Older workers have low awareness about pensions, research shows

Older workers in the UK have low awareness about pensions, which hinders their ability to plan their retirement, new research has found.

Just under a third (31%) of workers aged 50-64 knew how much a full state pension was worth per week, according to polling from the Institute for Fiscal Studies. Almost half (46%) of people in this age bracket said they did not know, while the remainder made incorrect guesses.

The IFS’ researchers warned that people could not effectively plan their retirement finances if they didn’t know the basics of the state pension, which they said was the single most important form of retirement income for most workers. 

A full state pension is currently worth £204 per week.

The research showed low awareness across all the age groups that were surveyed. Overall, only one in five people aged 25-64 knew the weekly state pension rate, within a £20 margin of error. Almost six in ten people (58%) said they did not know the amount.

Competing financial pressures

The new research is part of the IFS’ Pensions Review, a project launched earlier this year to assess how the UK’s current pension policy, economic environment and individual behaviour will affect living standards in retirement. The project is being carried out in partnership with abrdn Financial Fairness Trust.

In the polling, workers also showed a low awareness of retirement income sources beyond the state pension. Two-thirds of people surveyed didn’t know how much income they would need now to have a reasonable standard of living in retirement. Only 9% said they had a good knowledge of pension issues. 

While this lack of awareness might seem unwise, working-age people face competing financial pressures that make it hard to prioritise pensions, especially as the cost-of-living crisis continues. High food prices and mortgage rates are squeezing day-to-day budgets.  

The IFS research found that only 28% of people put pensions in their top three savings goals, well below saving to buy a house, to cover the costs of having children, or to ensure they had an emergency pot for unexpected issues. 

A separate survey earlier this year, by workplace pension provider People’s Partnership, found that 39% of people were less confident about their retirement prospects than they were when the Covid pandemic began in 2020.

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