A significant portion of older employees lack awareness about their pension investments.
- Almost half of working adults do not know where their pension is invested.
- 29% of pension holders are unaware their money is invested at all.
- 44% of workers over 55 are unaware they can choose their pension investment funds.
- Financial education is crucial for better retirement planning.
According to recent research, there is a notable lack of understanding among workers regarding their pension investments. Nearly half of the working adults surveyed are unaware of how their pensions are invested, highlighting a widespread knowledge gap.
The study revealed alarming statistics, showing that 29% of participants are not even aware that their pensions are invested. This lack of awareness is compounded by the finding that 44% of workers aged 55 and older are unaware of their ability to choose different investment funds for their pensions.
Jonathan Watts-Lay, director at WEALTH at work, expressed concern that many individuals do not realise pensions are a form of investment. He stressed that this oversight is particularly troubling for those nearing retirement, a time when understanding how to generate retirement income becomes imperative. Options for drawing retirement income include taking cash, purchasing an annuity, or opting for a drawdown.
Proactive engagement with pensions at an early stage of employment is vital. Leading companies offer financial education and personal coaching to help employees understand and engage with their pension options. These workshops are more effective than static online information.
Early education should cover fundamentals such as how pension schemes work, the different contribution levels from employers and employees, tax relief details, and investment fund choices. As employees progress in their careers, this education should evolve to include assessments of whether their pension savings are meeting their retirement goals and how their investment strategy aligns with these targets.
Greater awareness and proactive financial education are essential to improve pension engagement and retirement preparedness.
