Pension Awareness Week: Over a quarter of Brits know ‘little or nothing’ about pensions
Over half (58%) of savers who have not yet retired said they have low confidence about how pensions work.
Just over a quarter (28%) said they knew “little or nothing” about pensions and this rose to 41% of adults aged under 35.
Of those asked by the Phoenix Group which carried out the research, just 11% of adults said they had a good knowledge of how pensions work.
The report comes during Pension Awareness Week, and so far, in just the first two days, YourMoney.com has reported that nine in 10 savers are missing out on a lost pension and half of UK adults don’t know how much the State Pension is worth.
When looking at private pensions specifically, 65% said they knew little or nothing about workplace pensions and 60% said the same about private pensions. This is despite 78% saying they regularly saved into a workplace pension.
Half of those asked said they thought they would do more paid work after they retired from their main job. When asked what could encourage workers to retire at a later age, 59% said being able to work from home and 58% said having flexible hours.
The majority of those asked said they expected to retire at 65, a year below the current state pension age of 66.
There were big differences in pension knowledge between men and woman and people in different income brackets.
Men were 1.4 times more likely to have a good knowledge of how pensions work when compared to women, the data showed.
Two thirds of adults in the highest income bracket reported having a good knowledge of how pensions work compared to 30% of those in the lowest income bracket.
Patrick Thomson, head of research and policy at Phoenix Insights, said: “Pensions are the main source of income for most people in retirement – whether this comes from the state pension or a personal pension – yet understanding is typically very poor.
“The knowledge gap is most apparent when looking at differences in income, with those in the highest income bracket three times more likely than those on the lowest incomes to report good pensions knowledge.
“We need to close this gap so people aren’t disadvantaged when it comes to having the knowledge that allows them to make better financial decisions for their future.”
Family and friends for pensions advice
Of the 3,075 surveyed by the firm, the highest percentage, 18%, said they would ask friends or family members for advice on pensions and retirement savings.
The second-most popular source for information was Government websites, chosen by 17% of respondents. This was followed by 16% speaking to a pension provider, and 14% going to a financial adviser, bank, or employer.
“Speaking to friends and family is a good way to engage with pension topics, but people need to be aware that these are informal sources of information,” warned Thomson.
The group is now urging the Government to commit to a timetable to review the existing boundary between regulated advice and guidance.
“Let’s debunk the myth that pensions are only a concern for those nearing retirement age by engaging people with more frequent, simple and varied communications throughout their life course,” he added.