Almost a quarter (24.6 per cent) of defined contribution (DC) pension scheme members do not expect to be able to retire, according to Aon.

The firm’s Keeping on track in challenging times - DC pension and financial wellbeing employee research 2021 report found that the proportion of people thinking they will never be able to retire increased from one in seven in 2018 to almost one in four.

Additionally, 32 per cent expected to retire past the age of 70, with 87 per cent of respondents predicting a shortfall in their financial income based on current provision.

“A lot more people are expecting to phase into retirement,” commented Aon principal consultant, Steven Leigh. “It’s becoming a lot more complex for people.

“Six in 10 are looking for some kind of flexible income from their pension, people do really need help with that. I don’t think its enough for employers or schemes to tell them to look online or refer them to Pension Wise.”

Nearly three-quarters (71 per cent) had not set a goal for how much they need to save before they can retire, with that figure higher for women and under-35s at 76 per cent and 79 per cent respectively.

Furthermore, only 7 per cent of respondents had checked on their pension investments during 2020 and 8 per cent said they planned to do so over the next year, with half of those being the same people.

“It may come as a surprise that despite unprecedented market volatility, people are not checking how their pension savings are faring,” said Aon partner and head of DC investment proposition, Jo Sharples.

“It only serves to emphasise how vital it is for a DC pension scheme’s default to take care of investments on behalf of members.
 
“Similarly, when it comes to ESG considerations - and despite the increasing interest in the wider world - only 4 per cent of pension members have checked to see if they are comfortable with how their pension is invested from an environmental and ethical standpoint.

“Interestingly, older individuals are just as likely to have checked as younger ones, so this not a ‘millennials only’ issue.”

Some DC members were found to be unimpressed with employers’ financial wellbeing support, with just 15 per cent saying their employer offered a ‘very good level’ of support, while 30 per cent said their employer offers no support.

Leigh added: “More than ever, DC pensions need focused and clear communications. Most employees base their savings levels on what their employers put in place and they rely on them for help and guidance when taking actions regarding their pensions.

“However, only 15 per cent believe their employer offers a very good level of financial wellbeing support.”

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