66% of pension savers are clueless about their investments
Two thirds of people contributing to a workplace pension scheme do not know which funds they are invested in, while close to a fifth have no idea what percentage of their salary they contribute to their pension.
The results, derived from a Moneywise.co.uk survey of 830 people, indicate that people do not have a firm understanding of pensions - even when they are contributing to a workplace scheme.
The survey also found that, of the 34% of people who know which funds they are invested in, 36% research funds online, 30% use their pension provider's literature and website, 20% stick to the default fund and 18% use a financial adviser.
Respondents contribute an average of 6.19% of their salary to their pension scheme each month, but a third said they contribute 5% or less, while just under 14% contribute 10% or more - and 16.5% had no idea how much they pay in to their scheme.
Just under a third of people (29.98%) did not know how much their employer contributes to their workplace pension scheme. But 16% of respondents said their employer pays 10% or more of their salary into their pension, while 10% said the employer pays 5%.
The survey indicates that lower-paid salaries get a lower percentage contribution from their employer: with only one in five (19%) of people earning between £15,001 and £25,000 receiving employer contributions of 10% of salary or more, compared to 30% of people earning £35,001-£45,000 and 27% of people earning between £55,001 and £75,000.
Need for advice
With so many people not knowing what they are invested in or how much they are investing, it's clear there is a need for independent financial advice when it comes to pension investing. However, 61% of the people we surveyed have never had financial advice, even though 70% feel they are doing all they can to save for their retirement.
Worryingly, in the run-up to the new pensions rules being introduced in April 2015 - including the government's free pension guidance service - 64% of survey respondents said the government isn't helping them understand retirement options; while 53% of people thought their employer also wasn't doing enough to help them understand their options.
Among pension scheme providers, Prudential was rated as the stand-out provider while Scottish Widows and Aegon received the worst rating.
The survey results come in the same week as it was revealed that just 31% of 40 to 70-year-olds have spoken to anyone about the forthcoming pension changes, meaning almost two-thirds of consumers have yet to start asking questions around what these reforms might mean for them.
Andrew Megson, managing director of retirement at Partnership, which conducted the research into the April reforms, said: "The changes that will come into force at the start of April have the potential to significantly change how people approach retirement planning so it is vital to get informed advice. Taking the time to read up on the changes, speak to your provider, review your existing arrangements and contact an adviser will pay off in the long run."