Recent developments and accompanying research about the finance industry should be set to make many UK adults start thinking about their pensions more seriously, and whether we have the necessary savings plans in place for our future. Of course, it is difficult to face up to the importance of storing money away at a time when many of us are cutting back and still finding it difficult to afford the bare necessities. Yet, now may well be the most logical time to do so.
Perhaps the most alarming research published recently (August 2009) is that by Prudential (UK). According to the retirement specialists, nearly a third of Britain's 8.8 million active occupational pension scheme members are unaware of how their retirement money is invested, with over a quarter (2.5 million) never reviewing how well the pension is working.
This research caused The Independent's Simon Read to refer to the state as 'inertia' at
independent.co.uk. He stated: "Even more alarming is the fact that almost half of workers aged 25-plus have their money invested in the "default" fund of their company pension scheme."
At first glance, the data and Read's response highlight a glaring and significant issue. Whilst most adults are willing to take their time ensuring they are getting the best savings rates, the cheapest car insurance, or the killer 2 for 1s at the supermarket - they don't seem to care about their pensions as much. If they haven't got one, then it is always something to be done, but something that can wait. After all, retirement is a long way off. Additionally, if you start working at a new company and they mention that there is a pension scheme in place, this is seen as something of a bonus - and little more.
Of course, leaving you pension scheme to a company default plan is never likely to be the absolute best for your money, especially at a time when the market is particularly changeable. However, Read's response also had an impact on me, reading the research as a 25 year old. Do I ever even consider that it might be worth sorting out a pension plan? Certainly not. But, perhaps more needs to be done in order to educate people about their pension opportunities, and when they should start to pay into one. And like the recession has done for savings, insurance and 2 for 1s - maybe we will start to really think about pensions also.
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Paul Roberts writes about pensions, finance,
savings accounts and
best savings rates.
