Some 12 million people in the UK have never reviewed their pension plans, according to a new study.

Research by Baring Asset Management also suggests that of the 52 per cent of people who have reviewed their pension plans, 41 per cent could not remember if they had chosen the default investment option for their scheme.

Of those surveyed, 20 per cent had chosen a default option. The research highlights that certain age groups are more likely to choose the default option for their pension scheme than others are. Over a quarter of those in the 18 to 24 and 25 to 34 age groups chose the default investment option compared with just 10 per cent of those in the 55 plus age group.

While 54 per cent of people were clear on the asset allocation of the default option, 33 per cent were not and another 13 per cent could not remember the detail of where their pension funds were being invested.

Background

• Threat of fresh pension scandal

• Pensions savings cap set at £3,600

• Peers back pensions crisis fund

• Savers just forget about their pensions

• Plight of the A-Day pension prisoners

Retirement savings gone to pot?

Mark Atherton says that new rules for people with small sums in several pension schemes are more of a hindrance than a help

Background

• Pensions - a basic guide

• How to buy an annuity

• How to choose a pension

• How much to save?

Michael Hughes of Barings said: “These statistics are very worrying. The low number of individuals reviewing their pension on a regular basis is concerning.

“It is incredible to see that so many people have no idea where their money is being invested or, indeed, whether their pension is producing the returns necessary to support them in retirement. Coupled with the fact that people are not putting aside enough funds in general for their retirement, it clear that many people could face a serious shortfall when they reach retirement age.

The study by Baring coincided with a warning by the Equal Opportunities Commission (EOC) that low-income groups could lose out when the Personal Accounts pension system goes live in 2012.

Under the new system, all employees will contribute 4 per cent of salary, matched by 3 per cent from employers and 1 per cent in tax relief.

But the EOC said the money built up in a personal account could prevent some from claiming means-tested benefits.

Some people could find they are worse off under the new system, losing more in benefits than they gain through personal accounts.

In particular, women, who earn less than men on average, are among those most likely to fall into this trap, the EOC said.

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