Over a quarter (26%) of Moneywise.co.uk users don’t know how their pension is invested, the results of our latest poll reveal.
This worrying figure is broken down into 11% with a workplace defined contribution pension, 8% with a workplace defined benefit (final salary) pension – who said they don’t know the scheme’s strategy or governance – and 7% with a personal pension.
An additional 5% of people who voted said they don’t even know what type of pension they have to begin with.
However, at the other end of the scale, six in 10 (60%) of those who voted said they do have a pension and they do know how it is invested.
This figure is made up of 26% with a personal pension, 20% with a workplace defined contribution pension, and 14% with a defined benefit pension.
Checking the funds or strategy for your pension is important, as simply leaving it in the default fund could see you missing out on higher returns. The problem with ‘one-size fits all’ default funds is they will typically invest just 65% of their assets in shares. Yet the funds selected by those confident to make their own investment choices are likely to invest more heavily in the stock market. This increases risk, but if you have a time horizon of at least five years to save it’s likely to be more fruitful.
According to research carried out by investment platform, Hargreaves Lansdown, savers with a workplace pension have boosted their pot by 4.89% over the past five years, simply by ditching the default fund in favour of selecting their own.
See the pie chart below for the full poll results.