Retirement planning difficult as employees lose track of savings
While nearly one in five (17%) of employees have built up three or more pension funds in their career, retirement planning is actually becoming more difficult, according to new research from employee benefits consultancy Portus.
Problematically, rather than numerous pots increasing retirement confidence among these employees, only one in ten (11%) of employees are actually confident they can accurately estimate the value of all their retirement savings and investments.
The research also reveals that one in five (19%) of 18 – 24 year olds admit that they have no pension funds at all – and among those aged 55 to 64, 10% have no retirement provision in place.
Portus consulting commercial director Steve Watson comments on the research: “Keeping track of retirement savings and investments is a challenge for most people but particularly difficult for employees with multiple funds…It is clear too many employees are in the dark about their retirement funds.
“There can be advantages in transferring pensions into one in terms of lower fees and better control, but in order to be able to make that judgement people need to be fully informed about how much they have.”
The research highlights the importance of adequate preparation and long-term planning for retirement – whether that is with financial education or regulated advice.
Jonathan Watts-Lay, director, WEALTH at work, comments: “It’s a worrying problem that individuals are unaware of how much they have saved for retirement – and even more so that some have no retirement provision at all. Whilst this may be due to affordability or simply choice, it may be a result of employees not understanding their pension schemes or the financial benefits of saving more. We increasingly see employers putting in place professional provided financial education programmes, supported by regulated advice, to help address these issues. Those employees with multiple pension pots are often better off consolidating them in one place where they can be viewed alongside other savings, such as ISAs, which may be used for income in retirement. The good news is that employer sponsored ‘retirement planning’ services are increasing as a result of the Freedom and Choice regulations, as employers realise the increasing risks to them and their employees of doing nothing.”
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