Britons NOT prepared for retirement: Shock number have NO understanding of pension system

A study found an alarming level of ignorance among the British public when it came to planning for our older years.

Carried out by YouGov, the research highlighted the impact that government changes have had on UK consumer’s understanding of their pension options. 

Following radical changes new pension freedoms ushered in two years ago, along with the recent changes to the state pension age, more than a quarter (26per cent) of respondents admitted they were confused.

A further 29 per cent admitted that they found the range of pension products available confusing – the most popular response. 

Worryingly, only a tiny seven per cent of British adults claimed to understood the pension system and feel confident enough to use it to their advantage. 

There was also a small gender divide, with women admitting to understanding the system less well than men, with 30per cent of female respondents stating that they found it too complicated, compared to 23per cent of men.

David Newman, Head of Pensions at Close Brothers Asset Management who commissioned the study, said: “Widespread confusion brings with it a real threat that people are not saving enough for retirement – or using the products and allowances that will best support their pension saving. 

“Pension freedoms have brought opportunity, but allowing this to be undermined by a lack of education and understanding risks setting the UK on a firm course for a savings crisis.

“As pension products become more complex, and economic uncertainty grows, it’s incredibly important that people make informed decisions about their pension pot and how they can ensure that their particular requirements of retirement funding can be sufficiently met. A worrying number do not even know how many pension pots they have.”

He added: “It’s too easy to take the path of least resistance when it comes to pension products and this often proves to be a false economy. 

“A good financial adviser will prove their worth in the long-term, cut through the confusion, and provide much needed peace of mind for consumers and their families.” 

The study, which quizzed 2,200 adults, also highlighted people’s worrying lack of knowledge about their own pension provision, with two in five (40 per cent) admitting to not knowing the number of pension pots that they currently invested in.

In addition, nearly three quarters (73 per cent) admitted to being in the dark about the value of the assets in their pension pot or pots.

Despite the high level of confusion, nearly three quarters (72per cent) of adults said they had never taken professional advice about their pension. 

One pensions industry insider added: “This could leave many without a clear plan to accumulate enough savings for retirement or ensure their pension pots savings last long enough in retirement, and less able to react to recent changes to pensions taxation and the state pension age.”