Savers unlikely to seek pension advice despite lack of knowledge
Recently conducted research from NerdWallet has revealed the extent to which the UK’s pension savers lack knowledge around their pension products and what they need to save to enjoy a comfortable retirement.
NerdWallet found that:
- 83% of pension savers don’t know what contributions they should be making to generate their desired retirement income
- 78% of pension savers felt their pension provider hadn’t given them enough information to help them manage their pension effectively
- 64% of pension savers didn’t even know who their pension provider was
The final point is undoubtedly the most concerning, particularly with such a significant sum of money being tied up in lost pensions. Vast numbers of people could be sleepwalking into retirement poverty or end up working for longer than they wish due to lost pensions and lack of knowledge.
People unlikely to seek advice despite concerns
NerdWallet’s research also uncovered that:
- Only 30% of those with workplace pensions felt their employer had adequately and clearly communicated how it works
- Three-quarters of savers said they didn’t have the confidence to manage their pension without professional advice
- A quarter said the terminology, language, and jargon used by pension providers was the main barrier to them having the confidence to manage their pensions
Despite people lacking the knowledge and confidence to manage their pensions effectively and ensure they build up a suitable pension pot, there is an alarming lack of desire to address this.
NerdWallet found that 80% of people hadn’t sought out advice from an independent financial adviser. In addition, 89% said they were less likely to seek pensions advice than to seek advice about other financial services and products, like a mortgage or car finance.
Given the significant number of people reporting not knowing who their pension provider is, alongside those who feel they don’t know enough about their workplace pensions, it appears that this is one area where improvement could be straightforward and significant.
If you have a workplace pension and don’t know what you should be saving or who your provider is, ask your employer who you can speak to. At the very least, you will be able to get all the details of your provider, but you may also be able to get access to an independent financial adviser who can assist you with all elements of pension planning.
Positive signs as pandemic makes people think ahead
Thankfully, NerdWallet’s research wasn’t exclusively filled with alarm bells.
25% said the Covid-19 pandemic had made them think more carefully about their retirement, while 32% said online dashboards would make pension planning feel more accessible. With the Pensions Dashboards Programme continuing to pick up pace, better pension and retirement planning could become a reality for everyone by the middle of the decade.
Commenting on the research, NerdWallet’s senior pensions expert, Richard Eagling, said: “One’s pension can be complex, confusing, and even daunting at times, but the sooner you are able to look into what’s in it, the closer you will be to clarity and peace of mind.
“It is true that managing a pension on your own can be confusing if you aren’t familiar with a lot of the terminology and language, which is why it can be a good idea to consult a professional who can give you advice on things such as determining how much retirement income you would need, and work from there to figure out what contributions you need to make.”