15 September 2020

Perplexed by pensions: One in five have ‘no idea’ what happens to their pension savings

5 min read

 
Helen Morrissey, Personal Finance Specialist
Helen Morrissey

Corporate PR Specialist – Long Term Savings

Share

Nearly one in five (19%) workplace pension holders have ‘no idea’ what happens to their pension contributions, with 8% thinking their pension is saved in a bank account, Royal London research reveals.

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.”

-ENDS-

Notes to Editors

  1. Royal London surveyed 2,065 UK adults in August 2020.
  2. Royal London is a key sponsor of Pensions Awareness Week which runs from 14-18 September
  3. Find out more about The Secret Life of Pensions here https://www.royallondon.com/pensions/secret-life-of-pensions/

For further information please contact:

Helen Morrissey, Corporate PR Specialist – Long Term Savings

About Royal London:

Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £139 billion, 8.6 million policies in force and 4,348 employees. Figures quoted are as at 30 June 2020.