13.6m not reviewing pension plans

Some 13.6 million Britons are failing to review their pension plans, according to new research.

Research by Baring Asset Management shows only 22 per cent of people have reviewed their pensions and how funds are being invested in the last year – despite the recent market volatility.

This compares with 28 per cent of people who looked at their pension funds last year.

Of the people who have reviewed their pension plans in the last two years, 41 per cent could not remember or did not know if they had chosen the default investment option for their pension scheme.

Some 40 per cent of people had chosen the default option. Only 19 per cent said they had chosen the fund allocations themselves.

People are now urged to review their asset allocations on a regular basis to ensure it is in line with their age, lifestyle commitments and number of years to retirement - particularly given recent market volatility.

The general rule of thumb is as people head closer to retirement their pension funds take on less and less risk.

Marino Valensise, Barings chief investment officer, said: “These statistics are very worrying. It is surprising to see that so many people still have no idea where their money is being invested or, indeed, whether their pension is producing the returns necessary to support them in retirement.

"Coupled with the fact that people are not putting aside enough funds in general for their retirement, it’s clear that many people could face a serious shortfall when they reach retirement age."

He added the low number of individuals reviewing their pension on a regular basis was concerning.

"People seem to be going blind into their pension schemes without really considering the most appropriate level of investment risk and return."

He advises people to review their pension schemes on an annual basis and take independent financial advice.

"Circumstances change and individuals need to amend their pension portfolio in line with these changes," he concluded.