The 2024 Drewberry™ Workplace Pensions Survey

Majority Of UK Employees Don’t Know How Much They Need For Retirement

We asked employees about their retirement plans, their current company scheme, and if they really understand the world of pensions. Here’s what we found.

The good news is that 92% of employees are opted in to their workplace pension. This is a 5% increase from our last survey in 2022. However, it seems that there is a gap in knowledge when it comes to really understanding workplace pensions and how they work.

Most Workers Have A Basic Understanding Of Pensions

While 62% said they have a basic understanding of how pensions work, 19% said they either have little or no knowledge about them.

• 19% feel very clued-up on all-things pensions
• 16% don’t know much about it
• 3% have no knowledge of pensions.

Exact Retirement Savings Remain A Mystery

Despite their suggested understanding of pensions, 60% of employees don’t know how much they need to save for a comfortable retirement.

Of the 40% who said they did understand how much they need to save, 13% didn’t know how they would achieve it.

Nearly A Quarter Of Employees Don’t Think They Contribute Enough

Interestingly, despite not knowing how much they needed to save for retirement, 69% of employees said they were happy with their current level of contribution. 1 in 5, however, said that they don’t feel that they’re contributing enough.

• 20% would be keen to pay even more
• 19% don’t feel they contribute enough, but would pay more if they could afford it
• 8% not sure if they contribute enough.

Employees Are Relying On Workplace Pensions To Fund Retirement

63% of employees plan to fund their retirement using pensions from their previous jobs, and worryingly, 15% are relying on a state pension.

• 63% of employees plan to fund retirement through pensions from past jobs
• 15% will rely on the state pension
• 10% said they haven’t even thought about it
• 4% will use investments.

Many Could Face An Uncomfortable Retirement

If employees don’t know how much they need to save for retirement, how can they be sure their workplace pensions will be enough? The truth is, they can’t. This uncertainty puts them at risk of not being able to enjoy the retirement they’ve always dreamed of.

Employees Don’t Know Enough About Thier Current Workplace Pension

It’s not just a lack of understanding of how much they need to save, the data suggests there is a general lack of understanding when it comes to workplace pensions in general.

Only A Quarter Of UK Employees Fully Understand Their Current Pension

When asked “Do you understand how your current workplace pension scheme works?”, only 24% of employees said that they fully understood.

• 57% said they “somewhat understand’
• 13% said they “don’t understand”
• 5% were “not sure”.

Employees Don’t Know If Their Employer Offers Salary Sacrifice Pensions

Continuing on from the above, it’s no surprise that 56% of workers said they aren’t sure whether their employer offers salary sacrifice pension options.

A further 56% either haven’t heard of salary sacrifice, or don’t understand how it works.

Salary sacrifice pensions are a great way for employees to boost their retirement savings, as well as saving on your employer National Insurance contributions.

Many employers match contributions or even offer a fixed rate that’s above the minimum, and in some cases it can even boost take-home pay.

Nick Nelms
Senior Consultant, Employee Benefits

Pension Tax Relief Needs A Bigger Spotlight

It’s not just salary sacrifice that employees don’t understand either. Despite pension tax relief being one of the most valuable benefits employees will get from the government, 40% don’t understand it.

Employees Don’t Know Where To Access Information

When asked “Would you know how to access / find out about your company pension?”, 24% of employees said they wouldn’t know how to or would need assistance from their employer.

Work Needs To Be Done

There’s clearly work to be done to bring employees pension knowledge up to standard. And while retirement might feel a long way off to many employees, you have a unique opportunity as an employer to help them prioritise their financial future.

The years pass quickly, and building a substantial nest egg becomes increasingly challenging as time goes on. Simply sharing the facts about your company scheme isn’t enough. You need to create a personalised experience that makes employees understand the very real impact that today’s choices will have on their future.

Longer lifespans – coupled with the cost of living crisis – could see pension savings stretched as employees head towards retirement.

Despite this, Open Access Government reported that savers are losing track of their pension pots as they move between jobs, with the value of lost pots reaching £26.6 billion.

Richard Noble
Senior Consultant, Employee Benefits

66% Want More Pensions Education

🎶 We want pensions education 🎶 (sorry, Pink Floyd). Although there is a knowledge gap when it comes to employees and their workplace pension, the good news is they want to educate themselves…with the help of their employer.

Workers Want Employers To Provide More Pension Education

When asked whether their employer could do more to educate them on their pension, 22% agreed, saying they aren’t clued up at all.

• 44% said they’ve had some education but could do with more
• 27% said their employer provides enough education.

Employees Are Crying Out For Education On Retirement Savings

So what education do employees want? We asked “If your employer provided education, what areas of pensions would interest you?”. The top three areas were:

• Financial planning and how to save for retirement
• Salary sacrifice pensions and their impact on take home pay
• Tax relief that pensions offer.

There’s Demand For Employer-Provided Financial Advisers

When asked how they’d like to receive pension communications, the majority said they’d like employers to provide education via financial adviser (37%). This was followed by:

• Webinars (34%)
• 1-2-1 sessions (33%)
• Email (33%)
• Employee benefits platforms (31%).

Workplace Pensions Are Truly Valued

Although there is some confusion about how schemes work and how much is needed for retirement, it’s clear that pensions are something that employees truly value as a benefit.

Employees Aren’t Satisfied With Minimum Employer Contributions

Employees value workplace pensions and want employers to help them boost their retirement fund. 84% of workers said they want their employer to pay more than the statutory minimum contribution.

• 56% said it’s “very” important to them.
• 28% said it’s “somewhat” important
• 11% said “not sure”
• 5% said “no it’s not important”.

Workers Would Take Bigger Pension Contributions Over Other Benefits

Enhanced pension contributions were third on employees’ wish list when it comes to the benefits they want. So it’s no surprise that the majority of employees would take a bigger pension and have fewer company benefits.

When asked “Would you prefer higher employer pension contributions to other company benefits?”:

• 60% of employees said they would
• 24% said it would depend on which benefits would get the chop
• 9% said they’d rather have the benefits and standard pension contribution.

Employees Would Match Increased Employer Contributions

Interestingly, employees said that if their employer paid more into their contributions, they would too. This just goes to show the influence you can have as an employer.

• 51% said they would match if their employer upped contributions
• 38% said they’d add more only if they could afford it
• 6% said they’re not sure.

Ethical Pensions Are Important To Workers

It’s clear that workplace pensions are a highly valued benefit among employees. But it’s not just about the size of the contributions—they also care deeply about how their money is being invested.

Ethical workplace pensions resonate strongly with employees, offering them the chance to align their investments with their personal values. In fact, 73% of workers want their pension pot to be invested ethically.

This shows a growing trend where employees are looking beyond the numbers, seeking a meaningful and responsible approach to their retirement savings. Employees want to know that their money is being invested in the right way.

A Decent Company Pension Is High Up On The List For Jobseekers

When asked how important a potential employer’s pension would be to jobseekers, 86% said it was either “fairly important” or “very important”.

Better Pension & Financial Advice Is Enough To Make A Quarter Of UK Employees Jump Ship

As an employer, it’s important to pay attention to the value employees place on workplace pensions. If not, you could find yourself saying goodbye to your top talent.

26% said that better pensions and financial advice would be enough for them to ditch their current job for a new one.

Employees Expect More

The key takeaway is that employees want more from you when it comes to retirement. The statutory minimum contribution isn’t cutting it, and it could even be worth redistributing your benefits budget to provide bigger pension pots.

A great pension is a huge factor in employee morale, demonstrating your commitment to employees’ long-term financial security. It also gives your employer brand a boost, making your business more attractive to potential hires, customers, and investors.