As Pension Awareness Day passes, Jonathan Stapleton says why he believes it is so important to raise awareness about pensions
It is easy to be cynical about national awareness days. The sheer number of them doesn’t help – with last week hosting, among many others, the Great British Beach Clean Day, International Day of Democracy and International Dot Day as well as being the Remember a Charity in Your Will Week, Sexual Health Week and several other ‘weeks’ as well.
The one we should pay attention to though is Pension Awareness Day, which was held last Friday.
The Pension Awareness Campaign was launched in 2014 by Jonathan Bland, Ralph Turner and the pension heroes over at Pension Geeks!
The aim was simple – to alert the nation that it is not saving enough for retirement and to unite the financial services industry, businesses, employers and the government to share innovative ideas and to work together in driving engagement with retirement saving.
Sadly, the campaign has a huge amount to do.
First, despite auto-enrolment (AE), there are still large numbers of people who aren’t saving for a pension – a group that also includes the self-employed. Some of these will have other arrangements of course; sadly, many won’t.
Allied to this, people are just not saving enough. Total minimum AE contribution rates are currently just 2% – going up to 5% from April next year and 8% in April 2019.
Yes, this is something people need to understand – that an 8% contribution is unlikely to meet the 50% of earnings in retirement threshold set by the Pensions Commission, even when combined with the state pension.
Worse of all in my view is that even if people have a pension with excellent contribution rates, they are unlikely to understand it or monitor it.
Few people under the age of 50 have any idea of how much pension they have, what they are invested in or how much they are being charged, leaving many in danger of getting poor outcomes.
More needs to be done to engage people with their pensions. Initiatives such as Pension Awareness Day are a good step towards this goal.
Jonathan Stapleton is editor of Professional Pensions
Email him at: [email protected]
Follow Jonathan on Twitter at: https://twitter.com/jonstapleton