Few defined contribution pension savers have thought a lot about how they will manage in retirement, while two-fifths do not know how much they or their employer contribute, the latest Financial Lives Survey suggests – but in a sign that interest is there, half of DC members regularly check the value of their pots.   

The survey carried out by the Financial Conduct Authority every two years found only about a third of DC members have thought “a lot” about how they will manage in retirement. In addition, 38% said they do not know how much they or their employer contribute to their pension, and 29% of those with a DC pension in accumulation did not know roughly what their combined pot was worth.   

However, there is also engagement. Half (51%) of DC pension holders had checked how much was in their pots in the previous 12 months – with a similar proportion doing so regularly – up from 43% in 2017, and a quarter of people contributing to a DC pension had chosen to increase their contributions in the previous three years.  

This level of engagement has not yet filtered through to those at retirement. Just 9% of people received financial advice on investments, pensions or retirement planning in the previous 12 months, while 17% had used government-backed guidance services such as MoneyHelper over the same period.   

Of the roughly 700,000 adults who accessed a DC pension in the 12 months to May 2024, 52% partially and 28% fully encashed their pot(s), while 19% took an annuity – higher among those already retired (26%).  

The survey also found that one in 10 people have no cash savings at all, with another 21% holding less than £1,000. One in four people have missed payments or struggle to keep up with financial commitments.    

Sarah Pritchard, executive director of consumers and competition, said: “Our data shows that finances are stretched for many - with some unable to save for a rainy day. And we know that some do not have the confidence to invest. But there are improvements – more people with current accounts and less digital exclusion. Our strategy will build on this to help people better navigate their financial lives.” 

People’s financial wellbeing affects their health, relationships and work, said Oliver Morley, the chief executive of the Money and Pensions Service, urging people to use the MoneyHelper website.  

To help people with their choices at retirement and address the persistent advice gap, the FCA is currently preparing a consultation on the rules for ‘targeted support’, a halfway house it plans to bring in sitting between guidance and advice. The regulator and government are also working on a new value for money framework to improve saver outcomes.
   

   

The FCA’s work on allowing companies to offer targeted support to their customers"could make a world of difference”, believes Hargreaves Lansdown’s head of personal finance, Sarah Coles.   

Recent research in provider Aegon’s ‘Second 50’ series suggests there will be demand for targeted support, but the firm’s UK pensions director, Steven Cameron, said it was important that the FCA continues to support the advice channel as well. 

 

“Enabling wider access to advice should be part of the FCA’s agenda to support the government’s growth agenda,” he said. 

 

 

Overall, the survey findings imply that many people will be too reliant on the state pension, said Dan Coatsworth, an investment analyst at platform AJ Bell. 

Among respondents aged 45 and over, 36% expected the state pension to be their main source of income in retirement. In 2024, just 7% of retirees strongly said they had to work longer than hoped to fund their retirement, but this rose to 12% of those who rely on the state pension for their main source of income in retirement. Of those reliant on the state pension, 16% said they had difficulty paying for day-to-day expenses.   

“It’s vital that people have the support they need to squirrel away as much as they can while they’re still working,” Coatsworth said.