chapter  6
10 Pages

What drives the purchase decision in pensions and long-term investment products in the UK?

ByOrla Gough, Roberta Adami

The market for investment and personal pension products is in constant expansion, especially as a consequence of the UK government’s drive to shift the burden of retirement income provision to individuals. Within employment schemes, many private-sector employers have already replaced defi ned benefi t with defi ned contribution pension schemes to reduce costs and transfer fi nancial risks to employees (Banks et al. 2005 , Dobson and Horsfi eld 2009 , Timmins 2010 ). Pensions are complex fi nancial products and consumers may not fully appreciate the most relevant information to make an informed purchase decision. The UK’s Financial Services Authority (FSA) and the Offi ce of Fair Trading (OFT) have claimed that fi nancial service providers make the decision-making process more complicated than it needs to be by excessive use of jargon and by presenting the costs related to purchasing a private pension in a way that makes it diffi cult for consumers to make straightforward comparisons (Adami and Gough 2008 ).