Four in five members of UK pension schemes do not know how to utilise savings pot for retirement, according to research by MFS Investment Management.
The MFS Global Retirement Income Survey found some 80% of UK defined contribution (DC) participants and 78% of retirees had little to no knowledge of converting retirement savings into monthly income for living expenses, while nine in 10 said they had never accessed a pension planning guidance service.
The $491.6bn (£357.4bn) global asset manager also found over one third 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.
The survey was conducted by Research Now on behalf of MFS between 30 May to 13 June 2017, and included insights from 700 DC participants and 300 retirees in the UK, US, Canada and Australia.
To qualify, participants had to be working, enrolled in their employer's retirement fund and have at least $1,000 in assets.
Commenting on the results, 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. The creation of a single financial guidance body will create more clarity for consumers in the coming years".
The guidance body will merge Pension Wise, The Pensions Advisory Service and The Money Advice Service in autumn 2018.
Speaking recently to Professional Pensions, Pensions and Lifetime Saving Association (PLSA) deputy director Nigel Peaple suggested the pension industry also has a role to play in improving savers' confidence. He said: "There is a disconnect between people and their pension savings because people do not understand what their retirement needs will be.
The PLSA believes that a new set of national retirement income targets that illustrate the sort of lifestyle people can expect from different levels of income (‘minimum', ‘modest' and ‘comfortable') could help to reconnect people with their savings. This method is currently being used in Australia and is being rolled out in Hong Kong".
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