According to PensionBee’s latest Pension Confidence Index, Brits feel more positive than negative about their retirement prospects, for the first time in six months.
Positive pension sentiment has surged in the last three months, with the Pension Confidence Indicator soaring to +22 in March 2024. This marks a notable increase from -10 in December 2023 and -9 in September 2023.1
This shift can be attributed to a significant decrease in negativity among those under the age of 55 and a further increase in confidence among those at and near retirement age.
Key findings for under 55s:
Positive pension sentiment increased slightly, from 34% to 39% from December 2023 to March 2024, to become the dominant perspective among under 55s.
Negative pension sentiment fell significantly from 56% to 38% over the same period. However, the proximity of this figure to positive sentiment suggests an absence of a clear consensus when it comes to retirement and pensions.
The top reasons for feeling positive were: ‘my employer contributions are relatively good’ (41%); ‘my personal contributions are relatively good’ (38%) and ‘my fund performance is good’ (21%).
The top reasons for feeling negative were: ‘I can’t afford to contribute enough’ (34%); ‘I think my pension pot is small’ (34%) and ‘I’m worried that my costs will be high in retirement’ (26%).
Key findings for over 55s:
Pension optimism continued to rise as almost two-thirds (63%) of over 55s felt positive in March 2024, up from almost half (47%) in December 2023.
Meanwhile, negative pension sentiment diminished to less than a quarter (24%) in March, a significant drop from its peak at 52% six months prior.
The top reasons for feeling positive were: ‘I am entitled to the State Pension (60%); ‘I have a good Defined Benefit pension’ (21%) and ‘I am already enjoying a comfortable retirement’ (21%).
The top reasons for feeling negative were: ‘I wish I’d saved more’ (27%); ‘None’ (23%) and ‘I’m worried about inflation’ (28%).
Age plays a pivotal role in shaping confidence levels
In the latest Pension Confidence Index (‘Index’), pension confidence among working age adults declined with age, starting robustly in the early stages of their career (54% of 18-25 years old felt positive about their pension) and gradually diminishing as retirement approaches. Almost half (47%) of workers aged 44 to 54 felt negative about their pension, higher than any other age group.
The opposite is true for those near or at retirement. The majority (54%) of 55-64 year olds felt positive about their pension, while over two-thirds (78%) of over 65s expressed the same sentiment. Notably, the highest level of pension confidence was observed among males aged 65 and above, with an impressive 82% of this group reporting pension confidence.
The role of the State Pension
As in previous Indexes, the State Pension remained a key factor in influencing retirement sentiment, particularly for how those near or at retirement felt about their future. Over half (60%) of over 55s identified it as a top reason for positive pension sentiment. This is a noticeable increase from 38% in December and could be attributed to the 8.5% State Pension rise this month.
Conversely, among under 55s, expectations of the State Pension waned. For the first time since the Index’s inception, the State Pension dropped out of the top three reasons for positive pension sentiment. Instead, there was a greater emphasis placed on _‘increasing contributions’,_ which rose from 27% to 35% from December to March, suggesting a greater focus on funding retirement through personal contributions rather than a reliance on the State Pension.
An increased importance on fund performance was also evident among working age savers. ‘Changing plans to improve investment performance’ emerged as a top priority, up from 13% in December to 19% in March. In addition, ‘satisfaction with fund performance’ emerged as a top reason (21%) for feeling positive, a significant jump from 11% in December and 7% in September.
Men continue to have greater pension positivity than women
Despite overall positive trends, a gender disparity in pension confidence persists. Men continued to exhibit greater pension positivity than women across all age groups. This contrast is particularly striking among individuals near or at retirement age, with over half (58%) of men noting positive pension sentiments compared to only 37% of women. This may be partly 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, commented: “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 that 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.”
Please find our full Appendix, which includes tables with our data breakdowns here.
Footnotes
- The Pension Confidence Indicator - a new measure of sentiment towards retirement - is the difference between the proportion of British adults stating they feel positive and the proportion who feel negative about their pension outlook, with a positive number (plus) indicating more positive than negative sentiment, and a negative number (minus) indicating more negative than positive sentiment._
