Trust: a challenge for private pension policy

It is generally accepted there has been a shift from defined benefit to defined contribution provision in the United Kingdom and elsewhere, along with which comes a shift of pension risk to individuals. Having trust in defined contribution arrangements, and those involved in providing them, may be regarded as a strategy for coping with that risk. As the United Kingdom moves to adopt widespread auto-enrolment defined contribution provision in an attempt to increase retirement savings, these issues of risk and trust become even more important. Pension providers and regulators are aware of this, although the extent to which they can successfully enhance trust remains open to question. What may be crucial is the ability of individuals to “actively” engage in the development of trust in defined contribution pension provision. This relies on the structure of the United Kingdom's new auto-enrolment and National Employment Savings Trust framework, along with the positive engagement of employers, in tackling what has generally been a lack of public understanding and interest in pensions. The potential success of such reliance is open to question.