Pension confidence declines - but not among the older population

Ffion White

by , PR Manager

05 Feb 2024 /  

05
Feb 2024

Business man.

When it comes to confidence about retirement, we are a divided nation, according to new research, with older Brits reporting higher levels of confidence than those in the thick of their working years.

PensionBee’s latest Pension Confidence Index reveals that on balance, Brits feel more negative than positive about their retirement outlook, with a Pension Confidence Indicator of -10 in December 2023, down from -9 in September 2023 (Table 1).

More than half (51%) of Brits continue to feel negative about their retirement outlook, while positive sentiment has decreased from 42% in September 2023 to 41% in December 2023, indicating a slight decline in overall pension confidence over the last three months.

The Pension Confidence Indicator - a new measure of sentiment towards retirement - is the difference between the proportion of British adults stating they feel negative and the proportion who feel positive about their pension outlook, with a minus number indicating more negative than positive sentiment.

There was an increase in pension confidence among over 55s in the final quarter of 2023, but a bigger increase in negative pension sentiment among adults yet to reach the age they can first access their pension, over the same period.

There was a 7% increase in optimism about pensions among 55-64 year olds towards the end of last year, from 38% in September to 45% in December. Meanwhile, fewer said they felt pessimistic - a 9% drop from 55% to 47% over the same period). Over 65s were even more positive in December, with over half (53%) feeling confident about their pension, although this was a similar proportion to September.

Conversely, pension concerns intensified between September and December 2023 for those under 55, with 57% admitting “quite negative” and “very negative” emotions about their pension - a 6% increase in negative sentiment over the period.

Individuals aged 44-54 exhibited the highest levels (63%) of negative sentiment towards their retirement outlook and are the only age group to feel, on average, “less positive” (47%) about their pension compared to how they say they felt a year ago. This is a significant change from September 2023 when most (49%) 44-54 years olds felt “the same” about their pension compared to a year ago and only around a third (38%) felt “less positive”.

The State Pension remains a key factor behind whether people of any age feel good or bad about their future. Despite the government maintaining the triple lock and announcing a State Pension rise in April, distrust in the government remains a top three reason for negative pension sentiment among over 55s.

For younger savers, concerns around the inability to afford contributions (29%) overtook worries about high retirement costs (27%) as their primary pension concern between September and December 2023.

Men feel more positive than women

Despite under 55s generally exhibiting negative sentiments, men were (42%) more likely to express positive feelings about their pension than their female (26%) counterparts. In the working-age demographic, male savers aged 18-25, are notable outliers, with 46% reporting being on track for retirement, a significant rise from 31% in September.

Gender disparity persists among over 55s, where over half (58%) of men noted 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.

Renters feel down about retirement

Working age renters (61%) were more likely to harbour negative feelings about their pension than homeowners (52%). This marks a concerning increase from three months prior (55% and 50% respectively). This suggests rising rents and a decline in homeownership continue to make saving for a pension more challenging.

The influence of homeownership at retirement remains profound. The vast majority (60%) of renting retirees express negative feelings about their pension, a stark contrast to homeowners in the same age group who feel mostly positive (54%).

Self-employed feel less negative

Fewer self-employed people noted concerns about their pension (falling from 61% in September to 56% in December), a similar level to their employed counterparts (54%), despite their exclusion from Auto-Enrolment.

Becky O’Connor, Director of Public Affairs at PensionBee, commented: “Brits were feeling increasingly down about their pension prospects towards the end of last year. How we feel about our long-term financial prospects is a key indicator of how other financial pressures and concerns affect our lives.

Contrary to what you might expect - it’s not all doom and gloom when it comes to how people feel about their retirement prospects. It’s good to see positive sentiment among older Brits improve towards the end of last year, possibly alongside the slight easing of cost of living pressures, as inflation subsided, as well as State Pension increases and a recovery in stock market fortunes.

Younger workers and current retirees are generally more positive than the middle-aged; men are typically more positive than women and homeowners more positive than renters.”

Appendix

Table 1: Pension Confidence Indicator

September 2023 December 2023
Feeling quite or very negative 51% 51%
Feeling quite or very positive 42% 41%
Indicator reading -9 -10

A new measure of sentiment towards retirement. This is the difference between the proportion of British adults stating they feel negative and the proportion who feel positive about their pension outlook, with a minus number indicating more negative than positive sentiment.

Source: PensionBee, January 2024. A nationally representative sample of c.2,000 GB adults aged 18-85. Numbers have been rounded.

Please find our full Appendix, which includes tables with our data breakdowns here.

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