19% are clueless about pension contributions

One in five (19%) people don’t know much they and their employer is contributing to their pension. The figure rises to one-third (33%) of people aged over 55, according to new research from Hargreaves Lansdown. Younger people are even more clueless when it comes to pension contributions with just one in 10 (10%) of people aged between 18-34 saying they don’t know. When asked to estimate, people were most likely to say somewhere between £201 and £300 was contributed to their pension every month (15%). However, 3% said it was more than £2,000 per month. One in five (18%) of basic rate taxpayers had no idea, compared to just 7% of those paying tax at the higher rate. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Planning for retirement is one of the most important things people can do and yet one in five have no idea how much they are contributing to their pension. “It actually gets worse the older we get with one-third of people aged over 55 having no clue about what they and their employer are putting in. People risk sleepwalking into retirement with nowhere near enough to meet their needs.” Recent data from HL’s Savings and Resilience Barometer put the cost of a moderate retirement income at £25,000 per year for a single person. She warned people may not be aware of the contribution that either the government or their employer is making to their retirement. She suggested people could boost their pension by making use of their employer's salary sacrifice arrangement on their pension. Ms Morrissey said: “This is where people sacrifice a portion of their salary in exchange for benefits such as pension contributions. As salary is lower, then income tax and National Insurance contributions will be lower, so people are able to maintain pension contributions with higher take home pay. The employer also saves on their National Insurance contribution – which is something employers may increasingly look at as the rate they pay was hiked in the recent Budget and will hit 15% in April.” Research covered 1,100 people and was carried out by Opinium on behalf of HL in October.

19% are clueless about pension contributions

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