For many UK residents, the exact details surrounding their pension pots, and how much is needed realistically to retire, remains yet to be fully understood.
This lack of understanding became the centre point of recently released research from the digital pension provider Penfold.
Despite the figures showing that the general majority of respondents (54%) hold three or more pensions pots to their name, keeping track of how much money they actually have set aside for retirement continues to prove complex. With this, 58% admitted to having little to no idea how much exactly their pension pot was holding.
The study of 2,000 people found that 65% feel anxious, confused, overwhelmed, or stressed at the prospect of locating and accessing their pension pots as they near the age of retirement. Staggeringly, just 24% of over 55’s stated that they could pursue this task with confidence.
The data also revealed that 38% of consumers still have no idea about how much they need to comfortably retire. While it highlights that the average single person would need a pension pot of £192,000 for a comfortable retirement, 19% of the participants were way off the mark, believing they would only need up to £100,000 to retire comfortably.
Interestingly, however, just 28% of the 18 to 24 year olds in the survey thought that they could comfortably retire with just £50,000 in their pension pot. 46% of over 55’s had no idea how much they would need to comfortably retire.
The study also found that 39% of people were feeling concerned about not having enough money to live comfortably during their old age. A further 8% said they knew they would not have enough in their pension at retirement.
Speaking on their recent findings, Pete Hykin, Co-Founder of Penfold, comments, “Our research has shown that people are still feeling in the dark about their retirement. This is probably a legacy of the days when you had to make a phone call or wait weeks for a letter to find out anything about your pension. When your information is available via your phone, accessible in a few taps as it is with the new generation of digital pension providers, there’s really no reason why pensions should be overwhelming or confusing.
“With there no longer being ‘a job for life’ and the introduction of the ‘auto-enrolment scheme’ many people now have multiple pension pots. This can make it tricky to keep track of where all your pensions are and how much is in each account. We believe it should be easy to see how much money you have in your pension pot – just like you can your bank account. The important thing about saving for a pension is to start as early as you can, no matter how small the amount. Being able to see how much you’re saving and how far away you are from your target retirement fund really helps people to establish a regular savings habit.”
This survey was undertaken by Penfold to collect data around the use of their services. The platform represents a digital alternative to traditional pension schemes, allowing users to establish, manage and track their pensions online or through their devices. Contributions can be paused, topped up with one-off payments, and users can also track down and combine multiple pension pots. Users can choose where their money is kept or invested and the dashboard explains how much they have saved and how far off they are from their ultimate end-goal.
Pete added, “Over two-thirds of people are worried in some way about locating and accessing their pension pots – this is probably caused by the thought of having to search through years of paperwork to find old pension details. It’s easy for our users to track down old pensions just using the company name – meaning that they have full visibility of their retirement fund in one place.”