Published Monday 29th January 2024
Published Monday 29th January 2024
New research reveals that the type of schooling respondents receive has a significant impact on financial preparedness later in life, especially when it comes to pension savings and understanding the financial options available to them at retirement.
Private school educated respondents are more likely to hold private pensions (40%) outside of employment linked pensions compared to their state school (26%) educated peers.
Those privately educated are significantly more likely (20%) to say they were taught about pensions in school, in contrast to their state peers (6%).
More than half (57%) of all those surveyed said planning for retirement feels like navigating a complex minefield due to lack of knowledge.
State school educated respondents have on average just £112,765 in their pension pot, compared to those privately educated with £302,782. Interestingly, those privately educated are significantly more likely (20%) to say they were taught about pensions in school, in contrast to their state (6%).
Yet, despite clear gaps in pension preparedness and literacy, a lack of confidence around pensions is felt across the board.
“Having talked to so many people about pensions, I know the subject can seem daunting and complex no matter your background.
“It all starts with education, and as the research very clearly shows – the earlier we start learning about pensions and thinking about the future, the better. By improving general financial literacy and education, topics like pensions will no longer feel scary or overwhelming.
“It’s why campaigns like Get Britain Pension Ready are important to make sure everyone has access to the information they need to make the best decision for them.”
Angellica Bell, Ambassador for the Get Britain Pension Ready campaign
The research exposes worries around not having enough money to survive in retirement, with over a third of respondents feeling anxious or overwhelmed (35%) about planning for their so-called ‘golden years’.
Of those that felt unprepared for retirement, the top concerns amongst respondents was not having enough money saved due to the rising cost of living, as well as worries about outliving their pension fund(s) and running out of money mid-retirement.
The research also reveals the extent to which the type of schooling contributes to an individual’s degree of pension literacy - particularly when it comes to understanding the financial options available to them when they retire.
In fact, state school educated people reaching retirement age (65 plus) are more likely (22%) to say they don’t know that they’re able to shop around with their pension fund(s) and transfer savings to another provider, compared to privately educated (5%) people of the same age.
Not only that, state school educated respondents are more likely to say they’re baffled by annuities (48%) and are unaware of the benefits that annuities could offer if you have pre-existing health conditions, and/or smoke, and/or are overweight (72%), compared to their privately educated counterparts (34% and 56%).
“Retirement should be something to look forward to, but our research reveals that too many members of the British public instead feel anxious, overwhelmed, and fearful of making the wrong financial decisions.
“There’s a wide range of pension options to choose from. The industry has an obligation to provide everyone with the means to understand them and support the people of Britain to take charge of their financial futures.
“No one, from any background, should get left behind. We’re encouraging everyone to get pension ready with our free online resources and seek the guidance they need, to understand all the financial options available to them when they come to retire.”
Sarah Lloyd, Commercial Director at Annuity Ready
When it comes to keeping track of pension savings and planning for the future, a huge forty-two per cent (42%) of privately educated 35 to 44 year olds said they review or reassess their pension pot regularly at least once a year, compared to just seventeen per cent (17%) of state school educated peers of the same age.
The findings also reveal differences in where groups turn to for retirement planning advice.
Those privately educated are the most likely (37%) to rely on financial advisors to guide their pension and retirement decisions.
Meanwhile, those from state schools lean on family and friends (30%) for retirement advice rather than professionals.
Over half (57%) of all those surveyed still report that the entire financial retirement process feels like navigating a complex minefield due to their lack of knowledge.
Over a third (32%) admit they’re unsure how much money they have in their pension pot today, which worryingly rises to forty-four percent (44%) for those reaching retirement age (65 plus).
Even more surprising, eighty-five percent (85%) of those reaching retirement age (65 plus) said they’ve never been in touch with Pension Wise, despite it being the public guidance service and a critical first step towards good pension planning and literacy.
“Far too many older people in financial hardship face later life with little or no savings, struggling to afford even basic essentials. Many of the older people we speak to have worked all their lives and yet do not have enough money in retirement. One person told us he expected his private pension to be £400 a month when in reality, it was only £90 which left him unable to make ends meet.
“We welcome the Get Britain Pension Ready campaign to boost retirement literacy and planning, but more must also be done to provide security for those already passed State Pension age, living on low incomes, that’s why Independent Age’s work focuses on supporting older people living in financial hardship.
“Pensioner poverty has been increasing since 2012 and is at its highest level since 2008. To help reverse this worrying trend, we must ensure that no one reaches retirement unsupported and unaware of their options when it comes to their pension.”
Joanna Elson CBE, Chief Executive at Independent Age
Research was conducted by OnePoll on behalf of Annuity Ready and surveyed 4,000 adults living in the UK in December 2023.
