Around 48 per cent of people know how to change their pension contributions with their current employer, but 50 per cent have never considered increasing it, according to the PLSA.
Research shows that while many people understand the importance of pensions, most aren’t taking action, which could put their financial future at risk. Pay rises are a great chance to increase contributions, and it’s encouraging that 42 per cent of savers would consider boosting their pensions if they got a raise, while 27 per cent would contribute more no matter the amount.
The PLSA says the challenge, however, is turning this willingness into action, as other priorities often get in the way.
The research also shows that engagement varies by age, gender, and income. Younger people, aged 18 to 34, are more likely to increase contributions after a pay rise (37 per cent) compared to those aged 55 and over (20 per cent). Higher earners, with incomes over £69,000, are also more likely to act (41 per cent) than lower earners (16 per cent).
Men tend to be more engaged, with 52 per cent considering increasing contributions compared to 40 per cent of women, and 55 per cent understanding the process compared to 39 per cent of women.
Many people understand how to make changes to their workplace pension, with 48 per cent aware of the process. But 28 per cent don’t know how, and 24 per cent are unsure. The bigger issue is those who know what to do but still haven’t taken action.
PLSA director policy & advocacy Zoe Alexander says: “This research underscores the gap between knowledge and action when it comes to pensions. People understand the need to save more, they know how to do it, they even want to do it, but for many, it simply doesn’t happen. The reality is that many individuals are putting off important pension decisions because they feel overwhelmed by today’s financial pressures or are unsure about how to make the changes. More needs to be done to help people take the next step – whether it’s through better education, clearer communication, or making pension adjustments more automatic.
“Pensions can feel like a distant concern, but that attitude is leading to poor outcomes down the line. Those with DC pensions are more likely to need to take positive action themselves to secure the retirement they expect, as the default 8 per cent savings rate may fall short. Small actions, like reviewing investments, slightly increasing contributions, or maximising employer matching, can significantly impact long-term outcomes.
“However, employers and policymakers need to consider clearer guidance and behavioural nudges to help people act sooner rather than later. The process needs to be as simple and straightforward as possible, and we need to help people make their pension savings a more immediate priority, especially if they have the ability to save more.
“Without addressing this disconnect, many people will continue to miss out on the retirement they hope for.”
