to 53 per cent.

Overall, more than half (56 per cent) of respondents said that the PIC campaign had made them more likely to engage with their pensions and retirement planning, while 52 per cent said they felt more informed and empowered on pensions.

PIC also argued that financial education should not be limited to schools as a means of getting people to engage more fully with their retirement savings, arguing that employers could play a significant part in educating people about their retirement savings.

Whilst PIC acknowledged that these employers are already paying significant contributions into the pensions system as matching contributions, it argued that this is largely undervalued by employees, providing a "real opportunity" for them to enhance employee engagement and motivation.

However, PIC noted that, even as knowledge of pension options rose following engagement campaigns, employees became less likely to report themselves as depending on pensions in later life.

In light of this, PIC argued that renaming DC schemes as “retirement funds” or “later life savings” would encourage a more honest debate about pensions and encourage people to embrace their own responsibility to manage and optimise their savings for retirement.

PIC CEO, Tracy Blackwell, stated: “Britain is in the middle of a generational shift around retirement funding as we transfer responsibility and uncertainty to individuals.

"That’s a huge change but it hasn’t been set out clearly to the public, and the way pensions and savings are described is an obstacle to better understanding of the reality of retirement funding today.

“We’ve had a huge shift in the systems we use to fund retirement saving. We now need a huge cultural shift to match it, learning from countries such as the US and Australia.

"Finding a new way to talk about defined contribution pensions, with employers taking a lead in financial education, would allow Britain to have a more honest and informed conversation about retirement funding.”

Pensions Minister, Laura Trott, added: “I welcome this report, which usefully adds to our understanding of how people interact with and feel about their pensions. It makes interesting and important contributions to the debate around pensions and I hope it is read widely, especially by employers.

“Greater engagement with pensions and a more active, informed public debate about funding a better retirement are strongly in the public interest and I thank PIC for publishing research supporting those aims.”

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