Workers Unclear over Pensions

Many workers are unclear about how much they need to save for their pension in order to support themselves during their retirement, a new study claims.

Research by JPMorgan Asset Management revealed that just one in five workers are aware of the fact that they need to save £250,000 in order to secure an income of £15,000 during their retirement years.

Around a quarter of employees who have current pension savings are hazy about whether they have a defined benefit or a defined contribution pension scheme.

Karen Roberton, head of defined contribution investment services at JP Morgan Asset Management said the lack of understanding as to how pensions work could lead to some people getting less money than they should.

"There is evidently a fundamental lack of awareness among UK workers as to how pension funds work and the measures required to secure a reasonable level of income in retirement."

"As more and more organisations shift to money-purchase type schemes, where the onus is on the individual rather than the employer to monitor their pension fund, provision of a pension in the workplace needs to be supported by proper education."

But the majority of employees were found to be looking after their nest egg with 75 per cent of defined contribution scheme members reviewing their scheme at least every three years.

Earlier this year, the Association of Consulting Actuaries (ACA) estimated that nine out of ten pension schemes in the UK are running a deficit.

Rising regulatory costs and spiraling debts involved in the final salary schemes also mean that many British companies are now switching to money-purchase schemes.