'Fundamental changes' needed as research reveals low member understanding

Nearly one fifth (19 per cent) of UK working adults only have up to £5,000 currently saved in their pension, and a further 19 per cent do not know how much is in their pot, despite 71 per cent stating that they are interested in their pension, research from Penfold has revealed.

The survey showed that 71 per cent of savers would be more interested in their retirement savings if the value of their pension pot increased, although 27 per cent said it would not change their level of interest.

In particular, 20 per cent said that their interest would grow when their pot hit key milestones of £25,000, £50,000 or £100,000, whilst a further 14 per cent said they would be more interested at £75,000.

However, Penfold warned that these figures are relatively small in comparison to the £254,420 that people need to have saved into their pots in order to enjoy a comfortable retirement, highlighting this as "clear evidence" that people often underestimate how much they need to save for retirement.

Indeed, the survey found that 16 per cent of savers don’t know how much they’ll need to save in their pension pot for their desired standard of living, rising to 25 per cent among those aged 55-64 and 24 per cent among those aged 45-54.

Penfold co-founder, Chris Eastwood, highlighted the research as demonstration that "fundamental change is needed for the pensions industry to be fit for today’s saver".

"It’s not good enough that a significant proportion of people are still in the dark about how much they need to save to achieve their desired standard of living after retirement," he continued.

“Education is the key to resolving this. Clearly, there is a real interest from savers looking to prepare for their future, but the industry is struggling to properly engage these savers.

“Simply put, the pensions industry needs a rebrand. We need to put the emphasis on communicating the flexible and accessible tools available to help people achieve their pension goals, and leave the outdated practices and complex jargon at the door, which only help deter people from saving."

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