Almost half of working people in the UK have never reviewed their pension plans, according to new information released this week.
Almost 17 million working people (48% of workers) with a pension plan in place have never reviewed their pension plans, while only 21% have taken a pension planning review in the last year*.
Of those who have carried out a review of their pension planning, 38% opted for the default option offered to them by their lender, and 19% of these said that the explanation of how their funds would be invested was either poor, or not explained at all. Most alarmingly, 18% of people had made their allocation decisions on their own, acting without pension advice to decide how the funds in their pension plans would be invested.
A further 33% of those who had taken part in a review of their pension plans were unable to say whether or not they had simply chosen the default option offered to them.
Of those who admitted not knowing how their pension was invested, 1 in 5 were approaching retirement, aged 55 or above.
Given that some of the largest investment funds in the UK have underperformed, failing to meet their benchmarks for performance in each of the past 3 years, many pension savers who neglected their pension plans are likely to have lost out on potential pensions income they would have received, if their savings had been reinvested in better funds.
The research also explored who UK pension savers turn to for pension advice.
The largest group (33%) of those who did seek pension advice went to an independent financial adviser, while 10% indicated they turned to their bank manager.
One alarming fact to emerge from the report was that 13% of pension savers listen to unqualified advice on their pension plans, from a friend or family member.
*Research for Baring by ICM Research, covering 1478 non-retired UK adults, July 2010
