Unfortunately, for many people, pensions don’t have the best reputation.
A recent survey in the FT Adviser found that, out of 2,000 people questioned, only 3.8% said they trust the pensions industry “a lot.” That’s a striking number. It helps explain why many people treat their pension like a dusty folder they’d rather not open.
The trouble is that ignoring a pension doesn’t make it disappear. It just means you’re less likely to know whether it’s actually working for you.
Why Pensions Feel Hard to Trust
Part of the problem is history.
Over the years, there have been rule changes, tax tweaks and high-profile mis-selling scandals. Even if many of those issues date back decades, they still shape how people feel about pensions today.
Then there’s the complexity. Pension statements can be filled with unfamiliar terms, projections and fund names that don’t mean much at first glance. Add in regular headlines about scams, and it’s easy to see why people become sceptical.
So the reaction is often simple: switch off and deal with it later.
What People Forget About Pensions
The irony is that pensions often come with features that are difficult to replicate elsewhere.
One of the biggest is employer contributions. Under the UK’s auto-enrolment rules, employers must contribute to a workplace pension for eligible employees who are enrolled in the scheme. In other words, part of your retirement savings is effectively being funded by your employer.
Then there’s tax relief.
For a basic-rate taxpayer, every £80 of pension contributions will be topped up to £100 once tax relief is applied. Higher-rate taxpayers can often claim additional relief through their tax return.
Over time, those contributions are invested. That means the money has years, sometimes decades, to grow.
The Hidden Problem
Another issue is how many pensions people accumulate.
If you’ve changed jobs several times, you may already have multiple pension pots with different providers. Each one quietly ticking along in the background.
Research from the Pensions Policy Institute suggests millions of pension pots in the UK are now considered “lost pots”. In many cases, the saver simply lost track of them.
And lo and behold, retirement planning becomes harder when you don’t know where all the pieces are.
The Practical Message
You don’t need to become a pension expert.
But it helps to know what you’ve got.
That might mean tracking down old workplace pensions, checking what you and your employer are contributing, and reviewing how the money is invested.
The key is awareness. Distrust may explain why pensions are often ignored, but leaving them unattended rarely improves the outcome.
If you’d like help reviewing your pensions or bringing everything under one umbrella, give us a call on 020 8366 4400 or email enquiries@cedarhfs.co.uk to arrange a conversation.