Millions of Brits are facing poverty in their retirement due to the complexity and choice of pension schemes. That’s the conclusion of several recent investigations which have found that the sheer choice of pension schemes and small print that would ‘puzzle Einstein’ have deterred millions of people from saving for their retirement.

Indeed, a recent survey found that seven out of 10 employees considered pensions so complicated that they were unable to prepare for retirement.

We look at the pensions minefield and how confusion surrounding personal, workplace and even the State pension is putting millions of people off adequately saving for their old age.

Personal pensions

A recent investigation by the Workplace Retirement Income Commission (WRIC) has found that 14 million British workers could face a ‘bleak old age’ unless radical changes are made to the way that private pension schemes operate.

The Guardian reports that ‘the organisation has urged the government to reduce the risk, inefficiency and complexity surrounding defined contribution schemes, which could deter many workers from saving, leaving them with significantly lower retirement income than their parents and grandparents.’

Lord McFall of Alcluith, the author of the report, said: “Defined contribution pensions can be very good, but they have to meet the right standards. We need to focus on getting the future right.

“Sadly, millions of people are being left to navigate a pensions minefield that would puzzle Einstein. We’re seeing less saving and lower trust in pensions, and that’s a vicious cycle that cannot continue."

The commission found that the ‘opaque’ nature of charges levied on personal pensions was a contributing factor to people becoming increasingly wary of saving for their retirement. In addition, the sheer complexity and choice of schemes also put many people off.

All in all, the WRIC report makes 16 recommendations for reform. These include raising the minimum requirement for salary contributions, a 1.5 per cent initial cap on pension fund charges and the establishment of a long-term independent commission ‘to take the politics out of pensions’.

Ros Altman, director-general of Saga, welcomed the report and believes that: “simpler savings products, more flexibility, lower charges and higher contributions would all make an enormous difference".

Workplace pensions

While plans to introduce better access to pensions in the workplace are progressing, it’s not just employees who are concerned about the complexity of pension arrangements.

A recent study by PricewaterhouseCoopers reported in the Daily Telegraph found that companies are ‘more concerned about the administrative complexities of having to automatically enrol staff into pension schemes than the cost of funding contributions.’

The State pension

Whilst millions of people are so confused by private and workplace pensions that they aren’t contributing to these schemes, the State pension has also come under fire for being overly complicated.

A senior Government minister has admitted that the State pension is so complicated that officials frequently cannot work out what pension someone approaching retirement will receive.

Steve Webb, the Pensions Minister, said: “Officials tell me that even they find it difficult to figure out how much someone approaching retirement will get from the state. How can we expect the average person to understand it?

“It’s clear that the pension system has become so complicated, that even a financial adviser would struggle to calculate what they will expect in retirement.”

The Government have pledged to simplify the scheme so that people understand their pension and what they can expect to receive.

A spokesman from the Department for Work and Pensions said: "We want to simplify the state pension system.

“The aim is a simple, decent State Pension for future pensioners, which is easy to understand, efficient to deliver, affordable and provides a firm platform for workplace saving."