Pension confusion for majority of teachers
New research from Wesleyan shows misconceptions and misunderstanding for teachers around retirement
Teachers are still confused by pensions, with almost two thirds (61%) not understanding their key features, and 93% not sure how much to save each month, according to new research by specialist financial mutual Wesleyan.
One in twelve (eight per cent) incorrectly believe they can withdraw their full pension fund at any time, completely tax free, while the amount they believe they will need each year in retirement has fallen from £26,389 in 2014 to £22,467 in 2016.
Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: “It is hard for a busy teacher, with all the pressures that come with the job, to free up to the time to frequently review retirement plans.
“As a result, there is clearly some confusion around what pensions are there to do and how they can help you plan for the future, but proper planning is essential to help us enjoy the standard of living we dream of in retirement.”
According to the findings, two fifths (40%) haven’t done any research about pensions in the past year, meanwhile a third (34%) have no intention of researching their retirement plans in the next 12 months either, suggesting those in the dark will remain confused about what lies ahead.
The research also found that three quarters (75%) of teachers are unaware how much the government contributes for every pound invested in a pension.
While they may not apply to all teachers, 70% don’t understand the pension freedom reforms put in place last spring, despite the extensive publicity surrounding their introduction more than a year ago.
Vicki added: “It is hard to plan for retirement if you don’t fully understand the options available to you and what you can actually do with your savings – our research shows most teachers sadly don’t understand.
“How much teachers need in retirement depends on their own circumstances and needs, but what is clear is that many teachers have an idea of what they would like to have after they leave the classroom, but don’t understand enough about pensions to make effective plans to achieve it.
“Given the amount of publicity that has surrounded pensions during the past year, we would expect to see teachers begin to plan earlier for retirement, but our insight tells us that this isn’t the case and that teachers are still uncertain about what action to take.
“Fortunately, knowledgeable, credible, expert advice can help to get people’s retirement plans back in good health.”
*Research based on a survey of 100 teachers by Censuswide on behalf of Wesleyan, February 2014