Half (50%) of respondents do not understand the role and responsibilities of their employer or trustee when it comes to planning for their retirement, according to research by LV=.
Its survey of 1,004 UK adults aged 55 or over who have a defined benefit (DB) pension but have not started to take income from it yet, also found that 38% of respondents do not know they must transfer into a defined contribution (DC) scheme to take advantage of the pension freedoms.
The research also found:
- 11% of respondents want to transfer into a DC scheme in order to take advantage of the pension freedoms.
- 20% of respondents are certain they have the necessary knowledge to make an informed decision about whether or not to transfer out of their scheme.
- 25% of respondents are unaware that they may live longer than their pension savings last if they do not opt for a guaranteed income.
- 20% of respondents are not aware that inflation could impact on their investments if they transfer their pension.
Mary Stewart (pictured), head of corporate solutions at LV=, said: “The freedom and choice reforms have given everyone, including defined benefit members, greater access to their money. However, there is a risk that unless [savers] are given adequate information and know where they can turn for support, they could miss out on making the most of their pension pot.
“Our research has unearthed a fundamental lack of understanding among members about their options. We believe the industry must move away from producing communication material that solely complies with regulation, and instead focus on the needs of the consumer. Scheme trustees have a duty to provide their members with information in a simple, clear way to ensure they can make the right decision.”