The risk of pension inattention in a DC world

2nd February 2022

An area of our personal finances that many do not want to think about or even understand how it may affect them in retirement.

This item from the Institute of Fiscal Studies might give you a push to get it sorted out.

Many people have defined contribution (DC) pensions that they no longer contribute to but are yet to start drawing from, and the number of people in this position will increase rapidly in future as a result of automatic enrolment into workplace pensions. There has been lots of concern about the likely proliferation of very small pension funds, which are relatively expensive to administer. But there is an important wider issue as well, that ‘deferred' pensions that people no longer contribute to might provide declining value for money over time if people do not engage with them.

In this briefing note, we shed light on this issue using data from Profile Pensions. Profile Pensions makes pensions and investment advice available to the mass market and helps individuals to track down and consolidate their old defined contribution pensions. These data relate to a large anonymised sample of its potential customers aged mainly in their 50s who interacted with its services between April 2018 and December 2020.

Read the full article HERE