More than a third of employees say their workplace pension has either never been clearly explained to them or they cannot remember receiving an explanation, despite most employers believing staff understand how their scheme works, according to research from Penfold.
The provider’s UK Pension Gap report found that 37 per cent of employees said their workplace pension was not clearly explained or they had no memory of any explanation.
Around 89 per cent said they were confident explaining their pension scheme while 85 per cent believed employees understood how it worked. Meanwhile, 22 per cent of employees said they did not understand their pension and 10 per cent could not remember receiving an explanation from their employer.
The report also found that 26 per cent feel anxious or confused when thinking about their pension. Although 40 per cent said they check their pension at least once a month, 9 per cent have never reviewed their savings.
Trust in pension communications also appears limited, with fewer than a third (29 per cent) of employees saying they trust their pension provider most to explain how their pension works. Despite this, 65 per cent of employers said their workplace pension helps them attract and retain staff.
Penfold CEO and co-founder Chris Eastwood says: “Auto-enrolment has been a huge success in helping millions more people start saving for retirement. But being enrolled in a pension isn’t the same as understanding how to make the most of it.
“Our research shows a clear gap between what employers think they’re communicating and what employees are actually taking away. Many workers still aren’t sure how their pension works, what they’re paying in, or what it could mean for their future.
“Clear communication shouldn’t stop after someone joins a company. People need regular, simple ways to understand how their pension is performing and what it means for their future.
“The answer isn’t simply sending people more information. If millions of workers still find pensions difficult to understand, the industry needs to make them easier to engage with in the first place.
“Employers play an important role, but providers also have a responsibility to make pensions easier to understand through the experience itself. That means helping people clearly see what they’re saving, what their employer is contributing and what that could mean at retirement. When people can see that clearly, they’re far more likely to engage with their pension and take positive action.”
