A SURVEY by recruitment consultancy Joslin Rowe has revealed that just under 60 per cent of professionals surveyed confessed to not understanding their current pension scheme.
300 people working in the UK financial services sector were questioned in the survey about their pension plan and in particular details surrounding the type of scheme and contribution made. 53 per cent of those surveyed had a company pension scheme, of which an incredibly high 56 per cent admitted to not understanding it. 12 per cent had private pensions of which a surprising 50 per cent admitted to a lack of understanding.
The survey by Joslin Rowe, which has offices in London, Edinburgh and Glasgow, was carried out in response to the news that a number of large firms, in a bid to cut costs, have abolished their traditional final salary pension scheme. This means that they no longer required to contribute to employees’ pensions; instead employees are forced to build up their own pension fund to provide them with an income when they retire.
Of the 300 people surveyed 61per cent were offered a company pension, and of those offered the benefit a massive 87 per cent chose to join their employer’s scheme. Out of the 13 per cent who did not join the company pension, a quarter said they needed to get one and 75 per cent were ineligible, with the majority of those (90 per cent) being under the age of 25. Of the one in four workers who did not have a company pension a surprising 69 per cent did not have any private pension at all.
Amazingly nearly 60 per cent of professionals who had taken out a company pension had no idea what contributions their employer was paying into the scheme. The survey also showed that although 40 per cent of those who with a company pension said they were part of a company defined benefits scheme (final salary) and 26 per cent were part of a company defined contributions pension (investment related), worryingly more than one in three people (34 per cent) said they didn’t know which scheme their employer offered.
The survey also shows there is confusion surrounding company pensions. Eleven per cent of people with a company pension claim to know what their employer is contributing, yet not fully understand their pension plan, whilst 13 per cent admitted they did not know what contributions their employer’s made but said they fully understood their pension.
What's your experience? Do most employees have a genuine understanding of how pensions work, or not? Post your comments below.
