Research from Phoenix Group’s longevity think tank Phoenix Insights found that general pensions knowledge among UK adults is typically poor, but huge differences in knowledge exist within the population.
The research surveyed over 3,000 adults who had not yet retired*, as part of Phoenix Insights’ report Planning for Retirement, and found 58% reported low confidence in their pensions knowledge. Over a quarter (28%) said they knew ‘little or nothing’ about pensions, but this rose to 41% among adults under 35. Just 11% of adults reported a ‘good’ pensions knowledge.
What influences pensions knowledge?
Analysis of responses showed age, gender and income were all statistically significant predictors of pensions knowledge. Men were 1.4 times more likely than women to report good pensions knowledge, whereas a higher proportion of women (33%) than men (34%) said they knew ‘little or nothing’ about pensions.
Knowledge disparities were particularly stark when looking at monthly income. Nearly two-thirds (64%) of adults in the highest income bracket (as categorised in the British Social Attitudes survey**) reported a ‘reasonable’ or ‘good’ pensions knowledge, compared to just 30% in the lowest income bracket.
Phoenix Insight (2023), UK adults not yet retired N=2,260
Phoenix Group’s Patrick Thomson, Head of Research and Policy at Phoenix Insights, comments:
“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. And we found there are wide disparities in pensions knowledge throughout the population.
“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.”
Sources of information
The research also looked at where people turn to for information on pensions and retirement. Informal sources such as friends and family (18%) were the most commonly reported sources, followed by government websites (17%).
Patrick Thomson continues on closing the pensions knowledge gap:“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. Phoenix Group’s most recent brand campaign encouraged people to start talking more about how they can make the most of having a much longer life than previous generations.
“In order to boost understanding and pensions engagement, Phoenix Insights is urging the Government to commit to a clear timeline to reviewing the current boundary between regulated advice and guidance, so that a larger proportion of the population can access reliable and tailored financial support”
“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.”