New research shows that less than a third of UK workers feel knowledgeable about financial matters.
This is one of the main conclusions of the State Street Global Advisors (SSGA) who has just published its global research of sentiment among retirement savers. On the upside, it also said that although many UK pension savers have low levels of knowledge about financial matters, confidence in financial planning for retirement has increased year-on-year.
Called the 2015 SSGA Global Monitor, the study asked more than 3,500 participants in the US, UK, Australia and Ireland, and aimed to capture attitudes and perspectives amongst retirement savers worldwide.
It showed that financial knowledge and understanding is relatively low in the UK. Some 30% of respondents described themselves as “not at all” knowledgeable about financial matters, whilst 44% declared themselves as “somewhat” knowledgeable.
Yet despite this, the study did show that the confidence in retirement saving amongst UK workers has steadily risen over the past two years. It was revealed that in the UK, where 1,000 workers were surveyed, 43% of defined contribution (DC) plan members felt confident they will meet their retirement goals. This represents a significant increase compared with 2013 (24%) and 2012 (12%).
Head of SSGA’s DC business in Europe said Nigel Aston said: “We are encouraged to see that confidence in pension schemes is rising in the UK in line with a wider global trend. A stronger economy is a key factor here, although events such as those seen in recent weeks undoubtedly have some impact.
“We also believe confidence is a result of other factors including the introduction of auto-enrolment and pensions freedom. While financial knowledge remains low, our previous research has shown that the majority of pension savers do not want to become investment experts. Instead they are seeking reassurance from their employer and trustees that their workplace pension savings are expertly managed on their behalf.”
Key findings of the survey were:
- 54% of UK respondents rate themselves as satisfied with their retirement investments;
- under half (47%) of UK defined contribution plan members surveyed felt they have sufficient information from their employer/provider to make an informed decision (compared with 55% in the US and 35% in Ireland);
- only 53% of UK workplace savers understand their investments (compared with 62% in the US and 35% in Ireland);
- UK members of defined contribution pensions schemes are more likely to choose the default investment option, 52% of those polled compared with 36% in the USA and 50% in Ireland.
Aston added: “People rarely know how much in advance exactly when they will retire, and they are also unsure about how they will use their savings now that they have more options. The new retirement income freedoms available to pension savers should encourage greater innovation in the pension industry to develop products that offer savers greater flexibility. Default funds need to be more intuitive by providing an appropriate level of risk for members based on their circumstances – rather than targeting an overly specific outcome on a particular date.”