Retirement savers are failing to review their pension plans and are not saving enough to fund their later years, according to new research.
Around 14% of British savers with private pensions have not bothered looking at the performance of their plan in the last three years, says a survey by Duncan Lawrie Private Bank.
Around 40% of workers have never reviewed their pension pots and another 10% do not know how many pensions they have.
The worrying aspect of the bank’s survey is that many who responded were aware that their pension savings were lacking and would have an impact on their finances in retirement.
More than 25% of retirement savers confessed to knowing that they cannot afford to retire before they reach 70 years old.
The bank’s pension expert Richard Boyd said: “The lack of interest people have in their pension is surprising and they appear to be giving up hope of not having enough money for retirement.”
To avoid struggling with money in retirement, pensions should be reviewed regularly as this could make a significant difference to retirement income and the age when savers can retire.
“Managing a pension is just like going to the dentist – nobody really wants to go but they appreciate that it’s important to get regular check-up,” he said.
Hot on the heels of the bank’s revelations comes news from the Office for National Statistics (ONS) revealing 76% of British households have a pension and the amount they are setting aside has risen in recent years.
However, the cost of buying an annuity – the investment that pays a retirement income – has also gone up.
Not enough retirement income
That means that most people are not saving enough to buy an annuity which would give them their expected retirement income.
The levels of savings into pension pots vary wildly for those aged between 50 and 64 with the top 10% having saved eight times the amount of the bottom of 50% combined.
The demise of final salary workplace pensions also highlights a growing gulf between those who were still in the schemes and those who contribute to defined contribution pensions.
The real issue is that on average the savings in a final salary scheme are six times larger than those of defined contribution schemes.
This has a major impact on retirement income, and the ONS survey has also found that many people are looking at alternative assets, like property, to boost their retirement savings.