Over 5.5m people are saving more as a direct result of the pension freedoms

Here’s what you need to know

Today marks two years since the introduction of some of the most radical reforms to UK pensions in a generation, the pension freedoms. New research from Aegon has found that 14 per cent of working age people are saving more into their pension as a direct result: equating to some 5.5m people in the UK contributing more to a private or workplace pension because of the reforms.

This increased level of saving is reflected in the growth of UK retirement pots. On average, people have £50,000 saved in pensions, up from £29,000 in April 2015. In addition to these positive steps, the pension freedoms have also directly prompted more people to consider their future plans. 15 per cent of people have realised they need to plan more for retirement, up from 10 per cent in April 2016 and the proportion of people engaging with an adviser on their plans for retirement has almost doubled in the last 12 months.

Yet, despite the positive signs, over a third (36 per cent) of people have never engaged with their pension savings. The reasons are varied, one in five people (22 per cent) claim they simply don’t understand how to review their plans for retirement, 15 per cent of people say the lack of online services or information prevents them from checking up on their pension savings and for one in ten people (12 per cent) the main barrier is the fear of seeing how little they have saved.

Steven Cameron, pensions director at Aegon said:“The 2015 pension reforms put many more retirees in the driver’s seat for the first time. Two years on and all the signs point to the pension freedoms having paved the way for a smoother road to retirement. People have moved up a gear, saving more and becoming more engaged with their pensions. Crucially, the proportion of people speaking to an adviser about their retirement saving and income options is almost double what it was in April 2016. Giving retirees the freedom to do as they please with their money is having an impact not only on those who are taking advantage of that freedom today, but the trickle effect is positive down the generations. It seems that bringing freedoms to pensions and saving for retirement has boosted their appeal across working life, with 5.5 million UK savers contributing more to their pots.