One in four people don’t know what contributions are being paid into their workplace pension, new research has found.
This number includes those who are unsure about their own contributions, as well as those being made by their employers.
Surprisingly, the figure was even higher among older workers, with 38% saying they did not know what was going into these pension plans. In addition, women were also more likely to say they were unsure about pension contributions (29%) compared to men (20%).
However the research, conducted by Hargreaves Lansdown, found that this figure fell dramatically among higher rate taxpayers. Only 7% of this group were unaware what was being paid into their pension, compared with 24% of basic-rate taxpayers.
There was considerable variation on what people thought was being paid into workplace pensions. The research found that when asked, 16% of people estimated more than £500 per month was being contributed to their pension, while a further 16% guessed it would be less than £100.
Hargreaves Lansdown head of retirement analysis Helen Morrissey said: “Many of us are clueless about contributions, with almost one quarter having no idea how much we and our employers are contributing into our pensions.”
She added: “To an extent this is understandable in that auto-enrolment sees us put into a pension automatically, but it risks leaving many with a nasty shock when they come to realise they are nowhere near funding the retirement they hoped for.
“Pensions are an important employee benefit, and the employer contribution can make a huge difference to how much you end up with and yet people are unaware of it.”
Morrissey believes this lack of awareness means some employees are missing out on higher matched contributions, offered by some employers.
She concluded: “Higher-rate taxpayers were far less likely to be unaware of how much was going into their pension than basic-rate taxpayers. This could be down to the fact that they claim their extra pension tax relief through self-assessment every year, but it could also be because contributions are likely to be far chunkier. For instance, 19 per cent of higher-rate taxpayers have between £401 and £500 per month going into their pension. This compares to just 6% of basic-rate taxpayers.”
