Over half of workers don't understand retirement income
25 April 2003
Over half of all people with pensions don't know how much they will be entitled to when they retire.
A survey conducted by Barclays found that 51 per cent of adults with pension plans are unsure of the value of their retirement income.
With new style pension statements, explaining retirement income more clearly, on their way to homes now, Barclay's reveals that only 75 per cent of respondents said that they had received a pensions statement at all and 20 per cent of those claimed not to understand the statement.
When asked about what they would do if the statement showed that their retirement income would be lower than expected, 35 per cent of those surveyed stated they would increase their payments, 24 per cent would pay extra money into alternative savings products, such as ISAs, two per cent would seek advice or visit an independent financial advisor and two per cent would contact their company or union. Of the rest, 17 per cent would keep their payments at the same rate and a further five per cent would stop paying into the plan altogether.
Paul Morrish, savings and investments director at Barclays, commented, 'It's alarming that more than half of people with a pension are unsure of the income they can expect when they retire. As the new style statements start to arrive many may get a nasty shock.'
'The burning question for Government and providers is whether these statements will be enough to prompt consumers to realise how critical a pension is to their long-term financial security, and start to save more. Our research shows that a fair number will take positive action, however some won't and whether this is an issue of affordability or apathy is unclear.'
Many banks and building societies will offer free savings and investment reviews to customers.