More than one in ten people aged over 55 who have yet to retire, have not thought about how their retirement will be funded, according to new research by the Money Advice Service.
Four out of ten people in this age group who intend to retire are resigned to the fact that they will have to work for as long as they can, while 8% of those yet to retire don’t think they ever will.
The figures form part of a survey which indicates that the majority of UK adults are apathetic towards pensions, which could leave people struggling financially in retirement.
Almost one in three UK adults admit to burying their heads in the sand when it comes to pension planning because they don’t understand enough about it, while almost two thirds of people say they feel confused by the topic of pensions.
However, almost two in five adults intending to start a pension claim they will do so before their 30th birthday. The introduction of auto-enrolment means that employees will now be enrolled into workplace pensions at each company they work for, which will provide a solution for many.
Action point: find all the information you need to help you plan for retirement in the Which? retirement hub
Lack of knowledge among pension holders
Adults with pension provision in place still suffer from a lack of knowledge that could potentially jeopardise their financial health in retirement. The Money Advice Service survey also reveals common sources of confusion including the following:
- Financial advantages: The majority of UK adults (55%) don’t understand the tax benefits of having a pension
- Knowledge: 55% of non-retired people with a pension admit they don’t understand how their pension contributions are invested
- Personal contributions: 33% of non-retired people with a pension don’t know how much they personally contribute towards their pension each month
- Jargon: 36% of UK adults admit they don’t know what is meant by an ‘annuity’, while 59% admit they don’t understand the relationship between annuity and a pension pot
- Pension providers: 28% of those with a pension who aren’t retired don’t know the name of their pension provider
- Projected incomes: 17% of people with a pension who aren’t retired admit they have no idea how to work out what income they are projected to receive when they retire
- Pension pot check-ups: Around half of non-retired people with a pension (48%) only check the status of their pension annually, while 4% admit they check it less than once a decade