The government must work harder to ensure there is a clear definition put in place between advice and guidance, in order to help more Britons close the pensions knowledge gap.
This is the warning shot across Whitehall's bows from Patrick Thomson, head of research and policy at Phoenix Insights, who said the government must "commit to a clear timeline to reviewing the current boundary between regulated advice and guidance".
He said this was urgently needed so that a larger proportion of the population could "access reliable and tailored financial support” and help to close the pensions knowledge gap.
Thomson added: “To boost understanding and pensions engagement, Phoenix Insights is urging the government to commit to debunking the myth that pensions are only a concern for those nearing retirement age, by engaging people with more frequent, simple and varied communications throughout their life course.”
His comments came after analysis of a survey carried out by pollsters British Social Attitudes for Phoenix Insights among more than 3,000 UK adults.
The study found wide disparities in pensions knowledge uncovered within UK population, as the majority of adults reported poor understanding and confidence about pensions.
- Some 58 per cent of UK adults said they have low confidence in their pensions knowledge
- 28 per cent said they knew ‘little or nothing’ about pensions
- Men were 40 per cent more likely than women to report at least some ‘reasonable’ knowledge about pensions.
Analysis of responses showed age, gender and income were all statistically significant predictors of pensions knowledge.
Men were 1.4 times more likely than women to report good pensions knowledge, while people on lower incomes were more likely to have a poor pensions understanding (see graph).
The research also looked at where people turn to for information on pensions and retirement. Informal sources such as friends and family (18 per cent) were the most commonly reported sources, followed by government websites (17 per cent).
Thomson added: “Speaking to friends and family is a good way to engage with pension topics, but people need to be aware that these are informal sources of information.
“Pensions are the main source of income for most people in retirement – whether this comes from the state pension or a personal pension – yet understanding is typically very poor. And we found there are wide disparities in pensions knowledge throughout the population.
“The knowledge gap is most apparent when looking at differences in income, with those in the highest income bracket three times more likely than those on the lowest incomes to report good pensions knowledge.
“We need to close this gap so people aren’t disadvantaged when it comes to having the knowledge that allows them to make better financial decisions for their future.”
simoney.kyriakou@ft.com
