Millions of UK workers have been told to take action over their pension contributions to avoid ‘missing out on retirement they hope for’.
According to a new survey by the Pensions and Lifetime Savings Association (PLSA) half of savers have never considered increasing their workplace pension contributions.
The same survey found that nearly half of people know the process to change their pension contributions with their current employer, while nearly three in 10 do not know.
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The survey also found that 42% would consider raising their pension contributions depending on the size of a pay raise, with 27% saying they would make additional contributions regardless of the size of the increase.
Savers aged between 18 to 34, were more likely to say they would increase their pension contributions if they received a pay rise
Zoe Alexander, director policy and advocacy, PLSA, said attitudes to pensions is leading to ‘poor outcomes down the line’ and has called for the process of changing contributions to be ‘as simple and straightforward as possible’.
She added: “This research underscores the gap between knowledge and action when it comes to pensions.
“People understand the need to save more, they know how to do it, they even want to do it, but for many it simply doesn’t happen.
“The reality is that many individuals are putting off important pension decisions because they feel overwhelmed by today’s financial pressures or are unsure about how to make the changes.
“More needs to be done to help people take the next step – whether it’s through better education, clearer communication or making pension adjustments more automatic.
“Pensions can feel like a distant concern, but that attitude is leading to poor outcomes down the line. Those with DC (defined contribution) pensions are more likely to need to take positive action themselves to secure the retirement they expect, as the default 8% savings rate may fall short.”
Zoe said: “Small actions, like reviewing investments, slightly increasing contributions, or maximising employer (contribution) matching, can significantly impact long-term outcomes.
“However, employers and policymakers need to consider clearer guidance and behavioural nudges to help people act sooner rather than later.
“The process needs to be as simple and straightforward as possible, and we need to help people make their pension savings a more immediate priority, especially if they have the ability to save more.
“Without addressing this disconnect, many people will continue to miss out on the retirement they hope for.”