Savers with workplace pension schemes are significantly less likely to engage with their pensions compared to those with personal pensions, according to new research from Moneyhub, the award-winning data and payments platform built on open banking and open finance principles.
New Moneyhub research reveals how approximately a quarter of savers with a workplace pension, 26 per cent with a Defined Benefit (DB) or 23 per cent with a Defined Contribution (DC) pension, never check their pension pots.
In stark contrast, just 11 per cent of respondents with self-invested pensions (SIPP) and 10 per cent with self-employed pensions said they had never checked their pension.
The payment platform has explained its concern about these findings because savers with workplace pensions typically have less understanding of the funds they have set aside for later life.
Moneyhub also conducted a number of in-depth interviews, in which it found that participants with defined contribution pensions were often unaware that they were an investment. In addition, just 34 per cent of DB and 39 per cent of DC pension scheme holders said they would know the ballpark amount of money in their pension pot compared to 51 per cent of personal pension scheme holders.
Savers with workplace pensions often know less about engaging with their pensions and navigating their accounts. Fifteen per cent and 13 per cent of DC and DB pension holders, respectively, said they would not know how to check their predicted pension income, with this falling to just five per cent for those with personal pensions.
Workers need more pension support
Most Brits are likely to have a workplace pension, particularly since the introduction of auto-enrolment in 2012. While auto-enrolment was an important step, Moneyhub’s research highlights the need for greater support for the majority of workers to prepare themselves financially for later life and engage with their savings.
Enabling savers to view all their pensions (including State) in one centralised and easily accessible platform, pensions dashboards will bridge this workplace and personal pension scheme engagement gap.
Whether commercial or the government’s pensions dashboard, such platforms will help increase workplace pension scheme holders’ engagement and understanding of their retirement savings. In addition, through some commercial dashboards, consumers will be able to view pensions alongside their other financial products, such as savings, investments and mortgages, ensuring users are able to have a holistic view and make improved financial decisions.
Driven by the desire to enhance people’s financial well-being, control and awareness, Moneyhub is already leading the way to help workplace pension savers become more engaged.
Moneyhub’s Personal Finance Technology platform, used by the likes of Aon, Mercer, and Standard Life, is already able to show savers how much income they can expect during retirement based on current saving and spending levels. While the industry waits on the delivery of the government’s dashboard and central architecture, the technology to facilitate a dashboard experience is already available.
Utilising pension dashboards to help employees
By utilising Moneyhub’s open finance fully customisable white-label pensions dashboard, pension providers could also assist employees in improving their spending and saving habits to help ensure they have enough money stored away for retirement.
Mark Horwood-James, MD of Moneyhub Personal Finance Technology, explained the need for more pension support. He explained: “With the majority of employees relying on workplace pension schemes for funding their retirement, it is essential that action is taken to improve people’s engagement and interaction with their pension savings.
“The government and pension providers are uniquely placed to embrace open finance technologies, like Moneyhub, to break down barriers to engagement and help support savers up and down the country.
“Having easy access to all your pensions in one place, and being able to view them alongside your other financial products such as savings or mortgages, will enable you to make better decisions when it comes to preparing and planning for the life you would like in retirement.”