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Do you keep tabs on your pension savings?

Do you keep tabs on your pension savings?

Category: Pensions

Updated: 31/07/2015
First Published: 31/07/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

How regularly do you check on the performance of your pension savings? Chances are, it's not very often, with research from Aviva finding that 63% of over-45s pay little or no attention to their pension pots, but this is something that could lead to a poorer retirement outcome.

Pension pots go unmonitored

The figures went on to reveal that 41% of respondents never spend any time planning and reviewing their pensions, while 29% spend just one day a year – or less – doing so. Those further away from pension age are more likely to spend little to no time reviewing things, but worryingly, 25% of those retiring in two years or less still fail to dedicate any time to it.

Retirement savers with more than one pot to monitor spent just as little time managing their pensions: just 27% managed them all very closely, while 34% ignored their secondary pots altogether – including 24% who ignored their main pot, too. However, even those with only one pot to manage fell short, with 33% failing to pay any attention to it whatsoever, while 12% don't even read their pension statements.

"An alarming proportion of the UK's pensions pots are being left unmonitored, with many simply ignoring their pension statements and hoping for the best," said Clive Bolton of Aviva UK Life. "At the heart of this is how involved people are with their pensions, and while they can seem complicated, there is lots of online support to help people make sense of their retirement savings."

Have you considered consolidating?

If you've got more than one pension pot, it could be a whole lot easier to combine them and have them all in one place. Consolidating your pensions means you've only got one scheme to keep tabs on, and it'll also be easier to see how your savings are performing and how they could equate to a retirement income.

This in itself could be enough to motivate you to keep an eye on things, because if you know what kind of retirement your savings could give you, you'll be more likely to monitor their performance and make changes as necessary.

"Our research has shown that many people find managing their pensions difficult," added Clive, "and consolidating could therefore make it easier for them. If they do wish to consider consolidating, then it's important they take financial advice if they have valuable guarantees attached to their existing pensions."

However, what could make the process of consolidating harder is the fact that not everyone is quite sure how many pension pots they have. For example, 6% of respondents don't know how many personal pension schemes they possess, and 7% are unclear on the number of defined contribution workplace pension schemes they have to their name.

Others leave it far too late to get engaged, or simply don't think it's worth it – 11% believe their pensions are so small that they're not worth bothering with, while 8% delay looking at their statements until they're ready to retire. However, this could mean it's already too late to make any improvements, as pension performance all comes down to having a long-term investment outlook.

It's even more disappointing given that, if people consolidated all their "small" pots, they could actually add up to a decent sum. Active management could make those sums grow even more, and if you haven't checked the performance of your savings in a while, you could be surprised.

This is why it's so important to seek suitable advice – something that only 7% do when confronted with their annual statement – and it's even more vital to check that your savings are on track and, if not, to act upon it.

"At the very least, people need to understand what their total savings are across all of their pension pots, so they can plan in an informed way for their retirement," said Clive. "Having multiple pension pots can make things more complicated, but it doesn't necessarily have to if people keep careful track of their savings."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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