New research has found that a lack of understanding continues to surround self-invested personal pensions, requiring greater education and information around pension consolidation.
According to investment platform EQi, nearly one in six (14%) Britons has never heard of SIPPs. Furthermore, 12% were aware of SIPPs but did not understand the rules around moving pensions, while 7% did not know they could move or consolidate their other pension pots.
EQi said a lack of knowledge around what opening an account entails also posed a barrier, with 11% believing setting up a SIPP would be too complicated or they might make a mistake when transferring pensions, while 9% thought the process would take too much time and effort. More than one in 10 (13%) said they were not confident in selecting investments they would like to place their pension savings into.
EQi believes education would help people feel more confident around SIPPs, with 11% of respondents agreeing that a simpler application process would encourage them to open a SIPP and one in ten (10%) stating that help in completing the application would make them more likely to consider this avenue.
Richard Pearson, director, EQi, said: “Workplace pensions have been an undeniable success, but a big part of the problem in the UK is that every time someone starts a new job, they get a new pension. This makes things much harder to track.
“By enabling savers to consolidate pots into one account, SIPPs could go some way to alleviating this issue, giving people greater oversight over how much they have saved and what’s being charged in fees. Our study highlights various misconceptions which stand in the way of people exploring an avenue which could potentially make a lot of sense however, so a bit of education could go a long way.”
The research also revealed growing concern around scams, with 12% of those surveyed expressing worry they might end up losing their pension or be exposed to mis-selling or fraud by opening a SIPP.
Pearson added: “Of upmost importance for anyone transferring their pension is to have complete confidence in their provider, so it’s vital to verify a firm with a financial adviser or reputable personal finance website in the case of any doubts. People should absolutely be wary about the risks, but it would be a shame if this stopped people achieving a potentially better financial outcome.”
EQi has launched a series of webinars to help savers understand the benefits of SIPPs as well as the dos and don’ts.
