Three quarters of UK adults have no idea what state pension is worth

  • More than three-quarters of working adults do not know how much the State Pension is
  • 23% of working adults do not know how much they are saving into a pension
  • 13% of working adults have decreased their pension contributions

Research from pensions and retirement specialist LV= highlights how millions of people are unprepared for retirement.

The LV= Wealth and Wellbeing Research Programme* - a quarterly survey of 4,000 UK adults – reveals that millions of people don’t know the age at which they will receive the State Pension, how much it will be worth and how they can avoid running out of money in retirement.

The research found:

  • More than three-quarters (77% 25m) working adults could not say how much the State Pension is 

The current State Pension is £185.15pw (payments depend on National Insurance contributions and past earnings). The State Pension age is currently 66 and set to rise to 68 between 2044 and 2046 for those born after 1977. 

Confused by contributions

Large numbers of people do not know how much they are saving into a pension or how they can avoid running out of money in retirement. 

The research found that about a quarter 23% (7m) of working adults do not know how much they are paying into a pension.

Some 14% (4m) working adults say they are not paying into a pension. A quarter 25% (8m) say they are paying 15% or more.

LV’s research indicates that the cost of living crisis may be taking its toll on pension contributions. Some 13% (4m) of working adults decreased their pension contributions in the past three months. This is an increase from 7% (2m) of working adults who said they decreased their pension contributions in September 2021.
 
Lack of knowledge about taking an income from pensions

Withdrawing money from a pension is also a problem for many people who do not understand how to ensure their pension fund lasts the rest of their life. The research found:

  • 58% (19m) working adults say they do not know how to ensure they don’t run out of money in retirement
  • 60% (19m) working adults do not know how to take money from their pension in a tax-efficient way
  • The research highlights the importance of people monitoring their retirement savings and the benefit of taking financial advice. Withdrawing large lump sums from a pension can land savers with a large tax bill while a couple who planned their finances jointly could generate a combined income of more than £33,000 a year without paying income tax.

Clive Bolton, Managing Director of Protection, Savings & Retirement at LV=, said: 

“The latest LV= Wealth and Wellbeing Research Programme highlights how pensions confuse people. 

“Planning for retirement can be complex but it is important to get right. People approaching retirement need to take some time to think about what they want to do when they eventually stop work, the lifestyle they want and how much it will cost. 

“There are several simple steps that people can take to increase their confidence of being able to pay for a comfortable retirement. People in work should join their company pension scheme and make the most of an employer’s contributions. Self-employed people should consult a financial adviser and consider setting up a private pension. It’s also a good idea to regularly monitor the size of your retirement funds, including the expected State Pension to know if you’re on track. 

“People have a series of big decisions to make as they approach the end of their working life and each one can make a huge difference to their retirement. Taking financial advice is an excellent idea. A financial adviser will provide impartial advice about how much they can draw from their pension to ensure they have an income for life. They can also explain to clients how to withdraw money from a pension and avoid large tax bills.”

Notes to Editors

* LV= surveyed 4,000 nationally representative UK adults via an online omnibus conducted by Opinium in September 2022
UK population stats from ONS. Total UK adult population is 52.9m UK adults (aged 18+). 

For further information please contact:

David Gwyer
Media Relations Manager – Life & Pensions
07798 796907
Candice South
Press Officer - Life & Pensions
07867 141547

About LV=

LV= is a leading financial mutual and serves over 1.16 million members with a range of financial products. When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products. We offer our services direct to consumers, as well as through IFAs. 

LV= and Liverpool Victoria are registered trademarks of Liverpool Victoria Financial Services Limited (LVFS) and trading styles of the LV= Group of Companies. Liverpool Victoria Financial Services Limited, registered in England with registration number 12383237 is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, register number 110035. Registered address: County Gates, Bournemouth, BH1 2NF.