Low income and lack of understanding put off potential pension savers

Written by Jack Gray

Around 55 per cent of people not saving into a pension blame low income, lack of work or still being in education, an increase of 17 per cent from 38 per cent in 2010-12.

A further third of those surveyed said that they couldn’t afford to contribute in general and 18 per cent had too many other expenses to pay into a scheme, according to a recent study by Equiniti.

There also seems to a lack of knowledge about pensions, with 39 per cent saying they do not have enough understanding about pensions to make decisions.

Equiniti propositions and solutions director Chris Connelly explained the need for a greater public understanding of pensions: “This survey clearly emphasises that pension saving is one of the first outgoings to be cut when money is tight – it is not prioritised. However, it is absolutely crucial that people put away money for later life whenever they possibly can – particularly given the additional payments that employers will make in workplace schemes.”

The need for greater education regarding pensions is supported further by the survey’s discovery that 13 per cent of people feel they do not know enough about pensions to contribute to them financially.

Connelly supports the PLSA’s proposed national retirement income targets to help reduce the risk of damaging inaction from people who lack the confidence to save into a scheme.

“At present, people don’t understand a pension: don’t value the benefit and it is not seen as a priority, which is naturally going to lead to the conclusion that the monthly contributions could be better utilised. The PSLA’s plans would be a great idea to get people to focus on how much they need to put away for retirement, to plan ahead financially and increase support,” he added.

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