The Auto Enrolment Pension Scheme, often referred to simply as auto-enrolment, is a government initiative that was introduced in 2012. The scheme aims to help people save more for retirement, with both employers and employees make contributions towards the employee’s pension.
But, despite its apparent success, beneath the surface of the Auto Enrolment Pension Scheme lies a hidden reality: many Britons are drifting towards retirement without giving their workplace pension the attention it needs and deserves.
It’s definitely a case of ‘out of sight and out of mind’. Yet not keeping tabs on your pension could mean unknowingly falling short on saving enough for your retirement years. But fear not, here at My Pension Expert we’ve delved deeper into this issue, surveying 2,000 UK adults to shed some light on how the people of the UK are actually interacting with their workplace pension.
What Did We Find?
We know that successfully achieving a comfortable retirement is made more challenging if you don’t regularly engage with your retirement plan. But shockingly, we found that a staggering 27% of UK adults have either not checked their workplace pension in the past year (11%) or have never checked it (16%). Without regular reviews, savers might be unaware of the changes in their retirement performance.
What’s more, although there is a clear lack of engagement with workplace pensions, nearly 60% of those surveyed plan to rely on theirs to fund their retirement lifestyle. But with the cost of living soaring, a recent Pensions and Lifetime Savings Association (PLSA) report revealed that the amount you need to enjoy a ‘moderate lifestyle’ has increased by £8,000 per year. This could leave some in sticky situation if their workplace pensions aren’t enough to cover the necessities.
Another issue that continues to persist is the gender gap within pension planning. Less than half of women surveyed (44%) feel informed about their pension’s performance. This is definitely not a new issue, but one that needs urgent attention to improve gender parity in pensions.
What Do We Think?
Reflecting on the findings, our Policy Director Lily Megson gets to the crux of the matter: “In an ideal world, people could enrol into their workplace pension and be safe in the knowledge that their pension pot is gradually growing, eventually giving them enough income for a comfortable retirement when they wrap up work. Unfortunately, things are not so simple.
Auto-enrolment has undoubtedly played an important role in kickstarting the retirement savings journey for many people across the UK. Yet, our research illustrates the need for a broader and more comprehensive approach to financial education.
It is so, so important that the government does more to engage with the financial services sector to develop policy that ensures Britons have accessible routes to financial education and advice, meaning they are better equipped and empowered to achieve their financial goals.”
How Can We Help?
Neglecting your retirement planning can have consequences in the future, but Independent Financial Advisers, like our team of experts here at My Pension Expert, are on hand to assist savers in understanding their retirement finances. From understanding your options to crafting a personalised plan to suit your needs, we’re here to help you engage with your pension and remain on track to achieving your retirement goals.