Company pension savers say they are not confident that their funds will provide for their retirement, according to a study.
In addition, many don’t know what to do to improve their finances for their later years.
The study was conducted by pensions experts Hymans Robertson, which also found that fewer than one in three pension savers had no idea what level of retirement income they would need to live on.
More than half said that the information they received about their pension was too complicated. A quarter confessed to not knowing how much extra they would need to put into the defined contribution pension to get the standard of living they were expecting.
Lee Hollingworth, a partner at Hymans Robertson said: “There are 91% of employees in the private sector saving into defined contribution schemes, but they aren’t confident that they will get enough out.”
Baffled by jargon
The study highlights the communication by pension firms as too difficult to understand and full of jargon. Around 38% of savers said they would make better pension decisions if they understood how they worked.
More than half said they would act urgently if the information about the defined contribution pension scheme was clearer.
Mr Hollingworth added: “There needs to be a major change in the way information for defined contribution pensions is delivered because in its present form it is not a fit for purpose.
“Our survey found that many pension savers have taken a conscious decision to save for their retirement and if they aren’t engaged with pensions then there’s going to be a huge problem to engage with the millions of people who will be automatically enrolled into defined contribution schemes.”
He said one of the biggest issues is that most savers don’t have the confidence to manage their own pension plan and need more support and guidance instead of a reliance on them making their own decisions.
Clearer advice needed
Employees and pension trustees need to focus on the pension’s target, its progress and the actions needed by the saver for their pension plan to stay on track and also to strongly highlight the consequences of the saver not taking any action.
Mr Hollingworth believes that when pension trustees and employers take a stronger course of action they can help boost the pension saver’s retirement fund and help meet their hopes for funding a decent retirement.
In addition, he adds, by adopting a new proactive approach both the employer and the trustees will meet their strategic objectives for the pension and also better meet their governance responsibilities.