UK workers 'blissfully ignorant' about pensions
UK- Most of the UK workforce are blissfully ignorant about their pensions and are deluded about the amount they will receive in retirement according to research by MORI.
The report, sponsored by the consultants Towers Perrin, asked a thousand UK employees about pension provision and what they expected.
Nine out of ten employees expect a secure retirement which they define as receiving half their current income as a pension.
The report says that less than half are making any additional retirement savings and that without this top up, very few will reach this target.
The majority of workers expressed a desire to retire more than five years before normal retirement age. However, for an employee in a DB scheme to retire five years early, capital in the fund needs to be twice the size to make it feasible.
Although 84% claimed to understand their company scheme, more than four in ten admitted they had no idea how much their employer was contributing and a quarter were unsure of minimum contribution levels.
An alarming three out of ten said they felt no need to worry about private pensions as they could fall back on the state system.
Robert Ivey, head of financial planning at Towers Perrin, says the research demonstrates how complacent people are about saving for retirement.
“The inexorable move from final salary related pensions to defined contribution pensions means a much lower entitlement for most people. Unless employees wake up to the realities and start making some serious additional savings, they are likely to end up with less than half what they think is necessary and a shock when they reach retirement,” he says.
If the report’s finding’s are anything to go by, employers are also expected to do more than simply make contributions. Almost eight out of ten said their employer had a responsibility to help them plan their retirement and the same proportion said they would find it useful if their company provided access to an independent financial advisor.