Latest figures from BlackRock have revealed that a significant number of people don't know that the government contributes to pension savings.
According to BlackRock's Investor Pulse survey of 28,000 people worldwide and 4,000 people in the UK, half of Brits are unaware that the government contributes to pension savings outside of the state pension.
Some are potentially missing out on tens of thousands of pounds in retirement as a result, BlackRock said.
British people currently contribute around 2% of their annual salary (£27,000) into their pension, generating an extra £135 per year in contribution from the government through tax relief.
By increasing their payments to save 5%, they stand to gain £13,250 in pensions tax relief over 40 years, amounting to £28 a month.
The survey also showed that raising awareness of the tax relief the government provides to pension savers would entice some to put more away for their retirement.
A quarter (27%) said they would increase their regular contribution if they knew the government topped it up.
A general lack of understanding of basic pension terminology was also made apparent by the survey results.
Despite recent campaigns to increase awareness, half (48%) of the working UK population do not understand what auto-enrolment is, and two in five (39%) do not understand what a defined contribution pension is.
Claire Finn, head of UK DC pensions at BlackRock, said: "While it is surprising that half of Brits are not aware that the government already supplements their pension savings, our survey shows promise – people would contribute more if they knew the government was contributing too."
"With the cost of living going up, it can be hard to save for something that's years away, but every pound invested pre-retirement can have an exponential effect on what a person's life looks like in retirement."
Other survey findings include: the number of people saving for retirement has plateaued in the last two years with four in 10 saying they're not saving; of those not saving – two thirds do not have any pension provision in place and half are not saving because they do not have enough money.
The survey also found that technology is helping the education process – the use of online tools for monitoring progress is helping to change behaviour and improve people's confidence about retirement – one in 10 said using an online tool has been helpful when it comes to monitoring financial plans.
"Our survey shows education is paramount if we want Brits to be saving more, especially since we are all living longer and the responsibility of pension provision continues to shift from the state to the individual – and there are several levers that can be pulled," said Finn.
First published 13.07.2017
Lindsay.sharman@wilmingtonplc.com
