Industry Voice: Why do so many of us feel overwhelmed by pensions?

Standard Life's Gail Izat discusses how lack of pension knowledge is affecting how people are preparing for retirement

Gail Izat
clock • 4 min read
Industry Voice: Why do so many of us feel overwhelmed by pensions?

Only a fifth of women have done a great deal of planning or thinking around how much money they need to live on in their retirement. This compares to slightly more than a third (35%) of all men.

Meanwhile, more than a third (36%) of women have done no planning.

And a quarter of women say they don't know how to review their long-term finances, and never check them as a result (compared to 12% of men).

These findings are from our Retirement Voice 2022 report, where for the second year running we surveyed the views of around 6,000 people in the UK from all walks of life[1].

Of course, it is difficult for us to plan for our retirement if we don't feel that we understand pensions well enough - and this appears to be part of the problem.

Pension knowledge

On average, women are a lot less confident that they have enough knowledge of pensions to make good decisions (see Figure 1).

Younger people are also generally less confident. Meanwhile people aged 65-80 are typically the most confident, followed by those aged 55-64.

Figure 1: Women and younger people generally feel less confident in their knowledge of pensions

Q. How confident do you feel that you know enough about the following to make a good decision on these topics? (Fairly confident + very confident)

   

Gender

Age

 

Total

Male

Female

18-24

25-34

35-44

45-54

55-64

65-80

Identifying key features of a pension

41%

52%

31%

41%

37%

38%

37%

45%

52%

How much money I can take out of my pension pot as a tax-free lump sum

40%

51%

29%

31%

31%

34%

34%

52%

60%

The exact amount of my pension contributions

38%

46%

30%

31%

36%

36%

33%

43%

54%

Deciding whether to take any money out of my pension

36%

46%

27%

30%

29%

30%

32%

45%

56%

Whether my pension contributions will be sufficient

35%

46%

26%

33%

29%

32%

32%

43%

50%

Feeling overwhelmed?

One the reasons people lack confidence in their knowledge of pensions could be the nature of the information available.

Half of us find the amount of information on retirement planning information "overwhelming". This proportion is even greater for women and younger generations.

People aged 18-24 are most likely to feel overwhelmed, followed by the next youngest age groups. Those already retired or closer to retirement feel least overwhelmed.

Many people (42%) also say they have no idea what to do with the information they have. Again, people aged 18-24 feel this most often, followed by the next youngest age groups.  This indicates that more effective and readily available financial education could boost many people's financial planning and overall financial wellness.

So, what information would people find most interesting?

Information needs

Both women and men are most interested in knowing how much money their pension will give them in retirement, and how much is in their pension pot.  For almost each type of information need, though, women express more of an interest than men (see Figure 2).

Figure 2: People are most interested in knowing the size of their pension, and what it will provide in retirement

Q. What communication or information would you be most interested in when making decisions about your pension and retirement planning?

   

Gender

Age

 

Total

Male

Female

18-24

25-34

35-44

45-54

55-64

65-80

How much money will my pension give me in retirement

46%

41%

52%

34%

46%

47%

48%

52%

46%

How much money is in my pension pot

44%

39%

49%

34%

45%

44%

47%

48%

40%

What options or choices I can make about my pension

31%

28%

34%

28%

32%

30%

33%

36%

25%

How to make sure I'm paying enough into my pension

31%

25%

37%

33%

40%

37%

31%

24%

19%

How is my pension performing (growth, investments)

30%

30%

30%

27%

31%

30%

29%

32%

31%

Conclusion

Our research indicates that people who do a great deal of planning, or just a little, have a more positive outlook on their future (see Why retirement planning benefits people of all incomes: survey results to read more on this.)

Yet many people still do no retirement planning, and the nature of the information available on pensions appears to be part of the problem.

Fundamentally, the problems in this article affect all of us to some extent. However, there is clearly value in taking a segmented approach to helping people, as some cohorts need more support than others.

We must therefore continue to tailor the support we offer, particularly to women and younger generations.

Where people access advice and guidance varies. But wherever they turn to, it needs to be personal, relatable, and provided in a simple and engaging way for customers.

This post is funded by Standard Life 



[1] In August 2022, Standard Life commissioned an independent study that sought to understand consumer attitudes to pensions and retirement plans. The study questioned a total of 5,980 UK adults, with the data weighted to give a nationally representative sample by age, gender, region and working status. The sample included 1,000 interviews to boost Asian and Black ethnic groups to provide a larger sample for analysis. The research sample included UK adults aged 18-80 and covered a range by income, savings, region, gender, ethnicity, and other key attributes.

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