- The UK’s cohort of DC pension savers risk low visibility of their pension pot, as more than a quarter have never checked their pension online
- Almost three quarters (72%) have never changed how their pension is invested
- And only 41% of people have ever increased their monthly pension contributions
More than a quarter of workers with a defined contribution (DC) pension have never logged in to check their pension online or on their phone (28%) – a figure which is largely consistent across age groups. 11% have done it once ever, and 26% have done so a couple of times. Concerningly, 37% of people planning to retire within the next two years have never logged into their pension online or on their phone, leaving them reliant on either paper statements or no information.
This comes from new research from independent consultancy Barnett Waddingham, surveying more than 2,000 UK workers paying into a workplace DC pension to reveal the attitudes and behaviours of the UK’s retirement savers. The research shines a light on the nation’s pension apathy, and its impact on confidence about retirement.
The lack of visibility born of not checking how much is in a pension plays out into other financial planning decisions. 57% of people have used a pension calculator to see how much will be in their pot at retirement; 43% have not. And 67% of people have never spoken to a financial adviser about their pension – while 12% have done so once. The number of people who have spoken with an advisor doesn’t notably increase as people approach retirement, though men are far more likely to have done so than women (42% vs 27%).
In turn, most British savers are either trusting or apathetic about their pensions – almost three quarters (72%) have never changed how their pension is invested. Specifically, this is true of 66% of 25-30s and 72% of 31-35s, who are sitting in their scheme’s default fund – which is often too low risk for this age group, and may not generate the returns needed for a healthy retirement pot. Women are more likely to be in their default fund than men, at 79% to men’s 62%.
As well as being in the default fund, most workers are contributing the default amount – which is unlikely to be enough for a comfortable retirement. Only 41% of people have ever increased their monthly pension contributions – 13% have done it once, 15% a couple of times, 7% ‘a few times’, and 5% do so consistently. This leaves 59% of people – rising to 66% of women – contributing the bare minimum, usually 5% of their salary (with 3% matched by their employer). Meanwhile, just 23% have ever put a lump sum of money into their workplace pension, again driven by men (32% versus 17% of women).
On the other side of the fence, a concerning 26% of people have previously opted out of their workplace pension, rising to a whopping 55% of 18-24s and more than a third (36%) of 25-30s. Likely driven by the harsh increases to the cost of living, pausing pension contributions has brought a few more pounds into the bank – but at the sacrifice of a safety net in later life.
Mark Futcher, Partner and Head of DC Pensions at Barnett Waddingham, said: “The UK’s auto-enrolment system has hatched a generation of pension ostriches. With pensions – and personal finances in general – feeling complex, overwhelming, and often disheartening, many savers are simply refusing to check the status of their pots, nevermind making decisions to improve the outcomes. But burying your head in the sand won’t do you any good in the long run.
“Defined contribution pensions can be brilliant. Our latest analysis of the UK’s master trust landscape painted a picture of strong governance, good returns, and low fees. The problem lies in people saving too little, and employers failing to encourage better habits – like auto-escalation of contributions at the point of pay rise or career break. If everyone took twenty minutes to log-in to their workplace pension, use a calculator to check the expected pot at retirement, and consider the possibility of increasing the contribution by just 1% this year, we’d be a big step closer to tackling the looming pensions crisis in the UK.”
