One in five employees did nothing at all with their pension over the past year.
The figure comes from research by Wealth at Work, which surveyed 2,000 UK employees with a defined contribution pension.
It also found that 14% had never checked their pension at all, while fewer than a third had logged into their pension app during the previous 12 months.
At first glance, it looks like a knowledge problem.
More than a quarter of employees didn't realise their pension was invested, around a third wanted to understand how those investments worked, and a similar number wanted a clearer picture of how much income they'll need in retirement.
The obvious conclusion is that if employers explain pensions better, more people will engage.
That sounds sensible.
But the research also points to something else.
Why employees don't engage with their pension
Thirty-eight per cent of employees said they were afraid they would never be able to afford to retire.
That's nearly double the proportion who took no action at all.
It suggests that, for many people, the barrier isn't simply a lack of understanding.
They may already have a reasonable idea of where they stand financially.
The problem is that they don't believe they can do much to change the outcome.
If someone expects they'll still be working at 70, showing them exactly how far short they are doesn't give them anything they can act on today.
Financial wellbeing has to come first
That's why the order employers do things in matters.
Pension engagement and financial wellbeing are often treated as two parts of the same benefits programme.
In practice, one usually needs to come before the other.
An employee with a little spare money each month can be shown that increasing their pension contribution makes sense and choose to do it that afternoon.
Someone who is taking a salary advance every fortnight can't.
Asking them to make decisions about retirement while they're worried about paying next month's bills is unlikely to change their behaviour.
That fits with other research too.
Employee Benefits reported last month that half of employees would contribute more to their pension if their employer increased its own contribution.
Those employees understand what a pension is.
Their problem isn't knowledge - it's affordability.
This isn't an argument against financial education.
It has an important role to play.
It's an argument about timing.
A pension awareness campaign aimed at employees with no financial breathing room will mainly reach the people who could already afford to act.
Run the same campaign after a benefits review, a payroll savings scheme or access to free debt advice, and many more employees are in a position to do something with the information.
The age group employers usually overlook
Another finding received much less attention than it deserved.
Among employees aged 44 to 54, 26% did nothing with their pension over the past year, compared with 20% across the workforce as a whole.
Pension engagement campaigns often focus on younger employees, partly because they have more time for compound growth to work in their favour and partly because they're generally easier to engage.
These figures suggest employers may be looking at the wrong group.
If a 28-year-old ignores their pension for a year, the long-term impact is relatively small.
Someone in their early fifties may have only 10 or 15 years left to improve their retirement income. Increasing contributions, consolidating old pension pots or reviewing their investment approach can still make a meaningful difference, but there's much less time left to benefit.
They're also the employees most likely to be juggling a mortgage, teenage children and ageing parents at the same time.
It's not difficult to see why checking their pension slips down the priority list.
When doing nothing is perfectly reasonable
Not every employee who ignores their pension is making a mistake.
Auto-enrolment was designed to work without people constantly managing their retirement savings.
Someone paying into a good workplace pension, invested in an appropriate default fund and contributing at a sensible rate may never log in and still end up with a perfectly reasonable outcome.
The employees most at risk are a much smaller group:
- those contributing only the statutory minimum
- employees with pension pots left behind with previous employers
- people approaching retirement whose lifestyle investment strategy no longer reflects when they actually plan to retire
- employees who opted out of their workplace pension and never rejoined
That makes the challenge much more manageable.
Rather than asking how to get every employee engaged with their pension, employers should ask a more practical question: which employees are likely to lose out by doing nothing, and can they identify them using the data they already have?
Frequently asked questions
Why don't employees engage with their pension?
Lack of knowledge is only part of the picture.
Wealth at Work's research found that 38% of employees worry they'll never be able to afford retirement.
When people don't believe they can improve the outcome, they're often less inclined to engage with their pension in the first place.
How can employers improve pension engagement?
The timing matters as much as the message.
Employees are much more likely to act once they have some financial breathing room.
Benefits reviews, payroll savings schemes and access to debt advice can all make pension communications more effective.
Which employees should employers prioritise?
Employees aged 44 to 54 were the least engaged group in this research, despite having the least time left to improve their retirement income.
They're also more likely to be balancing mortgages, family responsibilities and caring commitments.
Is auto-enrolment enough on its own?
For many employees, yes.
Auto-enrolment was designed to deliver good outcomes without requiring people to manage their pension actively.
The greatest risks tend to be among those contributing only the minimum, those with forgotten pension pots, employees approaching retirement in an unsuitable investment strategy, and those who opted out altogether.
Written by Caroline Chell
Head of Communications
