Aviva research uncovers a pensions knowledge gap

New research by Aviva reveals a potentially worrying shortfall in people’s awareness of crucial pension matters, including the difference between different types of pension scheme.

The survey of more than 2,000 UK adults shows there is considerable confusion and misinformation about basic pension planning topics. In some cases, there is also a clear gap between people’s perception of their own knowledge and what they actually understand.

Here are some of the headline statistics from the research:

• Only a third of adults can correctly identify what a defined benefit (DB) or defined contribution (DC) scheme is.

• Over half (53%) say they are knowledgeable about pensions, but one-in-five (20%) do not know what type of pension they have.

• Only one in five (20%) know that they can access a DC pension from age 55 (changing to age 57 in 2028).

• Over half (57%) did not know the government contributes to pensions in the form of tax relief, and just 7% knew that tax relief starts at 20%.

• Less than a quarter (17%) knew that the State Pension age is currently 66.

The survey also revealed some shortfall in terms of awareness of the investment side of DC pensions. Just one-in-five (19%) said they actively managed their pension investments, and over half (55%) said they did not know how their pension was invested.

Aviva’s Doug Brown says: “These findings clearly show that, while confidence is high, people’s knowledge and understanding of pensions doesn’t necessarily match that self-assurance.

“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.”