Pension saving is considered as an important endeavour, as it is through money put aside during a person’s lifetime that they may be able to afford things later down the line. Putting away a healthy sum throughout the years can build up a pension pot to help when people ultimately choose to depart from the workforce. But data has revealed many do not know what happens to their pension contributions, despite often saving for decades.
The research was undertaken by Royal London and shed light upon an issue being faced by many Britons.
Nearly one in five workplace pension holders said they had ‘no idea’ what happens to the pension contributions they make throughout their lifetime.
And eight percent of workplace pension holders believe their pension is saved in a bank account – a false assumption.
Personal pension holders were found to be slightly more knowledgable, with seven percent stating they had ‘no idea’ about their savings, and 11 percent believing they are saving into a bank account.
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This is because, without the correct amount of knowledge at hand, Britons are unlikely to be able to make decisions that suit their personal circumstances best.
Indeed, it may also be the case that mistakes arise, or people become susceptible to scams as a result.
Britons have therefore been urged to take further control of their pension future, by planning more actively towards retirement.
Lorna Blyth, head of investment solutions at Royal London, commented on the worrying findings.
They coincided with Pension Awareness Day, designed to shed light on pension saving and draw attention to planning for retirement.
She 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.
“If people don’t understand what a pension is, then they cannot make 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, but 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.”
While pension saving can be undertaken in a number of ways, it is important to think about an income for retirement.
It is for this reason that Britons are encouraged to speak to a pension advisor before making any major decisions.
These individuals have expertise in the field and will be able to guide savers towards options that suit their retirement goals.