A majority of people in Britain do not have enough information about their workplace pensions, and don’t understand what they will eventually get when they retire, a new poll reveals.
The survey, commissioned by UK insurance firm Drewberry and carried out by YouGov, found that while pensions remain highly desirable among staff, not enough information about how they work and what employees’ contributions are is being provided in the workplace.
This is leading to a growing level of confusion among workers, the poll found, and it comes at a time when the UK is in the midst of a cost-of-living crisis triggered by soaring energy and other household bills, stretching personal finances to breaking point.
Dissatisfaction with Pension Information
Asked if they understood what their workplace pensions mean for them, the majority of respondents who took part in the 2022 Drewberry™ Workplace Pension Survey (58%) said they didn’t know if they were saving enough in their pensions so they would be comfortable in their retirement. As policies can often be complex, they said it would be beneficial if their employers provided financial advice so they could better understand what their pensions entailed.
A slightly higher majority (59%) of those polled said workplace pensions were one of the most important aspects they take into account when deciding on a new job. And 41% said pensions were among the most important staff benefits. But an almost equal number (41.5%) were unaware of how much their companies were paying into their pensions every month, and 29% believed their employers were not contributing sufficient amounts.
A further 34% of respondents felt they themselves didn’t pay in enough to their pension pot. Meanwhile, nearly half of those polled (48%) were clueless about pension tax relief and salary sacrifice, while 27% wanted improved communication at their companies about their pensions, with one in three in favour of a financial adviser being brought in for individual consultations.
A Lack of Financial Planning
Author and financial coach Elizabeth Buko says it’s no surprise there’s a lot of confusion about pensions, because there’s generally a lack of awareness about the intricacies of the financial product, and many people don’t even have a clear picture of how their finances will be in the years ahead.
“Everyone knows that they should plan, but many don’t. It can be hard for people to imagine what their future will be like,” she said.
“Many look at their current situation and find it hard to visualise how putting a little extra into a pension can help them, so this leaves them stuck not saving enough for their pension. The idea that a government pension will provide enough seems to give a false sense of comfort.”
Commenting on the survey’s findings, Drewberry director Tom Conner urged companies to provide adequate information about their employees’ pensions, so they were not left in the dark and knew how much they and their employers are putting in and how much they will get when they retire.
“It’s up to pension firms and people’s bosses to explain where people stand with their pensions, so there are no doubts about this financial product,” he said.