Retirement savings: many workers not using pension schemes

Almost one in five full-time employees is not contributing to a pension fund, although they say they are saving for retirement, research has found.

A study by employee benefits provider B&CE Benefit Schemes found that 18% of UK workers are saving for life after work, but do not contribute to a pension fund.

Almost half are unaware that the government provides tax incentives for pension saving, and John Jory, deputy chief executive of B&CE, has called on employers to provide more education.

“There is a lack of awareness about the benefits of pension saving which presents a worrying picture of retirement saving today,” he said.

“We need to do more to educate workers on the benefits of pension saving and look at more innovative ways of enabling them to retain control of their investment. Pension education should be accessible to workers at all levels now, rather than waiting until 2012 to address these issues.”

Instead of using pensions to save for retirement, most employees use property and ISAs, where they perceive tax advantages, control, flexibility and a good return, Jory said, adding that the figure of 28% who are just using general savings accounts was worrying.

One in eight polled regarded property as a way of funding retirement because they said they don’t trust pensions.

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