Did you know you can access your pension pot early in the event of severe ill-health? According to a new survey of non-retired UK adults, more than half of pension savers weren’t aware of this early access provision.
The research, carried out by Opinium on behalf of the Money and Pensions Service, spoke to 2,008 non-retired UK adults to gain a better understanding of their pension awareness.
They found knowledge was lacking when it comes to contributions during parental leave, tax-relief for the self-employed, and the terms of pension auto-enrolment. 56% of those survey did not know that it’s possible to contribute to a pension while on parental leave. More women were unaware of this than men, with 61% of women not knowing they could keep on paying, compared with 51% of men.
Nearly two-thirds of those surveyed didn’t know that self-employed people could gain tax relief on their pension contributions. The picture when it comes to an understanding of pension auto-enrolment was slightly better, with 65% of those surveyed aware that the minimum contribution rates do not guarantee enough will be saved for retirement.
Money and Pensions Service acting chief executive Caroline Siarkiewicz said:
“It’s clear that many people are unaware of their options when it comes to important events in their lives that can impact their pensions such as becoming a parent or starting their own business.
“Women in particular have many important financial decisions to make when transitioning into parenthood but our findings suggest they are less likely to be aware of their pension options.
“However, our findings suggest that many might be missing out on important information when making decisions affecting their pensions. You can speak to a pension specialist for free, confidential help by contacting The Pensions Advisory Service helpline or webchat.”
To avoid pensions blind spots, the Money and Pensions Service shared three top tips.
Continue to make contributions to your pension while on parental leave. Check with your employer how this will work. This will vary depending on whether you are part of a defined contribution scheme or defined benefit scheme.
If you are suffering from severe ill health and wondering what your options are to access your pension, talk to your pension provider. They will be able to explain whether you are eligible to access your pension early.
If you are self-employed, you could receive tax relief on the amount you put into your pension so it’s worth making contributions if you can. Further support for self-employed people with their pensions is available through the Pensions Advisory Service who offer a specialist telephone-based appointment service.
Pension blind spots in the form of misconceptions and misunderstandings can be extremely damaging to wealth in retirement.
If you’re unsure about any aspect of the pension system, please don’t hesitate to contact Wells Gibson.