48% of working Brits have never reviewed pension plans

According to new research conducted by Baring Asset Management (Barings), almost 17 million people in work in Britain (48%) have never reviewed their pension plans.

Only one in five (21%) working adults in Britain has reviewed their pension plans in the last year, with a further 12% unsure of the last time they specifically reviewed their pension plans.

Of those who have reviewed their pension plans, 38% (almost 7 million) went with the default option available to them. Of these, 19% (1.3 million) said the explanation they received for how the funds would be invested was poor or it was not explained to them at all. The research revealed a slight increase in the number of people making the investment decisions themselves. According to Barings’ consumer pensions research conducted in 2009, 15% (or 2.9 million people) had made the allocation decisions alone and in 2010 this number had increased to 18% (3.3 million).

The research revealed that an alarming 33% (6.1 million) of those who had reviewed their pension could not say whether or not they had chosen the default option for their pension contributions. Almost one in five (19%) of those who didn’t know where they had invested their pension were fast approaching retirement, aged 55 or above.

This apparent apathy towards pensions is mirrored in people’s general attitude towards retirement planning. The study revealed that an increasing number of Brits in work have never reviewed their financial plans for retirement. Barings’ study from 2009 found that 43% of adults (15.4 million) had not considered how they would fund their retirement. This year’s study has seen that number increase by some 800,000 with 46% (16.2 million) of the working population confessing to having never reviewed their financial plans for retirement.

Despite continued media coverage on the difficulty of funding a comfortable retirement, only 11% of working people who have reviewed their pension plans took recommendations given to them by their financial adviser on where to invest their pension pot. The research also explored where Brits go for advice on asset allocation decisions. The majority (33%) would go to an independent adviser, but a further 13% (4.6 million) of working Brits would go to a friend or family member for advice on asset allocation, while 10% (3.54 million) would ask their bank manager.

Barings’ Chief Investment Officer, Marino Valensise, commented, “The fact that individuals seem to continue to take little or no interest in financially planning for their retirement is of real concern. The industry needs to improve the way in which pension advice is given so that people better understand the levels of risk and return that they can expect from their portfolios. With the markets behaving so turbulently over the past few years, pension holders should be sure to review their schemes on an annual basis. I would urge them to seek independent financial advice when they do so to ensure their portfolios are correctly positioned for their needs and not just put into the default option funds for the sake of ease.”