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57% of readers unsure where their pension pot is invested.
We recently conducted a reader survey on social media, in which we asked our followers about their pensions. We asked people about their workplace and private pensions, as well as where their pensions are invested, and their pension providers.
We conducted a reader survey previously and found the results extremely interesting. Not only do surveys help us understand your thoughts and feelings but help us to understand how we can help our readers.
Here is what we found in this reader survey.
Prior to October 2012, employees needed to opt-in to contribute monthly to pensions. However, because of the Pensions Act 2011, employers must now automatically enrol their workers into a pension scheme. If you are unsure whether you are enrolled, or have been auto-enrolled in recent years, ask your workplace.
If you have been automatically enrolled and would like to opt-out, you will have received a letter from your employer telling you you’ve been added to the scheme. If you opt-out within a month of your employer adding you, you will get back any money you put in.
76% of our readers said that yes – they do pay into a workplace pension, with the remaining 24% of those asked saying they do not.
The workplace participation rate across the UK is 79% as of April 2021 – an estimated 22.6 million employees.
A private pension is a plan individuals can choose to contribute to themselves, which will be paid to them when they retire. It is different from the state pension, as there is no government involvement. It is also different to a workplace pension, as your employer is not matching your contributions.
It’s a less popular option but may be good for those who are self-employed. According to our survey, just 21% of respondents said they had a private pension.
74% of those who answered said they did not pay into a private pension, and the remaining 5% said they were unsure if they did or not.
The private pensions statistics commentary from 2022 shows that from 2019 to 2020, approximately 9.5 million people paid into a private pension. This fell to just 6.8 million from 2020 to 2021 – perhaps the result of factors such as the Covid-19 pandemic, lockdowns and the income uncertainty that came with this.
This question perhaps had the most split of results. Of the 35% of people who responded ‘yes’ – 14% of those said they chose themselves where their pension is invested. The remaining 21% said that although they know what their pension is invested in, they didn’t choose it themselves.
8% of respondents replied that they didn’t know a pension is invested. The remaining 57% responded ‘no clue’, suggesting they don’t know what their pension is invested in.
In a defined contribution pension, you build a pot for retirement based on how much you and your employer pay in. Your money is usually invested in one or many funds, to help it grow over time. You can choose the level of risk associated with these funds and where your money is invested.
Pension providers are organisations that provide pension arrangements for pension schemes. This is not for state pensions – which are paid by the government. Workplace pensions are set up by employers and run by pension providers with specialist pensions consultants.
In our survey, almost two-thirds (64%) of respondents said they do know who their pension provider is, with the remaining 36% answering that they are unsure.
If you are unsure of who your pension provider is, ask your employer. You may also have the name of your pension provider on your payslip. Look through any work-related documents you may have received, as it may also be on there.
If you are unsure about your previous pension providers, there are many ways to find them, as well as previous pension pots.
Although you don’t need to know the exact amount in your pension pot and check constantly, it may be a good idea to have a vague knowledge of how much is in there. This can help you plan for retirement and work out how much you need to reach your goals. You may realise you need to increase your contributions going forward or find they are just right.
‘Not at all’ was the most common response to this question. However, 35% suggested they have a vague idea, but aren’t completely sure of the amount in their pot. The remaining 24% of respondents said they check often and know exactly how much is in their pension.
If you are unsure how to check your pension amount, contact your provider directly, or get help from your employer.
It’s not uncommon for people to not know where all their pension pots are. Moving house and changing jobs can result in people forgetting to update their details or forget about previous providers.
15% of respondents stated they know where their pension pots are due to consolidating them. Pension consolidation is when you combine all your pension pots into one.
62% of respondents suggested they know where their pension pots are, but they are separate.
Almost a quarter (23%) said they have no idea where their pension pots are. Pension providers such as PensionBee offer useful tools to help you find lost pensions and consolidate your pots, so you can have them in one place.
Having an idea of where your pension pots are – consolidated or not – helps you plan for retirement, and having a general idea of whether you are on track or not is imperative to ensuring a comfortable life when you finish work.