Confidence in retirement prospects among Brits has fallen slightly, according to PensionBee‘s latest Pension Confidence Index. After a surge to +30 following the General Election in July 2024, the Pension Confidence Indicator has dipped to +28, as Labour prepares to announce what is anticipated to be a ‘painful’ budget.
Since the Index’s launch in September 2023, confidence levels among working-age savers (under 55s) have consistently lagged behind those over the age of 55, who are closer to or at retirement age. However, despite the overall decline, for the first time, confidence among the under 55 demographic has increased, from 45% in June 2024 to 49% in September 2024. Meanwhile, optimism among those over 55 has declined from 64% to 62% over the same period. Despite this shift, on the whole, older adults remain more positive about their retirement prospects than their younger counterparts.
Confidence increases among under 55s
Pension confidence among under 55s has fluctuated throughout the year. It initially fell between September 2023 and March 2024 (from 42% to 34%) but has since shown a steady improvement, resulting in higher levels of optimism now (49%) than this time last year. The key drivers of confidence for this group remain employer contributions (47%) and personal contributions (42%), followed by satisfaction with fund performance (24%).
Declining confidence among over 55s
In contrast, pension confidence for over 55s fell between September and December 2023 (from 52% to 47%), before peaking in March 2024 (65%). Since then, it has decreased slightly (62%), reflecting a more cautious sentiment among this group since Labour has taken office. This is compounded by increasing distrust in the government’s commitment to maintaining a sufficient State Pension, up from 18% in March 2024 to 27% in September 2024.
However, the future of the State Pension appears to be less of a concern for working age adults, as confidence that it will form part of their retirement held steady among 18% of respondents from March 2024 to September 2024. A larger challenge for this age group remains the perceived inadequacy of their pension pot, with 34% identifying it as their primary worry for the third consecutive Index.
Positive future steps for under 55s
However, there are encouraging signs for the future, as a growing priority for under 55s has been increasing their contributions; in September 2023, 29% expressed a desire to contribute more, and this figure has since risen to 42%, suggesting potentially some relief from economic pressures or a greater focus on accumulating pension wealth. Concurrently, concerns about not being able to contribute enough to their pension have decreased from 34% to 29% over the same period.
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “The increase in pension confidence among the working population in the first few months of a Labour government suggests high hopes for improvement in long-term finances. However, the slight decline in confidence among those in or nearing retirement may indicate increased insecurity as a result of policy signals so far, including cuts to the winter fuel allowance, and general uncertainty.
“Pension confidence is fragile, appearing to be very swayed by sentiment, speculation and general political measures. This underscores how important the tone and content of the upcoming Budget will be to the way people plan and manage their long-term finances. The Chancellor’s moves have real world consequences for people’s retirements. The Pension Confidence Index suggests that far from pensions being under people’s radar, both working and retired populations are acutely aware of how policy moves can impact them meaningfully.”
Please find our full Appendix, which includes tables with our data breakdowns here.
