Only one in three knows that their pension is invested in the stock market


A third of savers are familiar with pensions, but the rest are in the dark, new research shows.

The vast majority are unaware that pensions are invested in the stock market and are “confused and at a loss” about one of their greatest financial assets.

Women, the self-employed, single and low-income earners are most likely to admit a lack of knowledge about pensions, including how much they have saved so far, according to Hargreaves’ Lansdown survey.

Knowledge Gap: One in three believes they understand pensions, their options and expected income in retirement

Three quarters of those surveyed were in the private sector and likely had defined contribution pensions where they risk the investment of building a pot to finance retirement.

The remainder worked in the public sector, where they are expected to have a final salary or average occupational pension that provides guaranteed income from retirement age until your death.

Your money is invested too, but employers bear the risks of financing the pension.

>>> Worried about your pension? Read a guide below to get it on the right track

Pension trust: about one in three knows and the rest are in the dark (source: Hargreaves Lansdown)

Pension trust: about one in three knows and the rest are in the dark (source: Hargreaves Lansdown)

The results of the survey show that one in three believes they understand pensions, their options, and expected income in retirement – although some are likely to be overconfident while others underestimate their own knowledge.

Hargreaves says there is a tipping point when people start to be more concerned with pensions when they have saved about £ 5,000.

This could help explain why some groups tend to respond positively to the above statements.

The company also notes that people in the public sector are less informed and less confident about their pensions than people in the private sector.

For example, around 39 percent in the private sector know what income they need in retirement, compared to 29 percent in the public sector, and there are similar knowledge gaps in pension provision.

Nathan Long:

Nathan Long: “Your retirement is one of your greatest assets”

Perhaps this is because people on salary pensions are not responsible for investing their money themselves and can rely on their employer to make the decisions to secure an income for them in old age.

Hargreaves interviewed around 2,000 people who were weighted according to age and geographic location and who have a company or private pension.

Women and pensions: According to Hargreaves, women have bigger pension knowledge gaps than men, perhaps because they have smaller pensions and later hit the tipping point of £ 5,000.

“Because men earn more on average and take fewer career breaks, they reach this level faster,” says the company.

Previous research has shown that women retire on much lower pensions than men because lower wages and unpaid care work affect their ability to provide for old age. Here women learn how they can increase their retirement provision.

Self-employed: They don’t benefit from automatic enrollment and pay into pensions much less often than employees, says Hargreaves.

“They may have some old programs from previous employers, but if they don’t actively contribute they are less dedicated and knowledgeable.

“Also, being self-employed can often be more time-consuming, and managing bills and tax returns can take a back seat to other things like retirement planning.”

Here self-employed learn how to sort their pensions.

Single: Forty-eight percent of married people know what their pension is worth, compared with 21 percent of single people, says Hargreaves.

“This discrepancy may be due to an age bias: older people are more likely to be married and older savers are generally more aware of their pensions.

“Another reason could be that when you get married you often share your finances and this can be a trigger to get a grip on your pension. When people settle down with their other half, it can be a powerful incentive to look at their finances. ‘

Single people have to save harder than couples to achieve a comfortable retirement, recent research shows. This is because you only have a state pension and you only get a tax-free personal allowance.

If you’re single, here’s how much more you need to save.

Low wage earners: According to Hargreaves, taxpayers with higher and additional tax rates are twice as likely to be preoccupied with pensions as property taxpayers.

“When asked if they had a clear idea of ​​what their pensions are worth, 77 percent of taxpayers on higher and additional taxes said yes, compared to 35 percent of property taxpayers.

“This is probably because it is much more lucrative for higher earners to contribute to retirement. The lure of 40 or 45 percent tax breaks is hard to ignore, especially for those who will pay property taxes in retirement.

“So they tend to pay more into their pension pots to pick up the free money from the government. They can also have accountants to help them. ‘

Hargreaves says that low-income earners tend to be younger and more of a passive approach to retirement because they may be contributing through auto-enrollment and not worrying much about what to invest in or when to retire.

Younger people can read a guide here on how to get their retirement under control in their 20s.

“Your retirement is one of your greatest assets – and it will likely be the determining factor in how luxurious your retirement is – yet so many people are confused and amazed,” said Nathan Long, senior analyst at Hargreaves Lansdown.

“But ignorance is not happiness. If you don’t care about retirement, you can pay a terrible price for it in your golden years. Think about retiring from baked beans, not retiring from smoked salmon.

“The good news is that dealing with pensions is easier than you think. Knowing how much you have and when you want to retire can help you increase your monthly contributions or change your investment strategy.

Free investment instructions

“Alternatively, given the amount of money and the challenges, some people think that one of those times in life is worth paying for a counseling.”

How to get your pension on track

Nathan Long of Hargreaves Lansdown provides the following guide.

1. Find your pensions: Check that the providers have your current details and the correct address. Set up online access to your pension pots so that you can more easily monitor them.

Do you think you might have lost one? Take advantage of the government’s free offer Pension Investigation Service.

Check yours too state pensionwho currently offers a guaranteed income of £ 9,300 a year if you have full social security.

2. Contribute more: If you are employed, ask your company if it will make up for the additional contributions you make. If the answer is yes, it’s a breeze – stop depositing means leaving extra salary on the table.

If the answer is no, finding that extra £ 50 a month for your nest egg could pay off some serious retirement dividends.

Are you missing free customized employer contributions?

3. Review your investments: Think about how much risk you are willing to take; This will help you decide which investments to go into your retirement.

There may be a default fund, which is usually a mix of stocks, bonds, and cash. There will be other options too, such as emerging markets, ethical investing, and real estate, so be sure to check these out (including fees).


Should you stick with a “standard” pension fund?

Is your company pension up to date?

4. Get Free Help: There is a lot of information online about how annuities work, but you can also visit The money advisory service and the Pension advice service.

If you are 50 or older, you can get impartial advice free of charge Pension Wise. Even if you only use it as a second opinion, an hour with someone from the Pension Wise can really be worthwhile.

5. Consider consolidating: When you combine your pension pots, you keep track of things. It minimizes the administrative and paperwork and could reduce fees as well.

Remember to check that you are not giving up valuable accomplishments and most people should avoid transferring a final salary schedule.

Should you pool your pension pots?

6. Check every year: Set a date in your journal to check your progress – it is a good habit to check in at least once a year.

In the process, check how the investments are developing and whether they are still right for your circumstances, and consider whether you can increase your contributions.

How do you check investment performance?

7. Don’t forget about other options: A pension is not the only way to save for old age. Property taxpayers and the self-employed may find that with a Lifetime Isa, rather than a pension, they get the largest tax increase.

You must be under 40 to open one. So if that is you, take a closer look at the product to decide if it’s right for you – before you’re too old (and it’s too late).

How do Lifetime Isas work?


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