Almost 35 million consumers in the UK have pension savings – that is 71% of the population aged 21 or over. But this counts for very little if they are not given adequate guidance around how to ensure savings last throughout retirement. With 67% of individuals planning to rely on the state pension, there is a clear need for better education around workplace savings and how they should be used.
More than half of consumers (52%) have never used a financial adviser, so the retirement advice gap is a stark reality. Government efforts to improve access to retirement advice are not making much headway — 51% of consumers say they are not at all likely to use the new pension advice allowance.
The pressing need for consumers to access financial advice is underscored by low levels of engagement and knowledge. The majority (55%) of respondents do not know the approximate value of their pension pot, while one in seven (14%) are not even aware of who their pension provider is and over a quarter (28%) have never checked their pension savings. Furthermore, less than half (48%) know how much their pension provider charges them.
Meanwhile, nearly one in five (17%) don’t know how much they are saving toward their pension and those that do know are not saving enough. With know-how especially poor among those under 30, raising interest among younger people is a key part of tackling the retirement crisis.
The lack of involvement is also evident when it comes to pension investments as nearly half of consumers (42%) are in the dark about the funds in which they are invested. A majority (57%) also say they feel overwhelmed and confused by the sheer number of retirement products and investment options available.
Despite meagre levels of engagement, a significant portion think they have a good understanding of pensions— highlighting a worrying gulf between levels of knowledge people think they possess and their actual understanding. Addressing such misplaced complacency should be a priority for policymakers.
They will also have to tackle consumer apathy and inaction. While a large majority (82%) of people think their generation will face a more difficult retirement than current retirees, nearly half (49%) are not putting any serious thought into how much money they will need when they retire. This further underscores the need for consumers to be shaken out of their reverie and understand the urgency of providing for their retirement.