In a recently released report, Aviva has shed light on a troubling trend in a lack of pension awareness among British workers, dubbing it the phenomenon of “sleepwalking into retirement.”
According to the Working Lives report, a staggering 30 per cent of employees are unaware of how many pensions they hold, revealing a significant lack of retirement planning awareness.
The report underscores the urgent need for improved support and guidance from employers, as an overwhelming majority of workers (79 per cent) expressed a desire for more assistance in preparing for retirement.
Many employees also expressed concerns about the adequacy of their retirement income, fearing more is needed to sustain a comfortable lifestyle.
Among those seeking additional support, 41 per cent indicated a need for more information on building up a pension fund, while 45 per cent desired guidance on effectively managing their pension throughout retirement.
Alarming figures show that only a mere 20 per cent of employees feel their employer currently provides adequate assistance in this regard.
On the employer side, the report revealed that 20 per cent of companies merely meet the minimum requirement for retirement planning information. This lack of proactive engagement perpetuates the issue, as 31 per cent of employers fail to provide any guidance to employees on how to track down existing pensions.
Tracking down pensions is particularly challenging, with individuals typically having 11 different jobs during their working lives, as reported by government statistics. The problem appears to disproportionately affect women, with 34 per cent unsure of the number of pensions they possess, compared to 26 per cent of men.
Younger workers are also significantly impacted, as 50 per cent of 16-24-year-olds confessed to not knowing the exact number of pensions they hold.
Emma Douglas, Director of Workplace Savings and Retirement at Aviva, explained the importance of consolidating pensions early on in one’s career rather than postponing it until retirement draws near.
By taking proactive measures to consolidate pensions with each job change, individuals can effectively manage and maximise their savings, thus contributing to more robust retirement planning.
Douglas further stressed the need for comprehensive support in retirement planning.
While pension freedom legislation has provided individuals with increased flexibility and choices regarding the utilisation of their savings, the overwhelming range of options can leave many feeling overwhelmed and hesitant to seek independent financial advice.
As a result, workers unwittingly enter retirement without a solid plan in place.
To address these challenges, Douglas called for collaboration between the pensions industry and the government to provide adequate support for current and future retirees. By offering accessible resources, education, and guidance, workers can make informed decisions to ensure long and financially comfortable retirements.
Aviva’s Working Lives report serves as a wake-up call, highlighting the pressing need for enhanced retirement planning support among employees.
By taking proactive steps to address this issue, individuals, employers, and policymakers can work together to pave the way for a more financially secure future for all British workers.
If you’d like advice or guidance about pensions and retirement planning then get in touch.