Are your pension customers facing an outcomes gap?
Consumer Duty has fundamentally changed what’s expected of firms when it comes to understanding customer vulnerability.
It’s no longer sufficient to show you have processes in place to identify customers with characteristics of vulnerability. The real question now is: can you identify the links between your proposition and journey, vulnerability and customer outcomes? And, what are you doing to close those gaps?
With Defined Contribution pensions, that’s particularly challenging. Engagement is notoriously low. Products are long-term and often forgotten about. And customers rarely disclose their needs – contacting a pension provider is often a long way down a busy to do list. Yet the financial impact of small decisions today can compound significantly over decades.
Through the Inclusive Outcomes Pensions Study, we’ve been examining how vulnerability appears during the accumulation phase, and what this means for customer experience and outcomes in practice.
Three things have become very clear:
- 1Vulnerability isn’t a niche issue – it’s affecting over half your customers and costing them real money, as well as stress and anxiety
- 2Poor experiences are directly creating poor outcomes, confusion leads to lower contributions, uncertain decisions and financial harm
- 3Disclosure rates are never the end game – and there’s a gap between what customers are expecting, and what is being delivered, when they ask for help
Vulnerability isn’t a niche issue
Over half of DC pension holders are living with at least one vulnerability characteristic – roughly in line with FCA reporting. One in five are experiencing multiple, overlapping needs. And vulnerability looks different across life stages, someone navigating a divorce faces very different challenges to someone managing a long-term health condition.
We’re also seeing evidence that certain characteristics are linked to lower pension savings. While this isn’t surprising, it matters enormously, because in pensions, disadvantage compounds over time.
The real question isn’t just whether vulnerability exists in your customer base, it’s whether you can evidence where it’s concentrated, how it shows up at different life stages, and how it’s shaping long-term outcomes.
The takeaway: Vulnerability affects most of your customers, it’s lowering their pension savings, and you need to know where it’s concentrated in your book. You can then take targeted, well designed steps to increase engagement and contributions.
Poor Experiences Are Leading to Poor Outcomes
Speed, clarity and feeling understood when you contact your provider – we often track these as service metrics. But in pensions, experience issues quickly translate into outcomes gaps.
When customers attempt key tasks – like increasing contributions or consolidating pots – those in vulnerable circumstances are far more likely to experience challenges, as well as stress, confusion, or unintended consequences. For example, customers with vulnerabilities were nearly three times more likely to be unsure about the impact of increasing contributions, as well as being twice as likely to be unsure how much they should increase their contributions by.
Challenges faced when increasing contributions
With a product where most people are already disengaged, friction doesn’t just frustrate. It delays decisions, it undermines confidence and it can lead to lower contributions, or worse, no action at all.
That’s where an experience gap becomes an outcomes gap.
The takeaway: Customers with characteristics of vulnerability are having worse experiences – often as a result of journeys, communications and propositions that haven’t been designed for them. Understanding, and designing for, different needs can close these gaps.
Disclosure Won’t Tell You What You Need to Know – You Need Insights
Many firms still lean heavily on disclosure as the primary way to identify vulnerability – and then to track experience and outcomes.
But in long-term, low-touch products like pensions, disclosure will always be limited. Customers are not contacting you regularly and, when they do, they may not recognise their situation as something worth “declaring” or asking for help with. Others may not expect meaningful support from their pension provider even if they did share something.
Insights on disclosure, expectations and what prevents people from disclosing
If vulnerability only becomes visible when a customer proactively tells you about it, you’re almost certainly missing unmet need.
That creates blind spots, not because firms don’t care, but because the signal is inherently weak in this type of product.
The takeaway: If you’re relying on disclosure alone, you’re missing the majority of unmet need in your customer base. Designing inclusively, and providing options and support without the need for disclosure, can close these gaps
What Does This Mean for Your Organisation?
The FCA is clear: firms need to understand the nature and scale of vulnerability in their target market, and demonstrate how it affects customer outcomes.
That requires evidence.
The Inclusive Outcomes Pensions Study is designed to provide exactly that, not just prevalence data, but meaningful insight into impact. Where vulnerability is concentrated. How it affects engagement and decision-making. Where outcomes gaps are forming, and what’s driving them.
If you’re responsible for pensions strategy, vulnerability, or Consumer Duty compliance, it’s worth asking:
Can you demonstrate, with evidence, how vulnerability affects outcomes in your DC book? And if not, what would it mean for your strategy if you could?
The full study contains 70 pages of insights, and can be mapped directly to your target market or customer segments. If you’d like to explore the findings, or understand how this could support your work, we’d love to hear from you.
Get in touch: lauren@inclusiveoutcomes.co.uk
