Research conducted by Barnett Waddingham, the provider of consultancy and actuarial services, has found that UK employees suffer from “major gaps” in pensions knowledge.
The survey, from over 500 respondents, found that more than 70% of millennials and generation X employees feel that they don’t understand pension investments. In addition, 94% of baby boomers who earn between £20,000 and £39,999 were not aware of the retirement choices available to them.

The research also found that nearly half (49%) of all employees would prefer face to face financial advice, indicating, says BW, “a major need for workplace financial education to improve employees’ knowledge about their pension planning options, the financial opportunities open to them and their overall wellbeing.”

The research reveals key generational differences in attitudes towards financial priorities and money management:

Millennials

Nearly half (44%) of those aged between 18 -29 feel that saving for a house is their biggest financial priority. A lack of focus on saving for a pension could be due to the fact that nearly three quarters (71%) of those aged 18-29 feel they do not understand their pension investment. A lack of understanding peaks among those earning less than £20k a year, with 96% feeling this way. However, despite this limited financial awareness, 89% of millennials would contribute more to a pension if they could afford to.

Generation X

Even though saving for retirement should be a key focus for those aged 30-49, it is currently the smallest concern for this age group. In fact, paying off the mortgage is a bigger concern for this age group, with 42% admitting that this keeps them up at night. None of those surveyed who earn less than £20k feel that they understand pensions, in comparison to nearly half (44%) of those earning more than £75k, who feel they have an adequate understanding.

Baby Boomers

As expected, those aged 50 or over are the most aware of their financial health and retirement options. Over half (52%) feel that retirement is of most financial importance to them and 43% say the financial pressure of retirement keeps them awake at night. Over half of employees (57%) see themselves only gradually phasing into retirement and would like to go part-time with the same employer.

Julia Turney, head of platform and engagement at Barnett Waddingham, said: “Our research shows that early financial education is critical– the earlier someone starts to save, the easier it should be.

“However, age and affluence play a significant role when it comes to saving for the future. Those who earn more might be able to afford to seek financial advice, but what about those who cannot afford it?

“Will this group be left to find out things for themselves and make mistakes along the way? Or, will employers step in to provide more financial education, recognising the significance of personal financial health in overall employee wellbeing? We believe this is the way it should be. There are encouraging signs that employers are investing into the overall wellbeing of their employees, spending time to ensure they have financial wellness and rectifying any financial issues that may arise.”