Jessica O'ConnorResearch from Aviva revealed a concerning gap between perceived and actual knowledge around pensions in the UK, reinforcing the need for greater financial literacy and support.
The survey of more than 2000 UK adults uncovered widespread confusion about the basics of pension planning.
While more than half (53%) claimed to be knowledgeable about pensions, only a third could correctly identify what a Defined Benefit (35%) or Defined Contribution (34%) scheme is, and one in five (20%) didn’t know what type of pension they have.
Those aged 25 to 34 appeared the most confident, with 76% saying they were sure they knew what they needed to about pensions.
However, this confidence doesn’t necessarily equate to understanding as just 44% of this age group were able to correctly identify the characteristics of a Defined Benefit (DB) pension, and only 45% knew the features of a Defined Contribution (DC) scheme.
Also, while 64% of men said they were knowledgeable about pensions (versus 43% of women), accuracy around the specifics was more balanced, with 47% of men and 45% of women correctly describing what a workplace pension is.
Doug Brown, CEO of insurance, wealth and retirement at Aviva, said: “These findings clearly show that, while confidence is high, people’s knowledge and understanding of pensions doesn’t necessarily match that self-assurance.
“At Aviva, we believe that financial literacy is the cornerstone of financial wellbeing. By empowering people with better pension knowledge and the tools they need, we aim to help them make informed decisions about their financial futures to help them get ready for retirement.”
He added: “A good grasp of pension literacy can help you to maximise your benefits by knowing when and how to claim your pensions, understand tax implications, and make the most of your employer contributions.
“Having a well-informed approach to retirement planning, including how to balance spending, saving and investing, means that you could have sufficient savings put aside to maintain your desired lifestyle in retirement.”
