Pension confusion is stifling the long term savings culture

1 Apr, 2016

Saving for retirement to ensure a decent standard of living in later life should be one of the most important financial decisions we adopt from a relatively early age, but people are being put off because pensions have become too confusing.

While rock bottom interest rates hasn’t helped our attitude towards savings, the constant meddling with pension rules and regulations means people simply don’t understand what they should be saving or what they are entitled to when they finally give up work.

Recent research from The Open University Business School (OUBS) highlights the level of confusion particularly around the new state pension.

According to OUBS findings 60% of employees aren’t aware that people who have been contracted out may not get the full amount of the new state pension and even more worrying is that almost a quarter of working people don’t know whether they’ve ever been contracted out.

The persistent meddling with rules and regulations has created too much uncertainty amongst would be savers and is a major reason why people are not putting sufficient monies aside for their retirement.

How can people be expected to plan for the future if the goal posts are constantly being moved? – until it’s clearer who gets what and how much people should be saving then the situation will not improve.