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24 Jan 2018

DC pension savers have little knowledge about retirement planning

Most people who belong to a defined contribution (DC) pension scheme in the UK are in the dark when it comes to planning for their retirement, new research shows.

A global survey by MFS Investment Management found that UK participants have the worst level of knowledge about financial strategies for retirement.

Some 80% of UK DC participants and 78% of retirees had little to no idea about converting their retirement savings into monthly income, while 90% said they had never accessed a pension planning guidance service.

The research also showed that over one third of UK participants did not know how much their employer was contributing to their retirement plan, and over half had no idea what their retirement savings withdrawal will be each year, Professional Pensions reported.

Commenting on the findings, MFS UK managing director Madeline Forrester said: “Participant knowledge was low in every country we surveyed, but in other regions knowledge increased as participants reached retirement, and this is not happening in the UK. With freedom and choice placing so much emphasis on individual decision making, we need to do a better job educating investors.

“Knowledge of the UK pensions systems is limited. There is a serious lack of awareness around services such as the free pension planning guidance.”

Looking ahead, Forrester said that the merger of Pension Wise, The Pensions Advisory Service and The Money Advice Service this autumn should “create more clarity for consumers”.

The new single financial guidance body will offer guidance on pensions, debt and other money issues.

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