The nation is struggling to understand how much money is in their pension pot and how much they need to retire, according to new research released today from digital pension provider Penfold.
With 54 per cent of the people surveyed having three or more pensions, keeping track of how much money they have set aside for retirement is proving challenging, with 58 percent admitting to having no idea how much was in their pension pot.
The study of 2,000 people found that two-thirds (65 per cent) were feeling anxious, confused, overwhelmed or stressed at the prospect of locating and accessing their pension pots as they near retirement age. Only 24 per cent of over 55s were feeling confident about locating and accessing their pension.
It also revealed that four in 10 consumers (38 per cent) still have no idea how much they need to comfortably retire. While the latest figures show that the average single person would need a pension pot of GBP192,000 for a comfortable retirement, 19 per cent of the participants were way off the mark, believing they would only need up to GBP100,000 to retire comfortably. Interestingly, 28 per cent of the 18-24 year olds in the survey thought that they could comfortably retire with just GBP50,000 in their pension pot. Almost half (46 per cent) of over 55s had no idea how much they would need to comfortably retire.
The study also found that 39 per cent of people were feeling concerned about not having enough money to live comfortably during their old age. A further 8 per cent said they knew they would not have enough in their pension at retirement.
Penfold is a digital alternative to traditional pension companies, the provider allows users to set up, manage and track their pensions online or on their devices. Contributions can be paused, topped up with one-off payments and users can also track down and combine multiple pension pots. Users can choose where their money is kept or invested and the dashboard explains how much they have saved and how far off they are from their ultimate end-goal. In summary – it makes pensions painless today.
Pete Hykin, co-founder of Penfold, says: “Our research has shown that people are still feeling in the dark about their retirement. This is probably a legacy of the days when you had to make a phone call or wait weeks for a letter to find out anything about your pension. When your information is available via your phone, accessible in a few taps as it is with the new generation of digital pension providers, there’s really no reason why pensions should be overwhelming or confusing.
“With there no longer being ‘a job for life’ and the introduction of the ‘auto enrolment scheme’ many people now have multiple pension pots. This can make it tricky to keep track of where all your pensions are and how much is in each account. We believe it should be easy to see how much money you have in your pension pot – just like you can your bank account. The important thing about saving for a pension is to start as early as you can, no matter how small the amount. Being able to see how much you’re saving and how far away you are from your target retirement fund really helps people to establish a regular savings habit.”
Hykin adds: “Over two-thirds of people are worried in some way about locating and accessing their pension pots – this is probably caused by the thought of having to search through years of paperwork to find old pension details. It’s easy for our users to track down old pensions just using the company name – meaning that they have full visibility of their retirement fund in one place.”