Fewer than one in five defined contribution workplace pension members understand key retirement topics, including pension consolidation, retirement options and how their savings are invested.
This is according to a survey of 3,000 UK DC members from CoreData, which found that just 19 per cent said they have a good understanding of their likely retirement income, while 21 per cent understand the contribution levels needed to achieve their desired retirement lifestyle.
Only 16 per cent said they understand consolidating DC pension pots, while 17 per cent understand retirement options and how their pension is invested.
These knowledge gaps are wider among lower earners, where just 10 per cent of members earning less than £25,000 say they understand how their pension is invested.
The findings also show that 68 per cent have never changed how their pension is invested and 66 per cent never consolidated their pension pots.
But 55 per cent of members used their provider’s online portal in the last 12 months and 39 per cent access their provider’s mobile app.
More than half of respondents, 57 per cent, said their provider’s website or app is a key source of pension information, although fewer than a third said they had accessed educational content on core retirement topics.
CoreData head of research, Europe Joe Dalton says: “Encouragingly, our findings show that a growing number of members across all age groups are now visiting their pension providers’ digital channels. But on the flipside, we see that this interaction is not translating into engagement that boosts member understanding and ultimately spurs meaningful action.
“Some cohorts are avoiding engagement with their pension because they’re afraid of what they might find, others are eager to take action but struggle to understand what income they will need and what their current trajectory is – and then there are more complacent members who think they’ll be fine because they are making the minimum auto-enrolment contributions.
“Given these different factors, a one-size-fits-all approach to member engagement is unlikely to drive the necessary behavioural change to meaningfully improve retirement outcomes. A more tailored approach to engagement is needed, and that requires building a more complete picture of individual members’ financial situation and behavioural profile and harnessing technology to deliver tailored communication at scale.”