UK adults feel more positive than negative about their retirement for the first time in six months.
Pensionbee’s latest Pension Confidence Index found positive pension sentiment has surged in the past three months.
The pension confidence indicator jumped to +22 in March 2024 a rise from -10 in December 2023.
According to Pensionbee this shift can be attributed to a significant decrease in negativity among those aged under 55 and a further increase in confidence among those at or near retirement age.
Among those aged under 55, 39 per cent expressed positive pension sentiment, a slight rise from 35 per cent in December 2023.
The top reasons for feeling positive included employer contributions being “relatively good” (41 per cent), personal contributions being “relatively good” (38 per cent) and good fund performance (21 per cent).
Negative pension sentiment fell significantly from 56 per cent in December 2023 to 38 per cent in March 2024.
Top reasons for feeling negative included not being able to afford to contribute enough (34 per cent), pension pot being small (34 per cent) and worrying that costs will be high in retirement (26 per cent).
However, Pensionbee noted that the close proximity of figures between negative and positive sentiment shows a lack of consensus when it comes to retirement and pensions.
Age and Confidence Levels
According to Pensionbee pension confidence among working age adults declined with age.
Some 54 per cent of those aged 18-25 felt positive however this sentiment declined with 47 per cent of workers aged 44-54 feeling negative about their pension, higher than any other age group.
The opposite is true for those near or at retirement with 54 per cent of 55-65 year olds feeling positive about their pension and 78 per cent of those aged over 65 feeling the same.
Pensionbee said the data showed gender disparity in pension confidence is still persistent.
Men continued to exhibit greater pension positivity than women across all age groups.
Some 58 per cent of men, near or at retirement age noted positive pension sentiments compared to only 37 per cent of women.
Pensionbee said this could partly be explained by the persistent gender pension gap in the UK, which tends to widen with age.
Becky O’Connor, director of public affairs at Pensionbee, said: “It’s encouraging to see a growing sense of pension optimism in the UK, suggesting factors such as falling inflation rates and reduced cost of living pressures, in addition to a recovery in stock market fortunes and the state pension increase, have played an important role in bolstering confidence.
“While it’s often assumed younger individuals feel more confident when it comes to their pension, due to having a longer period to save, this research highlights a nuanced reality. Initial zeal for pension savings can give way to competing financial demands during the middle of one’s career.
"It appears for many, it's the proximity to retirement and the attainment of financial clarity that reignites this pension confidence later in life. However, it’s crucial to acknowledge the persistence of the gender gap in pension confidence.
“These dynamics highlight the multifaceted nature of pension confidence, underscoring the importance of financial planning for all individuals across all stages of life.”
Role of state pension
The state pension remained a key factor influencing retirement sentiment particularly for how those near or at retirement felt about their future.
Some 60 per cent of those aged 55 and over identified it as a top reason for positive pension sentiment, an increase from 38 per cent in December 2023.
However, among those aged 55 and under the state pension dropped out of the top three reasons for positive pension sentiment since Pensionbee’s index began.
Instead there was a greater emphasis place on increasing contributions which rose from 27 per cent to 35 per cent from December to March.
Which Pensionbee said suggested a greater focus on funding retirement through personal contributions rather than a reliance on the state pension.
alina.khan@ft.com
