Majority of savers interested in their pension but need more help to save for a comfortable retirement
New research released today from Penfold, the digital pensions platform, finds that 71% of people say they are interested in their pension pot, showing that possible engagement levels are high. Yet people still aren’t saving enough, with one in five (19%) working adults in the UK saying they only have up to £5,000 currently saved in their pension and a further 19% saying they don’t know how much is currently in their pot.
The research also finds that if the value of their pension pot increased, so would savers’ interest in their retirement savings. 71% said they would be more interested as the value of their pot increased, and 27% said it would not change their level of interest.
When asked at what value they would become more interested in their retirement savings, an equal proportion (20%) said their interest would grow when their pot hit £25,000, £50,000 or £100,000. A further 14% said they would be more interested at £75,000.
However, these figures are relatively small in comparison to the £254,420 that people need to have saved into their pots in order to enjoy a comfortable retirement, providing clear evidence of how people often underestimate how much they need to set aside for later life.
This lack of education is further emphasised by the fact that 16% of people don’t know how much they’ll need to save in their pension pot for their desired standard of living, a figure which rises to 25% among those aged 55-64 and 24% among those aged 45-54. This is especially concerning given these individuals are much closer to retirement and have far less time to save.
Nevertheless, Penfold says high levels of interest in pensions could be good news for the industry as a greater number of savers interacting with pensions, even if of relatively low value, will drive engagement and in turn give pension providers greater insight into how to get people saving more for retirement.
Chris Eastwood, Co-founder at Penfold, says:
“Our research shows that fundamental change is needed for the pensions industry to be fit for today’s saver. It’s not good enough that a significant proportion of people are still in the dark about how much they need to save to achieve their desired standard of living after retirement. Education is the key to resolving this. Clearly, there is a real interest from savers looking to prepare for their future, but the industry is struggling to properly engage these savers.
“Simply put, the pensions industry needs a rebrand. We need to put the emphasis on communicating the flexible and accessible tools available to help people achieve their pension goals, and leave the outdated practices and complex jargon at the door, which only help deter people from saving.
“Penfold’s easy to use platform engages savers with complete transparency over fund performance, the ability to check your balance and manage it on your phone, and the power to vote on issues that you care about by offering sustainable investment plans. It’s this freedom and accessibility which will ultimately drive engagement.”