Auto-enrolment – savers with workplace pensions twice as likely to be disengaged

• 23% and 26% of those with Defined Contribution (DC) or Defined Benefit (DB) workplace pensions respectively never check their pension
• This compares to 11% and 10% of those with self-invested personal pensions (SIPP) or self-employed pensions who never check their pension
• Utilising Open Finance as part of a pensions dashboard build; pension providers could help drive engagement and understanding for all pension savers

 
Savers with workplace pension schemes are significantly less likely to understand or engage with their pensions compared to their counterparts with personal pensions, according to new research from Moneyhub, the award-winning data and payments platform built on Open Banking and Open Finance principles.

Moneyhub’s research revealed how approximately a quarter of savers with a workplace pension, either DB (26%) or DC (23%), never check their pension pots. In stark contrast, just 11% of respondents with self-invested pensions (SIPP) and 10% with self-employed pensions said they had never checked their pension.

Such disparity is especially concerning, considering  the fact that savers with workplace pensions typically have less understanding of the funds they have set aside for later life. Several of Moneyhub’s in-depth interviews found that participants with defined contribution pensions were unaware that they were an investment. In addition, just 34% of DB and 39% of DC pension scheme holders said they would know the ballpark amount of money in their pension pot compared to 51% of personal pension scheme holders.

Moreover, savers with workplace pensions have less understanding of how to engage with their pensions and navigate their accounts. 15% and 13% of DC and DB pension holders, respectively, said they would not know how to check their predicted pension income, with this falling to just 5% for those with personal pensions.

The majority of Britons are likely to have a workplace pension, particularly since the introduction of auto-enrolment in 2012. Whilst auto-enrolment was an important step, Moneyhub’s research highlights the need for greater support for the majority of workers to prepare themselves financially for later life and engage with their savings.

Allowing savers to view all their pensions (including State) in one centralised and easily accessible platform, pensions dashboards will bridge this workplace and personal pension scheme engagement gap. Whether commercial or the government’s pensions dashboard, such platforms will help increase workplace pension scheme holders’ engagement and understanding of their retirement savings. In addition, through some commercial dashboards, consumers will be able to view pensions alongside their other financial products, such as savings, investments and mortgages, ensuring users are able to have a holistic view and make improved financial decisions.

Driven by the desire to enhance people’s financial wellbeing, control and awareness, Moneyhub is already leading the way to help workplace pension savers become more engaged. Moneyhub’s Personal Finance Technology platform, used by the likes of Aon, Mercer, and Standard Life, is already able to show savers how much income they can expect during retirement based on current saving and spending levels. While the industry waits on the delivery of the government’s dashboard and central architecture, the technology to facilitate a dashboard experience is already available. By utilising Moneyhub’s Open Finance fully customisable white label pensions dashboard, pension providers can also assist employees in improving their spending and saving habits to help ensure they have enough stored away to live the retirement lifestyle they have envisaged.
 
Mark Horwood- James, MD of Moneyhub Personal Finance Technology comments: “With the majority of employees relying on workplace pension schemes for funding their retirement, it is essential that action is taken to improve people’s engagement and interaction with their pension savings. The government and pension providers are uniquely placed to embrace Open Finance technologies, like Moneyhub, to break down barriers to engagement and help support savers up and down the country.

“Knowing you have a pension, because you haven’t actively opted-out, is simply not enough to ensure you are financially prepared for later life. Having easy access to all your pensions in one place, and being able to view them alongside your other financial products such as savings or mortgages, will enable you to make better decisions when it comes to preparing and planning for the life you would like in retirement.”