Pensions update

Recently released research¹ suggests UK consumers are becoming more knowledgeable about pensions and prepared to take a greater role in preparing for retirement. Other research², however, shows significant sums are still sat in ‘lost’ pensions, while experts have warned about potential pension-related problems as the cost-of-living crisis bites.

Pensions knowledge improving

A survey conducted by Link Group suggests bodies within the pensions industry have had some success in building better public knowledge of pensions and the importance of retirement planning. The research found that almost four out of five consumers ‘understand’ pensions, with 18 to 34 year-olds more likely to display higher levels of knowledge than consumers in other age groups. In addition, nearly six out of ten respondents said they should take more responsibility for ensuring they have a good retirement income.

Time to trace lost pensions?

Estimates suggest there is currently over £19bn sat in lost pension pots across the UK. These are typically the result of people changing jobs and then not keeping track of contributions made with previous employers. The good news, however, is that the government runs a free pension tracing service (www.gov. uk/find-pension-contact-details) to help employees track down their lost pensions. So, if you’ve worked for a number of different employers through the years it might be worth checking to see if you can be reunited with a long-lost pension.

Pensions warnings

Experts are warning the over-55s not to be tempted to raid their pension pots in response to the cost-of-living squeeze. There are fears that if people withdraw lump sums or start taking an income sooner than planned this will result in them having less income in the future. People are also being warned not to reduce their workplace pension contributions as a knee-jerk response to the cost-of-living crisis.

¹Link Group, 2022

²ABI,2022