Nearly three-quarters (70%) of respondents are likely to stay in a pension scheme once they have been auto-enrolled, according to research by the Department for Work and Pensions (DWP).
Its Attitudes to pensions: the 2013 survey, which polled 1,949 UK adults, also found that almost two-thirds (59%) do not feel they know enough about pensions to decide with confidence how to save for retirement.
Two-fifths (41%) of respondents with a private pension have no knowledge of what their income will be in retirement. This rises to four-fifths (79%) among those who do not have a private pension.
The research also found:
- 19% of respondents with no pension provision gave the excuse that it is too early to start.
- Among young people aged 18 to 24, 39% said they actively avoid thinking about retirement altogether.
- 71% of female respondents said they found pensions complex, and 28% admitted they are scared of dealing with them.
- Fear of not having enough in retirement is the key reason people gave for saving into a pension (32%), followed closely by qualifying to join a company scheme (28%).
Steve Webb (pictured), minister for pensions, said: “Automatic-enrolment is helping millions to save for the first time and this survey shows most people will stay in when they are offered the chance to save in a pension.
“The simple fact of being offered a company pension is a clear driver to helping people save.
“However, too many people are put off saving for their old age by a pensions system that is too complex, and too few know clearly what they will get when they retire.
“We are taking the hassle out of saving in a pension through automatic-enrolment, we are working with the industry to restore trust and confidence in pensions, and we will reform the state pension to make it simpler and clearer to understand.”
No-one, least of all the DWP, should be surprised that the general public find pensions complicated and difficult to comprehend. Constant tinkering and political interference with the system over the years have produced a virtual labyrinth of rules and regulations, which very few fully understand and which are often a breeding ground for mistakes and misleading advice.
There is particular confusion over the state pension and when it can be claimed, with 60% of women and 38% of men expecting to reach the state pension age sooner than they will. As this date is often key to formulating a meaningful retirement plan, it is vitally important that communication in this area is improved and the correct information made more widely available.
It is the 70th anniversary this week of the publication of the Beveridge Report and, while we have clearly come a long way, it is difficult to believe that the system has developed quite in the way Beveridge might have imagined it. As we enter a critical stage with the onset of auto-enrolment and plans to reinvigorate occupational pension saving being launched, more effort is clearly needed to explain pensions in a way that ordinary people can understand and can then engage with for their own long-term good.