The majority of employees are reliant on their company pension as their main source of retirement income, 42 per cent of respondents with a defined contribution (DC) scheme did not actually know how much their employer actually contributed.
The workplace pensions’ report, published by Scottish Widows also showed that almost half of those under 50 admitted to not doing enough financial preparation for their retirement.
One of the largest surveys of its kind with a sample of more than 5,000 adults, the Scottish WidowsÃ‚Â Workplace Pensions Report 2010 foundÃ‚Â that amongst those who expect to receive an income from a private pension in retirement43 per cent were still in final salary schemes, with 33 per cent relying on these defined benefit (DB) schemes to provide them with more retirement income than any other private pension.
The report also shows the ongoing shift from defined benefit to defined contribution. Amongst those who expect to receive an income from a private pension in retirement nearly half of the respondents over 50 were in final salary schemes, compared with less than one third (29%) of those under the age of 30 were found to have DB pension plans.
Ann Flynn, Head of Marketing Communications, Corporate Pensions, Scottish Widows, said: “Despite the death of the final salary pension due to its lack of affordability or sustainability, it is clear that many people are still incredibly reliant on their employers and still believe that their defined benefit scheme will provide them with enough money to support them throughout their retirement
“Defined contribution schemes do provide challenges, but they also can create great opportunities and employers need to be working with employees to help them to build better investments for the future.”
With over two-fifths of workers saying that the quality of the company pension scheme is an important factor when thinking about changing employer .The report underlines the importance of pension provision as an employee engagement tool, as63 per cent of employees stating that they would be less likely to look for a new job should their employer increase their pensions contributions.
It is important that employers offer advice and guidance to help employees better understand their pension scheme and benefits. Two fifths (40 per cent) felt employers should offer full financial advice if they provide access to a pension, with a further 55 per cent stating that they thought that their employers should at least offer some kind of general information .
Ann Flynn said: “As the face of UK workplace pension provision continues to change, it is important for employers to engage with their employees to help their understanding of the benefits available to them as the individual has to take responsibility and make the correct decisions about their short, medium and long term financial planning needs.