Only 35 per cent of people know that their pension is invested in the stock market, with a third of respondents stating their pension was not invested in shares according to new research. A further 32 per cent said they didn’t know what happened to their money.
The Hargreaves Lansdown survey, conducted by Opinium of 1,000 people, found that only a quarter of women (25 per cent) said their pension was invested in the stock market compared to 44 per cent of men.
People’s awareness did not increase as they got older, with 35 per cent of 25-34-year-olds saying their pension was invested in the stock market and 33 per cent of 45-54-year-olds saying the same.
The survey’s findings point to a fundamental misunderstanding of what a pension is, which could be one of the reasons why people do not participate, says Hargreaves Lansdown.
Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Around one-third of people know their pensions are invested in the stock market. It’s an alarming figure, but it’s understandable because we talk about saving, rather than investing, in a pension. It means people are confused into thinking their contributions are stored in some kind of bank account until retirement.
“This fundamental misunderstanding stops people from engaging with their pension planning. By being invested in the stock market, they can benefit from long-term returns that really boost their retirement savings. Knowing the impact these returns can have should encourage people to contribute more.
“They also have the power to decide where their contributions are invested and so can choose to invest in a way that suits their retirement plans, and also in line with their values. This could be to invest in a more environmentally sustainable way for instance or to remove certain companies or industries from their investments. If we can tackle this fundamental misunderstanding of what a pension is then it could prove to be a powerful catalyst for engagement.”