Under a quarter (23%) of respondents aged between 18 and 34 with a workplace pension do not know how much their employer is paying into their occupational pension, according to research by Aegon.
Its survey of 685 adults, including 380 employees who have a workplace pension, also found that 58% of millennial respondents think it is their employer’s responsibility to help them plan for retirement.
The research also found:
- 51% of respondents aged between 18 and 34 with a workplace pension are not actively encouraged by their employer to check their occupational pension pot.
- 41% of millennials with workplace pensions are not aware that they receive tax relief on their workplace pension contributions.
- 72% of respondents who have a workplace pension have chosen to invest their pension contributions in the scheme’s default fund.
- 30% of millennial respondents have selected their own investment fund rather than stayed in their scheme’s default option, compared to 20% of 35 to 44 year olds, 15% of 45 to 54 year olds, and 23% of 55 to 64 year olds who have also done this.
Kate Smith, head of pensions at Aegon, said: “In simple terms tax relief on pensions contributions is the government topping up an individual’s pension contribution, and it’s effectively a reward for saving. This worrying lack of understanding means that young savers in the workplace might be missing out on some of the benefits a workplace pension can offer if they opt-out or fail to maximise their employer’s pension contribution. Every year that passes in which this young generation doesn’t take advantage of the benefits of tax relief or employer contributions is a year of potential free money and investment growth lost.
“As the main route for employees to save for retirement, the workplace is the perfect place to encourage employees to engage with pensions. And the results of our research show that this would be warmly welcomed and needed by most. We’d like to see more employers encouraging their younger employees to get into the habit of saving through their workplace pension.
“While auto-enrolment gets people out of the starting blocks, it’s only a small part of the solution to saving for retirement. Employees should be encouraged to build on this to take an active role to grow their retirement savings.”