FTAdviser.com

Advertising

People avoid reviewing how their defined benefit pensions are invested because they view it akin to "a trip to the dentist", Sesame has warned.

Research from Barings Asset Management, published on Monday, shows fewer people are reviewing how their pensions pots are invested than last year.

Just 22 per cent of 1000 adults polled in June have done so in the last 12 months, compared with 28 per cent, according to comparable research conducted in April 2007. And only 46 per cent of people polled in 2008 have ever reviewed their schemes.

Ian Clarke, investment research manager at IFA network Sesame, said the figures were part of a recognised trend.

He said: "Young people do not understand the importance of taking control of your own retirement pot. And there is a degree of complacency because pensions are long-term, and they think they can put it off until tomorrow or next year.

"And as they get older it is a case of denial. It is like a trip to the dentist, you know you need it but you also know it is going to cost you and be uncomfortable."

Roger Sanders, director of employee benefits at London-based IFA Helm Godfrey, agreed more needed to be done to persuade people to take an interest in their pensions. But he added there is good news as default options are becoming more diverse and offering higher yields, while online technology is better at allowing people to have access to information about their schemes.

Occupational pension schemes typically offer workers a default option when signing up or reviewing their pension which allows the employer to select an investment fund on behalf of members.

Jonathan French, spokesman for the Association of British Insurers, urged people to keep a closer eye on their money. He said: "It is a very important decision to make and it is one that you can, of course, change over time, so if consumers want to get advice on the best funds for them then the best thing to do is to seek independent financial advice or to speak to their pension provider," he said.

Marino Valensise, chief investment officer for Barings, 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."

Table: To default or not to default?