PensionsAug 14 2017

Most people ignorant of basic pension rules

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Most people ignorant of basic pension rules
ByMaria Espadinha

More than half (52 per cent) of UK adults who are not already retired are unsure at what age they will start receiving the state pension, research shows.

Recent changes in state pension age, which will be brought forward to 68 between 2037 and 2039, seem to be adding to the lack of certainty about how people will fund their financial future

In a poll of more than 4,000 people, conducted by YouGov on behalf of The People’s Pension, almost one in five (18 per cent) non-retired people aged 55 and over said that they didn’t know at what age they would start receiving a state pension.

In addition, more than half (55 per cent) admitted they didn’t know what the full state pension weekly rate currently is.  

Ben Smaje, chartered financial planner and managing director at Kennedy Black Wealth Management, agreed with the conclusions of the research.

“There is a real lack of knowledge across all spectrums of what the details of pensions are, of what people can expect, from the state and from their own personal affairs,” Mr Smaje said.

But Mr Smaje believed the state pension age “has becoming relatively well publicised,” as “people are aware now that it will be late 60's.”

The problem of a lack of pensions understanding is significantly worse among young people, the research showed.

Some 93 per cent of 18- to 24-year olds did not know the state pension weekly rate and 83 per cent did not know when they would be able to receive their state pension.

Mr Smaje agreed with the research conclusions: “Young people, especially below 30 [years’ old], simply do not engage with pensions, they feel it is a long way off. Age does definitely play a part.”

According to Alistair Cunningham, financial planning director at Wingate Financial Planning, the information about pensions is “relatively straightforward to obtain, if an individual knows where to look".

“The state pension forecast is now online with a Government Gateway ID, this gives a personalised projection, though of course the rules do keep changing,” Mr Cunningham said.

“Private pensions may be harder to understand, and at younger ages it may be sufficient for some just to pay what they can afford.

But as an individual ages it becomes more important to seek professional help – paying in a token amount to an auto-enrolled scheme is unlikely to result in an optimal outcome for most people,” he concluded.