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Nearly eight out of 10 people are mystified by the basic details of pensions, research commissioned by Halifax Financial Services has revealed.

The research concerning consumer pension awareness has been published to coincide with the 100- year anniversary of the state pension, introduced by Lloyd George's government in August 1908.

Conducted among 2000 people, the findings showed a staggering 79 per cent of the public were confused by the basics of their pension and did not know when they would receive it or how it would be paid out to them.

Even more people are in the dark about what happens when their pension becomes available. At retirement, 83 per cent of the public had no idea how much of their pension they can take as a tax- free lump sum.

The research also showed that 61 per cent of the public are vague about the difference between a personal pension and a state pension. Knowledge about entitlement is also hazy too, according to the study. More than a third of the population believed they do not qualify for a state pension and 17 per cent were of the opinion that too much money saved meant no state pension.

On a more positive note, 44 per cent did understand the meaning of an annuity and 65 per cent appreciated that some pensions are linked to the stock market.

Karen Crowshaw, managing director of Halifax Financial Services, said: "Our research highlights confusion over pensions among the British public. We are issuing a timely reminder for people to start thinking about their retirement plans.

"Costs are rising and people are living longer, which means it is more important than ever before that people have the funds in place to support their lifestyle in retirement. It is important that people seek financial advice when arranging their pension."

Martin Bamford, managing director of financial advisers for Surrey-based Informed Choice, said: "It is vital that people seek financial advice about their pension, but even before that the first thing they should do is to understand what they want from retirement and consider the issues involved.

"The lack of knowledge about pensions, as indicated by these findings, shows that we have a nation that is sleepwalking towards retirement, without having sufficient financial resources."