Pay your pension some attention

Gemma Collins (right) and Iona Bain | Supplied

To try to tackle these issues, there is an annual Pensions Awareness Week, with this year’s having been held from 9 to 15 September. Nevertheless, research shows that more has to be done all year round to address ongoing problems.

The most recent Retirement Report from Scottish Widows found that a quarter of UK adults admit they aren’t sure how pensions work; 27 per cent aren’t clear on when they’ll be eligible to receive their State Pension, and how much they will receive;32 per cent of future retirees don’t receive any financial advice, and only 29 per cent of respondents feel optimistic about retirement.

Robert Cochran, pensions expert at Scottish Widows, supports initiatives to encourage long-term saving, such as the annual Pension Attention campaign, and Pensions Awareness Week.

This year’s Pension Attention campaign – led by the Association of British Insurers, and the Pensions and Lifetime Savings Association, and funded by pensions companies – saw reality TV star Gemma Collins and money expert Iona Bain highlight the small steps that can be taken to build up a pension pot.

The key message was: “Face forward and pay your pension some attention.” Collins featured in a parody advert for face cream, about tackling the effects of ageing and encouraging people to focus more on their savings rather than their wrinkles.

Cochran recalls that back when the whole pension awareness messaging kicked off several years ago, it was really about trying to simplify language and make it easier for people to get involved with their pension and understand it.

He adds: “We decided at the time to drive a double-decker bus around the country raising pension awareness, and Scottish Widows agreed to sponsor it. We asked people to come on board and find out about pensions. One man came on who was in his sixties and wanted some help. He had joined a company and decided to opt out of the pension scheme because he didn’t plan to stay long in the job. I explained what he was leaving behind, and he came back later to tell me he was speaking to his HR department to go back into the pension scheme. So that was an example of a result.”

Cochran explains that they got Gemma Collins involved as the face of the 2024 campaign in a bid to get more cut-through with the public: “People don’t realise they’re watching something on pensions, because it’s about face cream and looking into the future. Then Gemma flips from that to your pension pot. And she’s paired up with Iona Bain, who is well known in this financial space.”

Cochran says that the key messages they are trying to get across are: find any pension pots that you might have lost track of; check what you’ll need when you retire, and picture your future self and your financial requirements.

He adds: “The Pension Policy Institute says there is £26.6 billion of lost pension money in the UK. That’s 2.8 million people who have an average pot of £9,500 sitting in a pension right now. They might not all really be lost, but what that means is the connection between the provider and the member is lost. What’s most likely happened is they’ve moved house and not updated the provider, or got married and just changed some of the details.”

To highlight the issue, the last Sunday of October – the day the clocks go back – is National Pension Tracing Day, which is designed to encourage people to check on their pension pots.

Keeping with the theme of looking to the future, last year Scottish Widows launched its “pension mirror” consumer engagement tool, which has been used more than 600,000 times. It asks people to use the camera on their device to look into the pension mirror which firstly guesses their age. “A number then appears on the screen that is the average pension savings somebody of your age would have,” explains Cochran. “It’s a fun and effective way to get people to engage with pensions.”

The financial advice sector is encouraging people of all ages to focus on their pensions. Ross Leckridge, Chartered Financial Planner at Aberdein Considine Wealth, believes it’s crucial for younger workers to nurture their pensions.

He says: “Rent, subscriptions, travel costs, filling the fridge, socialising – for younger workers in their 20s and 30s there are so many competing priorities fighting for a slice of your monthly wages, it can feel as though there’s no wiggle room to set any money aside for the future.

“Compound that with high inflation and the difficulties of purchasing your first home, it’s perhaps no wonder some younger people are focusing on the short-term rather than planning for their retirement.

“The trouble is, with defined benefit pensions now the preserve of only public sector workers, it is now more crucial for people to take control of their pensions –starting as early as possible will pay dividends when the time finally comes for you to hang up your office pass.”