Millions suffer 'pension inertia' says the Pru

Published on Friday 21 August 2009 19:51

MILLIONS of workers pay into their employer's pension scheme without knowing how their retirement savings are progressing, according to a report published today.

The research – by insurer Prudential – found that nearly one third of workers paying into occupational pensions admit to having never reviewed how their investments are performing. Almost half of those paying into their employer's defined contribution (DC) scheme – where the final pension pot is based on contributions and investment performance – opted for the default fund offered by their employer instead of checking the other investment options available.

Just one in five DC scheme members took an active role in selecting the funds that would help dictate the success of their retirement savings, said the Prudential report, while just 13 per cent sought financial advice to select and regularly review their fund choices. But 29 per cent have never checked up on the progress of their chosen investments.

Andy Brown, director of investment funds at Prudential, expressed his concern at the level of "pensions inertia" uncovered in the study.

"You routinely check your savings, utilities, insurance cover, mobile phone contract and broadband arrangements to make sure you're getting the best from them, and checking the performance of your pension should be no different," he said.

"You're an employee paying into a pension scheme, you have taken the first important step towards building up a fund to provide you with an income in retirement, but you stand a greater chance of maximising its value if you review your fund arrangements regularly."