Your pension is important, some key tips to think about

More than one in four adults (26%) either lack full details of their workplace pension savings or suspect they’ve lost track of at least one pension pot altogether, according to new nationwide research from Royal London Ireland, one of Ireland’s leading life insurance and pension companies. The issue is particularly pronounced among those aged 35 to 54 – 34% of whom are in this position.

Tips for your pension

• One in ten of the respondents with a workplace pension said they have completely lost track of at least one pension, rising to 15% among 35- 44-year-olds.
• While 22% of men said they either do not have or do not believe they have any workplace pensions, 34% of women said the same.
• Stark socio-economic differences also emerged, with half of all C2DE respondents (50%) saying they either do not have or do not believe they have any workplace pensions, compared with just 13% of ABC1 respondents.

Royal London Ireland’s research also explored what people would do if they discovered a forgotten pension worth between €5,000 and €10,000. More than one-third (34%) said they would consolidate it into their main pension, while 33% said they would cash it out if possible, and a further 21% said they would simply leave it where it is.

According to Mark Reilly, Pensions Proposition Lead at Royal London Ireland,

“There is still a clear lack of awareness and confidence among many people when it comes to their retirement savings. There is still a sizeable group who either do not have full visibility of their pension arrangements or may have lost track of older pension pots entirely.

“The gaps across gender, age and socioeconomic groups are also striking. Women, middle-aged workers and lower-income households appear less confident about their pension position.

“People are changing jobs more frequently than in the past, and as a result, pension savings can easily become spread across multiple schemes over time. Even relatively small pension pots can grow substantially over the long term, which is why it is important that people regularly review their pensions, keep their details up to date and understand the options available to them.”

What to do with a forgotten pension?

When asked what they would do if they discovered a forgotten pension worth between €5,000 and €10,000:

• More than one in ten respondents (11%) said they would not know what to do with the money. Younger adults were significantly more uncertain, with more than one in five 18- to 24-year-olds (22%) saying they wouldn’t know what action to take, compared to just 5% of those over 55.
• Cash-out intentions were highest among younger workers and those closest to retirement: four in ten people aged 25 to 34 (40%) said they would cash out a forgotten pension, followed by 37% of those over 55.
• Income also shaped responses. Higher earners were far more likely to consolidate a forgotten pension into their main retirement savings plan, with 41% of ABC1 respondents choosing this option compared to just 26% of C2DE respondents. Lower income groups were also more likely to say they wouldn’t know what to do with the money (17% v 6% of ABC1 respondents) and more likely to cash it out if possible (39% v 29%).

Mr Reilly commented on the findings,

“These findings suggest that many younger adults still view pensions as something distant or difficult to engage with rather than as an important long-term savings tool. This is particularly concerning given the value of starting pension contributions early in order to maximise the benefits of compound growth and tax relief over time.

“With age and experience, people often become more familiar and confident when it comes to managing their pensions. Just 5% of over-55s said they would not know what to do with a forgotten pension, compared to more than one in five 18-24-year-olds.”

Mr Reilly concluded,

“While auto-enrolment and higher levels of pension participation are positive developments, it is equally important that people understand where their pensions are held, how they work and the long-term value of keeping retirement savings invested.

“Starting pension contributions early and staying engaged with retirement savings can make a significant difference to financial outcomes later in life. It is why we always recommend people get impartial advice from a Financial Broker; they are best placed to make sure people’s pensions are suitable for their circumstances and optimised to achieve their financial goals.”

*Based on total 2022 premium income. ICMIF Global 500, 2024

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