One in three Brits has “no clue” how their pension plan works or where their money is being held, research suggests.
Despite 84% of Brits putting about 3.8% of their income into a pension plan every month, 32% do not actually understand their plan, a survey of 2,000 UK adults by My Pension Expert found.
What’s more, financial struggles caused by COVID-19 have driven one in eight (12%) Brits to withdraw from their pension without seeking financial advisement first.
Meanwhile, a similar number (13%) have moved their pot into a higher-risk investment, in an attempt to increase its value.
Two thirds (64%) of pension planners admitted they have never sought any form of financial advice.
Almost half (48%) would simply rather not engage with their pension, preferring to leave it to their employer, while nearly as many (44%) admitted to finding retirement finance “very complicated”, and more than a quarter (28%) believe it would be “too expensive”, the study found.
Perhaps because of this, two in five (41%) pension planners admitted they have no clear strategy in place for their retirement funds, choosing to “put off” thinking about it until a later date.
“Retirement finance is a complicated subject, with lots of rules, regulations and products to navigate. That said, distancing ones’ self from pension planning entirely can be damaging,” said Andrew Megson, executive chairman at My Pension Expert.
“Failure to understand how their pension plans work, or where it is invested, could mean Britons are trapped in schemes which offer little value, or they could face hidden charges.
“Worse still, it could lead to ill-informed decisions, such as withdrawing too much too soon or moving savings to risky investments — potentially leaving consumers worse-off in the long run.
He added: “It is vital consumers seek independent financial advice before making any major financial decisions. Affordable advice is available, and it minimises the risk of consumers wiping out their finances. In such challenging times, consumers crave stability and guidance — professional advice can offer this.”