Being able to enjoy a comfortable retirement all comes down to preparation. Planning is key, and if you don't start saving towards your pension from as early as possible you could find you're not able to enjoy the standard of living you'd hoped.
However, to really plan effectively you need to stay up to date with the value of your pension pot. Doing so means you'll have a better idea of the income you'd get in your golden years, as well as letting you know if you needed to make further provisions, but research from Capita Employee Benefits has revealed that not everyone is up to speed.
The figures show that 28% of employees in workplace defined contribution (DC) pension schemes have no idea how much is in their pension pot, while an additional 25% could only make a rough guess. Even more worrying is that 54% don't know how much they should realistically be saving for retirement, potentially leaving a lot of people facing a shortfall.
The research, says Capita, highlights the need for clearer , with the current format failing a large proportion of scheme members.
More than a third (34%) don't know where their contributions are being invested, with 46% of those saying that they had been told but the information was too confusing to understand. Terminology and jargon is a clear barrier to pension saving for 55% of respondents, while 48% said they'd be more willing to save if they understood how pensions worked.
Arguably, it's this combination of confusion and poor communication that's leading to a distinct lack of engagement, with 23% never checking how their pension is doing.
The current form of pensions communication is clearly failing a lot of savers, so it's no wonder that so many people – 38% in fact – are concerned about retirement. If they don't know the size of their pension, how it's being invested or even how much they need to be saving, how can they hope to be confident about their retirement income?
Louise Harris, head of client communications for Capita Employee Benefits, commented: "With DC pension schemes the go-to for many employers as they look to auto-enrol their staff, it's vital that pensions communications are clear so as to encourage engagement and effective planning for retirement, otherwise as contributions increase, so may opt-outs."
The issue of effective communication has become an even bigger point of contention since the Government promised a "guidance guarantee" to those approaching retirement. However, as Ms Harris pointed out, offering guidance at the point of retirement isn't enough. If someone had been failing to contribute enough to their pot throughout their working life then telling them that when they're about to retire is a case of too little guidance, too late – instead, savers need to have clear, quality communication and effective guidance throughout their working years, ideally ensuring they'll have enough to retire on comfortably.
"If we're to create a nation of savers, it's absolutely crucial people are engaged in pensions, understanding how much they have and need, so they can adapt their contributions and choose where they invest, while regularly checking to see they are on track. Employers must therefore provide clear, good quality information, in order to empower people to make these kinds of choices," added Ms Harris.
By properly planning ahead you'll be able to approach your retirement years with confidence, safe in the knowledge that you've saved enough – and that your contributions were performing well enough – to provide a comfortable income. If your pension provider isn't giving you the necessary information it's important to be proactive and seek it out, and it's even more important to get suitable advice if you're unsure of anything. Then all you've got to do is make sure you're saving enough.
So, do you know the size of your pension pot?
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