Almost six out of 10 working adults have ‘low confidence’ in their own pension knowledge — with women, those on lower incomes and younger adults most likely to have a poor understanding about their retirement options.
The research, by Phoenix Insights, found widespread gaps in people’s understanding and confidence about pensions with over one in four adults (28 per cent) saying they knew “little or nothing” about pensions. This figure wa significantly higher (41 per cent) among adults under 35.
In total just 11 per cent of those survey said they had “good” pensions knowledge.
The survey showed men were 1.4 times more likely than women to report good pensions knowledge. Knowledge disparities were particularly stark when looking at monthly income. Nearly two-thirds (64 per cent) of adults in the highest income bracket reported a ‘reasonable’ or ‘good’ pensions knowledge, compared to just 30 per cent in the lowest income bracket.
Phoenix Insights head of research and policy Patrick Thomson says: “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.”
The research also looked at where people turn to for information on pensions and retirement. Informal sources such as friends and family (18 per cent) were the most commonly reported sources, followed by government websites (17 per cent).
Thomson says: “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.”
He adds that this knowledge gap could be better addressed through more formal types of advice and guidance. “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.”
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