The only thing that is clear about the financial and pension wellbeing world is that it is not clear at all.
Whether it’s pension contributions, salary sacrifice pension or simply information on pension providers people are looking for, a google search can return millions, if not billions of results. Sourcing unbiased pension wellbeing information is a common struggle and the evidence proves this: 7 in 10 employees are reportedly not actively engaged with their workplace pension.
Two main problems: Too much information and product bias
With so much content out there, people are likely to either opt for the simple, uncomplicated content or be so overwhelmed they would rather not bother to learn about pensions at all. There comes a choice paralysis, where rather than make any decision or take informed risks, people choose to do nothing. Many are daunted by the number of acronyms, caveats and regulations associated with making decisions about their pension. The minefield of information out there can be exhausting and extremely difficult to navigate.
The other challenge is finding reliable information that is product agnostic. More often than not, providers of information are biased in their guidance, with the underlying objective to sell products or influence individuals decisions. This means that people may not always be finding the most accurate, helpful or transparent knowledge available.
In the real world
Taking the example of deciding how much to contribute to one’s pension – this is an important decision and can have an impact on the quality of life that people can achieve during retirement. A pension is the savings vehicle that provides people with an income during their retirement when they are not employed and is, therefore, a lifeline for people during their later years. An individual can currently access their pension when they reach the age of 55, meaning that the money added to their pot could be required to last them a number of years. Research shows that more than half of people aged between 25 and 54 say that they feel nervous and unsure about their retirement finances.
When looking for pension guidance, naturally one may begin their research by visiting the websites of well-known pension providers and using reputable sources such as the government website to learn more. Due to information being largely general, some advice may not apply to a particular individual. Everybody’s pension situation and what is right for them will differ drastically. The lack of pension education available to people makes controlling and managing their pension far more difficult and confusing.
The means to confident decision making
As mentioned in our previous posts, education is key to navigating pension management with confidence. It also equips people with the knowledge and tools to help prevent confusion due to incorrect information. In extreme circumstances, misinformation could lead to an individual making a very poor decision about where to invest their pension and how much to contribute. This could ultimately result in a less comfortable retirement. Research has shown that one of the main reasons that people make poor decisions about their pension is a lack of current and reliable information being available.
Speaking about concerns with finances and pensions is still taboo – particularly in the workplace – and being misled or falling victim to scams can be a further knock to confidence and perpetuate the problem.
Particularly through the pandemic, employees have been turning to their employers as a trustworthy source of information for all aspects of their lives. At a time when it’s difficult to predict what’s around the corner, having access to reliable pension information will help relieve the stress and anxiety associated with pension management.
Fundamentally, pension education – more specifically unbiased pension education – empowers people to make the right decisions when managing their pension.