Only a third of workers heading for retirement have reviewed their pension planning in the past four years despite a raft of radical new measures announced by the government.
Pension changes have come think and fast in recent years, with changes in lifetime allowances, annual contribution amounts and new laws allowing early access to pension funds.
Other changes include shifting the state retirement age, introducing auto-enrolment and the new flat-rate state pension.
Nevertheless, at least two-thirds of workers seem not to be that bothered about how these changes will affect their retirement income, according to a report from financial firm Barings Asset Management.
More than 40% of workers confessed they had never reviewed their retirement income plans and almost less than half were ‘very’ or ‘fairly’ aware of the risk attached to their pension investments.
Default option confusion
Pensions are not the only financial matters that most workers are choosing to ignore.
Two-thirds do not review their savings or investments.
Only 22% said they had reviewed their retirement finances during the past year.
Only 53% of 55 to 64 year olds had looked at their pensions in the past four years despite approaching retirement – and only 18% of this age group were ‘very’ aware of the risk attached to their investments.
Around 40% of workers approaching retirement opted for the default option on their pensions, which automatically shifts assets into safer investments commanding a lesser return as the pension member approaches retirement.
However, many could not remember taking the option or having the details explained to them.
The number of investors considering multi-asset funds to diversify as a hedge against risk is also climbing, according to the study.
The number has increased by 50% from 12% to 18% since 2011, says the report.
Barings head of UK Wholesale Distribution Rod Aldridge said: “Pension savers must take the trouble to understand the risk involved with their investments and how their pension cash is allocated if they want to make any sense at all of how large their fund is likely to grow and how much income they will receive on retirement.
“Miscalculating here can lead to higher risk and the wrong allocation of assets.
“It’s a big concern that people are forgetting or can’t be bothered to check out how their pensions are performing, especially at that vital time when they are stepping up to give up work.”