A staggering 83% of working people have limited or no knowledge of different pension schemes (i.e. state pension, private pension, workplace pension), reveals Aviva’s Retirement Reality Report1 that was released in November 2018. The research, which included a survey2 of 2,010 UK employed adults aged 22-65, also showed that:
- 1 in 8 workers don’t know how to review the balance of their pension
- Almost 1 in 3 people have never discussed pensions with their family or friends
- 1 in 6 people don’t talk about pensions out of fear of appearing boring
Pension knowledge was found to increase with age as those closer to retirement were less likely to say they have no understanding of different pension schemes and how they work compared to their younger counterparts. Workers aged 56 to 65 years were also more likely to rate their understanding of pensions and how they work as ‘advanced’. However, they were also more likely to rate their understanding of pensions as ‘limited’.
Men tend to be slightly more knowledgeable about different pension schemes and how they work than women, with 21% of them rating their understanding as ‘advanced’ compared to 13% of women. Female workers were also more likely to say they have ‘no understanding’ (18%) than their male counterparts (13%).
“The research findings are worrying,” says Alistair McQueen, Aviva’s Head of Savings and Retirement. “Private pensions are the biggest home of private wealth in the UK, yet most of us are unsure how they work. However, the research should also reassure us that, if we feel we don’t understand pensions, we are far from alone.”
Despite the widespread gap in knowledge of pensions and how they work, Brits don’t seem to be keen to discuss them with family or friends: 29% of respondents talk about pensions only a couple of times a year or not at all. Asked why, 25% of workers said they don’t feel they know enough about it, while 17% said they are worried they would appear boring.
“Pension providers, such as Aviva, recognise the importance of helping their customers understand their pensions,” says Alistair. “The government recognises this too. There is an unprecedented amount of free information available on the internet. And the free government services such as Pension Wise3 (for general retirement questions), the Pensions Advisory Service4 (for general pensions questions) and the Money Advice Service5 (for general money questions) also provide great help. Of course, you’ll find help on the Aviva website, aviva.co.uk as well. Small learnings today could make a big difference tomorrow.”