The majority (92%) of employees are unaware how much money they need to save in their pension to be able to live comfortably in retirement, according to research from MoneySuperMarket.
The average pension pot can require as much as £298,000. Despite this Millennials (18- to 34-year olds) in particular showed a lack of knowledge about pension planning, with 62% underestimating the amount needed for a comfortable retirement.
Sixteen per cent thought they would only need between £50,000 and £100,000, compared to 13% of 45-54 year olds and 12% of those over the age of 55.
Under half (42%) of all respondents said they are saving for retirement.
For 18- to 24-year-olds home ownership is a higher priority, with 58% saving for a property.
When looking at other financial issues, just 42% of respondents admitted to having life insurance. However, 46% do not plan on taking out a life insurance policy, despite it being one of the best ways to clear debt and help dependants after the policyholder’s death, according to the research.
Ros Altmann, campaigner and former pensions minister, said that employers need support from pension providers to help increase awareness of pensions among the workforce: “In many cases employers themselves need educating. I think that it is time for the pensions industry itself to start helping its customers understand pensions."
She added that pension providers are not using auto-enrolment as a way to increase awareness of pensions: "Up to now the pension firms keep complaining that people are not paying enough into their pensions but are not taking the opportunity of auto-enrolment, which is facilitated and significantly funded by employers, to engage workers and help them understand what an excellent product [pensions] can be.
“Relying on jargon and old-fashioned processes is not the way to get young people or anyone else to feel good about their pensions.
"The government and regulators should ensure that the companies providing workplace pensions have a duty to improve the understanding of pensions and financial education.”
Rachel Wait, consumer affairs expert at MoneySuperMarket, said that it can be easy to overlook pensions as people are finding it difficult to meet day-to-day costs: “Brits face all sorts of calls on their money and it’s easy to see why the cost of everyday living can trump longer-term objectives such as saving for retirement – especially if you’re not fully aware of how much you’ll need in retirement.
"But anyone who can get into the savings habit gives themselves a better chance of building up the sort of pension kitty that’s needed to fund a comfortable lifestyle once they stop work,” she said.
MoneySuperMarket surveyed 1,000 employees.
