Pensions Awareness Week: More must be done to make saving for later life relevant

More must be done to make saving for later life relevant, with a 'drumbeat of constant helpful guidance' made available to savers, said Becky O’Connor, director of public affairs at PensionBee.

She applauded Pensions Awareness week but called for a year-round effort to encourage more workers to save for their  retirement. 

This week Pensions Awareness week hit its 10-year anniversary – a milestone that has prompted debate on how effective the campaign has been.

O’Connor said: “Any effort to make people more aware of their pension is great and lots of creativity and publicity go into making Pensions Awareness Week a worthwhile activity. But ideally, such efforts need to be an ongoing thing, day in, day out. 

“To make pension communications effective, it’s really important to reach people at the point that the message feels relevant to them at the stage they are at in their lives.

Otherwise, it may not sink in. Of course, it’s hard to know when that moment is in anyone’s life, which is why a drumbeat of constant helpful guidance and education is so key.”

Pension saving: Starting them young

However, O’Connor noted that younger people now have a greater awareness of their personal finances which could be down to a combination of factors including auto-enrolment, digitisation including access to apps that allow greater involvement with a pension, better communication and people gathering more pension pots throughout their working life. 

She added is heartening that pensions appear to be moving up people’s priority lists.

O’Connor said: “The main concern people have is whether they will have a big enough pot at retirement to give them a decent standard of living. There is another worry among those struggling with the cost of living crisis that they are not able to save enough to make up any shortfall and ultimately, that they might not be able to retire at all.

“Despite these concerns, what is heartening is that pensions appear to be moving up people’s priority lists. This certainly has something to do with improved education and engagement around pensions. We know from our own data that when people are more engaged, they tend to contribute more. It works. Every week should be pension awareness week”

Widespread pension ignorance 

This comes as new research suggests there are still wide disparities in pensions knowledge within the UK population.

Phoenix Insights found 58 per cent of UK adults have low confidence in their pensions knowledge.  Over a quarter of the 3000 adults quizzed said they know ‘little or nothing’ about pensions, and just 11 per cent reported a ‘good’ knowledge of pensions.

Patrick Thomson, head of research and policy at Phoenix Insights, said more must be done to close the pensions knowledge gap. He said:

“Speaking to friends and family is a good way to engage with pension topics, but people need to be aware that these are informal sources of information. Phoenix Group’s most recent brand campaign encouraged people to start talking more about how they can make the most of having a much longer life than previous generations.

“In order to boost understanding and pensions engagement, Phoenix Insights is urging the Government to commit to a clear timeline to reviewing the current boundary between regulated advice and guidance, so that a larger proportion of the population can access reliable and tailored financial support”

“Let’s debunk the myth that pensions are only a concern for those nearing retirement age by engaging people with more frequent, simple and varied communications throughout their life course.”

Pensions inertia

This also follows research that found nearly one in six retirement savers never review their pensions.

A survey, commissioned by the provider of The People’s Pension, found nearly a quarter of the 2,139 adults questioned reviewed their pension savings less than once every year, while 20 per cent checked it only once a year and 11 per cent said they checked once every six months. 

Kevin Martin, group director of customer services at People’s Partnership, provider of The People’s Pension, said: “It’s clear from our research that many workers are ill-prepared for retirement, which is a concern given that we know that millions of workers are not saving enough.

“There are simple steps that a person can take to ensure that they are better prepared for retirement, including signing up for an online pension account, naming a beneficiary, checking your annual statement and ensuring your details are updated so your provider can stay in touch.”

Lost pots

However, a decade of Pensions Awareness week has clearly made inroads to improving the general public’s knowledge. This was highlighted by a recent survey by Pension Geeks, which found that 62% of the 7000 adults quizzed in August said that saving for their future is a high priority to them. 

Jonathan Bland, co-founder of Pension Geeks & the official Pension Awareness campaign, said: “The majority of people that we are speaking to, do seem to be aware of their pension and are quite engaged with their pension. There's been less conversation around pausing pensions and more people looking to increase their contributions.

“The main concern and big questions we've seen so far during the week is locating lost pension pots and whether it's worthwhile combining different pensions. Finding and locating pension pots is clearly a very big issue.”

The success of the awareness campaign was echoed by Alan Morahan, chief commercial officer at Punter Southall Aspire, who said it has helped to break down industry jargon to the public. 

He said: “Pension Awareness Week has gone from strength to strength since it was launched in 2013. For many people pensions get put in the too-difficult-to-deal-with box, that's because the industry has tended to shroud them in jargon and complexity. 

 “What the team behind Pension Awareness Week have done is to take some of the mystery away and raised understanding and engagement. 

 “This has been helped by the fact that the industry has got firmly behind the campaign meaning that millions of people are now being communicated with in a way that didn’t happen ten years ago.”

However, he added more needs to be done in schools to better educate children on finances. 

He said:  “I’m firmly of the belief that pension understanding needs to start in schools and colleges, so that people enter the workplace with greater knowledge of this important area than has happened in the past.”

Reuniting savers with their pension(s)

Punter Southall has been at the forefront of demystifying pensions and is currently urging workers to trace any of their lost pensions. 

It's estimated one in 20 people are thought to have mislaid or forgotten a pension, which averages £9,500. This equates to almost £27bn in total.

The amount in pots gathering dust has gone up by over a third since 2018, when it was £19bn, according to research carried out last year. As such, National Pensions Tracing Day, which is on Sunday 29 October, is urging everyone to join the ‘Great Pension Treasure Hunt’ and check if they have savings they do not know about.

It has released tips to help workers find missing pots including looking through their paperwork to find pension statements from old employers.