Monday 19 March 2018

Many workers are 'clueless about pension contributions'

Simon Read

Barely half of workers paying into a pension scheme know how much they contribute, a report suggests, while 38pc have no idea how much their employer contributes.

The confusion means it is time to change workplace attitudes to retirement planning, according to Pete Glancy, the head of corporate pension propositions at Scottish Widows, which commissioned the research in Britain.

He proposes changing the name of retirement funding from "a pension" to "deferred pay". "Often pensions are seen as too complicated yet the messages could be quite simple," said Mr Glancy. "Positioning a company pension as 'deferred pay' could increase appreciation to the value of this benefit."

The Scottish Widows study reveals that almost three-quarters of workers have a private pension plan, yet a significant proportion are uncertain about what it will provide them. More than a quarter do not know how much, if anything, they contribute to their workplace pension scheme, while 38pc have no idea how much their employer puts in.

"This lack of understanding of how much is being saved is potentially leaving employees with unrealistic expectations of what this will provide them at retirement," Mr Glancy warned.

Yet although workers may not understand their pension scheme, more than half see it as a reason to stay with their current employer. Further, they say they would consider the pension offered by a prospective new employer before looking at bonuses, flexitime, a company car or overtime pay.

"It is clear that there is a gap in financial education about pensions and other benefits in the workplace. Many employees expect a lot more from their employer than just access to a pension scheme," Mr Glancy added.

"More advice and guidance is needed, not only to increase the number of people who are not saving, but also to ensure that those who are contributing are making the most of their benefits."

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