By Mohamed Ali Bernat The vast majority of people contributing to pensions are confused by retireme...
By Mohamed Ali Bernat
The vast majority of people contributing to pensions are confused by retirement planning matters and are unaware of who manages their pension fund, according to a survey by Barclays Global Investors.
At the same time more pension members seek advice on their company scheme from a colleague rather than an IFA, with 31% compared to 25%, while 11% derive information from the media.
Some 98% of respondents recognise the importance of taking an interest in pension provision with 89% saying they no longer take Government provision for granted.
However, at the same time 74% did not know what their current arrangements, whether State or private, were worth.
The poll sampled 500 members of money purchase schemes about their level of knowledge and confidence in their company schemes.
More than 60% admitted to having limited or no understanding of their arrangements.
Only 7% of respondents were fully aware of their pension arrangements while one in 10 had no understanding at all. A quarter of respondents claimed they did not know the proportion of their earnings contributed by their company while 20% said they were not aware of their own level of contribution.
Michael MacDonald-Smith, head of defined contributions at Barclays Global Investors, said he was surprised so many were unaware of their own level of contribution but added he could sympathise with people who neglected their pensions knowledge.
"The time when it is most important to contribute to a pension is the time when such considerations are furthest from your mind. When you are 25 you are concerned about buying a car or a house not providing for your retirement."
The survey showed respondents becoming more aware of their pension arrangements as they aged. Some 34% of 35-40 year olds knew how much their schemes were worth compared with just 16% of 25-29 year olds.
Although 87% of respondents felt confident their own pension arrangements would provide good returns, the survey results point to the realisation that pension provision is the responsibility of the individual, according to MacDonald-Smith.
He said: "The survey results are good news for Government because they show people in occupational schemes have come to realise that these are what will provide them with income in their retirement. But it also confirms there are significant gaps in consumer knowledge."
"This is an industry-wide issue," he added.
Results from the survey showed that only 11% were confident they would be able to maintain their pre-retirement standard of living and 42% anticipated a small drop in living standards.
There was further evidence that members felt distanced from pensions with only one fifth of respondents feeling they were given a choice in how their money would be invested.
Over half did not know how their pension was performing and only a quarter knew how much their pension schemes were worth.
The survey also found that twice as many respondents who read the financial pages, 44% knew what their pension scheme was worth compared to those who never read them, 20%.
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