One in six employees have never checked their pension – and I’m one of them

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Ana Cester has had six different jobs since she moved to London eight years ago. She has always tried to save some of her income, but she “never” thinks about retirement.

“I have no idea how much money I have saved for it,” she said.

The 27-year-old said her many jobs have made it hard for her to understand how much money she has put away. She doesn’t know where to check how much she has and she doesn’t know if all the different employers have provided her with a pension plan at all.

Last year, as the cost of living crisis bit, she heard from a friend she could stop contributing to pensions in her current role to get some extra income every month. This was the first time she had thought about pensions at all.

As she struggled financially and could do with some additional money, she decided to look into it. “I didn’t know where to start and I had no idea who in my company to ask,” she said. “So I gave up and decided against it,” she said.

One in six UK employees with a workplace pension has never checked how much is saved in it, new research shows, and campaign executive Ms Cester is one of those.

And around one-in-eight of people don’t know whether they have a workplace pension or how much they contribute to it, according to My Pension Expert, which has surveyed more than 2,000 UK adults.

Despite the lack of engagement and many only making the minimum contributions, more than half (59 per cent) of UK adults with a workplace pension say they will rely on it to fund their desired lifestyle in retirement.

“Workplace pensions are not just a box to tick – otherwise people could enter later life with a nasty surprise when assessing how financially prepared they are for retirement,” said Lily Megson, policy director at My Pension Expert.

It comes as new figures this week showed that Brits are far off from reaching what Pensions and Lifetime Savings Association defines as a comfortable retirement. According to calculations from wealth manager Quilter, an individual who wants to buy an annuity at retirement age would need £738,000 in their pot. At the same time, the Pensions Policy Institute estimates that the average savings pot at pension age in Britain is £137,000.

Auto-enrolment rules — where companies enroll employees and have them start saving at a default rate unless they opt out — have increased increase the amount of people saving for retirement by roughly 50 per cent, according to think-thank New Financial. But the switch from defined benefit (DB) funds, where companies promise a guaranteed income for life, to defined contribution (DC) funds, where the individual is responsible for generating a savings pot, has increased the need for people to engage with pensions, experts said.

“Auto-enrolment has been successful, but with the shift to DC schemes, all risk is on the individual. So it’s important that they understand the value of saving into a pension early because you know that the earlier you start, the more that the investment performance that to that you achieve, the more that compounds over the years,” said Louise Davey, head of policy at the Pensions Regulator.

Ms Megson said: “It is troubling that people are not checking on their workplace pension more. Auto-enrolment is just the first step – we need to see much, much more done to ensure financial education and pension monitoring tools are made available for the UK workforce.”

Late last year, a research study by Boring Money, the consumer website, found over one in five of Brits did not know that the money in their workplace pension was being invested — let alone what it was invested in. Still, nearly two thirds of pension holders surveyed say they would be interested in knowing where their money is invested, and that number rises significantly in younger cohorts.

Ms Cester said she wishes she understood pensions enough to engage in conversations about it. “I know how important it is to save, but every time someone says the word pensions I just stop listening,” she said.

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