The data published on Pensions Awareness Day shows personal pension holders were slightly more knowledgeable but 7% still said they have ‘no idea’ and 11% think they are saved in a bank account.
The mutual insurer asked more than 2,000 adults about their pensions and found a worrying lack of understanding with nearly three in four (72%) admitting they have little or no knowledge about pensions. This rises to 83% for women, compared to 61% for men.
The research showed only 24% of those with a pension saw themselves as an investor. Women were much less likely to consider themselves as an investor with only 17% classifying themselves as such in comparison with 31% of men.
Half of pension holders admitted they had never looked at where their pension contributions are invested. Almost one in ten (9%) said they did not realise this information was available while 11% said they did not know how to access it. Over a quarter of workplace pension holders (27%) said they were unaware they could change how their pension was invested. Again, personal pension holders were more knowledgeable with only 15% saying they were unaware they could change their investment strategy.
Even fewer people were familiar with the term ‘responsible investment’ – which considers social, environmental and governance factors. Only 16% said they were familiar with this term. However, once they were made aware of it over half (56%) of respondents said it was important their contributions could be invested in this way.
Commenting on the research, Lorna Blyth, head of investment solutions at Royal London, said:
“Auto-enrolment has brought millions more people into pensions but these results show we still have a long way to go to engage people and this has prompted us to launch a new campaign – The Secret Life of Pensions - to empower people and narrow the engagement gap.
“If people don’t understand what a pension is then they cannot make the informed decisions that will help them get the best outcomes in retirement. What is positive though is when people become more aware of things such as responsible investment they do become more engaged. Contributing to a pension means people can not only benefit from the effect of long term investment, they can also ensure their contributions are invested in a way that reflects their values. We must work to ensure people understand the powerful impact their pension can have.”