Pensions 2000: public attitudes to pensions and planning for retirement
A hard copy of this report summary can be obtained by contacting Paul Noakes [E-Mail: Paul.Noakes@dwp.gsi.gov.uk] or by writing to him at the 'Social Research Division, Department for Work and Pensions, 4th Floor, Adelphi, 1-11 John Adam Street, London WC2N 6HT'.
Research Report No. 130
By Victoria Mayhew
This report presents findings from a survey examining attitudes towards pensions and planning for retirement conducted among almost 1700 adults in Britain aged 16 and over who were interviewed using the National Statistics Omnibus in March 2000.
The main findings were:
Pensions knowledge and attitudes to pensions and retirement
- Almost half of working age respondents had no more than a ‘patchy’ knowledge of pensions. Seven in ten had given ‘at least some’ thought to their retirement income.
- Public opinion was divided on who should be mainly responsible for ensuring that people have enough to live on in retirement. Forty two per cent thought responsibility lay with the government, 50 per cent the individual/their family and four per cent employers. Those most likely to think that the individual should be responsible tended to be those in a better position to provide for themselves.
Pension provision
- 52 per cent of employees belonged to an occupational scheme and 19 per cent had a current personal pension. Overall, 29 per cent of employees had no current non-state provision – 40 per cent of these were women working part-time.
- 59 per cent of self-employed people interviewed currently had a personal pension.
- Those most likely to have some form of non-state provision were men, people working full-time, the middle aged and those on higher incomes.
Stakeholder pensions
- The stakeholder ‘target group’ made up just under half (44 per cent) of all those in employment without non-state pension provision. Most of the ‘target group’ was concentrated in the lower half of the stakeholder income range.
- Around a quarter of working age adults had heard of stakeholder pensions, mainly those with better pensions knowledge. 29 per cent of the ‘target group’ were aware of stakeholder pensions.
- 41 per cent of the stakeholder ‘target group’ said that they were very/fairly likely to take out a stakeholder pension; 14 per cent said they needed more information.
Confidence in pensions
- People with occupational or personal pensions were broadly confident that their pension arrangements would pay the pensions and benefits that they expected on retirement, although people with occupational pensions were more confident in this respect than those with personal pensions.
- Just under half of working age respondents were confident that they would get some form of pension from the state when they retired – those approaching retirement were most confident in this respect.
Introduction
The report is based on analyses of a module of questions placed on the March 2000 National Statistics (formerly the Office for National Statistics) Omnibus Survey, which interviewed around 1700 members of the general public in Great Britain aged 16 and over.
The main aims of this research were to:
- examine the extent and types of pension provision among the British population a year before the launch of stakeholder pensions;
- examine attitudes towards planning for retirement;
- explore awareness of, and interest in, stakeholder pensions and the features that particularly appealed to people;
- examine the characteristics of the ‘target group’ for stakeholder pensions.
Knowledge of pensions issues
Seven in ten people of working age said they had given at least some thought to their income in retirement. Thirteen per cent of respondents reported a 'good' knowledge of pensions issues, and 40 per cent said that they had a 'reasonable basic' knowledge. This means that just under half of respondents interviewed reported that their pensions knowledge was below this level. Many employees seemed confused or uncertain of their SERPS status and around a tenth of employees with occupational pensions did not know if their pension was salary related or money purchase.
There was a link between self reported pensions knowledge and the extent to which people had thought about their retirement: those who were least knowledgeable about pensions issues were also those who had given least thought to their income in retirement. These people tended to be younger, on lower incomes (and often not in employment), and not contributing to any form of non-state pension provision.
Responsibility for income in retirement
Public opinion among working age people was evenly divided on whether the government or the individual should be mainly responsible for ensuring that people have enough to live on in retirement (50 per cent thought the former, 42 per cent thought the latter). Very few (four per cent) thought that this was the responsibility of employers. Those most likely to think individuals should be responsible were in a better position to provide for themselves - in employment (particularly the self-employed), on higher incomes, and already making contributions to some form of non-state provision.
Occupational pensions
Seven in ten employees worked for an organisation that provided an occupational pension for some or all employees and 52 per cent were currently members of an occupational pension scheme. Among employees, levels of occupational pension scheme membership varied by employment sector, age, income, and whether people worked full-time or part-time. Part-time workers, the majority of whom were women, were much less likely to be members of occupational schemes than full-time workers. The most common reasons employees gave for not being in an occupational scheme were that they were not eligible, or that they were satisfied with other pension, or financial, arrangements.
Personal pensions
19 per cent of employees were contributing to a personal pension. Those most likely to be contributing to a personal pension were: men, people working full-time, people in their forties and people with incomes over around £10,000. Fifty nine per cent of self-employed people were also currently contributing to a personal pension - again, men, those working full-time and those on higher incomes were most likely to be contributing.
Awareness of stakeholder pensions
Awareness of stakeholder pensions varied considerably across the population. Those most aware at the time of the interview were those with the best knowledge of pensions – most of whom were already contributing to some form of non-state provision. Overall about a quarter of working age respondents had heard of stakeholder pensions and among the ‘target group’ around three in ten (29 per cent) were aware of them. Among the ‘target group’, the self-employed were more likely to have heard of stakeholder pensions than were employees. The characteristics of stakeholder pensions that appealed most to the ‘target group’ were ‘flexibility’, and a 'reasonable minimum level of contributions’.
Likelihood of taking out a stakeholder pension
Around four in ten of the ‘target group’ said that they would be likely to take out a stakeholder pension when they became available – women in the ‘target group’ were more likely to say this than men. At the time of the research, there was little interest in stakeholder pensions among people who were already making contributions to a personal or occupational pension (the research was conducted prior to the decision being made about concurrency).
The stakeholder ‘target group’
Most employees in the target income range for stakeholder pensions (between £10,000 and £20,000) were currently contributing to some form of non-state pension provision. However, a significant minority of these employees did not appear to have any non-state pension provision - especially those in the lower half of the income range. Of employees earning £9360 to £15600, 30 per cent were not currently contributing to any non-state pension provision. This was true for 19 per cent of employees earning £15600 to £20800.
Forty one per cent of self-employed people were not currently contributing to a personal pension and thus were targets for the stakeholder pension. Self-employed people without a current personal pension tended to earn less than £20800 a year and had lower incomes than self-employed people with personal pensions.
The ‘target group’ for stakeholder pensions contained an almost even proportion of men and women, most of who were aged under 50. Most of the ‘target group’ was concentrated in the lower half of the income range.
Opinions of different types of second tier pension provision
Occupational and personal pensions were generally regarded quite positively by people of working age. Occupational pensions in particular were seen as offering a good return for people's money, and were also seen as secure. Respondents were not very positive about SERPS - it was regarded by many as offering a poor return for people's money, and was also not seen as particularly secure. People who were currently making contributions to SERPS were no more positive than those who were not. Many respondents were unable to make any judgement about which type of pension offered the best or worst return on people's money, or which pension was most or least secure, suggesting that people may be less knowledgeable about this aspect of pensions.
Confidence in occupational and personal pensions
People with occupational or personal pensions were broadly confident that their pension arrangements would pay the pensions and benefits that they expected on retirement, although people with occupational pensions were more confident in this respect than those with personal pensions. There was some evidence to suggest that people with private pensions were less confident about their pension arrangements than people interviewed in an earlier survey, conducted in 1995. Fifty three per cent of people with an occupational pension in the 1995 survey were very confident that it would pay the benefits expected as stated in the scheme rules. In the 2000 survey, 26 per cent of respondents with an occupational pension only were very confident that it would pay the benefits expected. Twenty three per cent of those with personal pensions were very confident in 1995, compared with 10 per cent of those with a personal pension only in 2000. Whilst the questions relating to confidence were phrased in a different way between the two surveys (and so are not directly comparable), it is likely that this does not account for the entire change. It could be that people have continuing concerns about occupational and personal pensions arising from Maxwell and publicity surrounding personal pension mis-selling in the 1990s. It is also possible that some personal pension holders have become aware of recent publicity surrounding falling annuity rates, which may have affected their confidence in their personal pensions.
Confidence in state pensions
Fewer than half of working age respondents interviewed were confident that they would get a pension from the state when they retired which remains broadly unchanged since the 1995 survey. Those approaching retirement were most confident that they would get a pension from the state.
Savings
Eighty one per cent of working age people had some form of savings or investments, most commonly in a savings account, an ISA or TESSA. People without any savings or investments mainly said that this was because they could not afford it. They tended to be younger, on lower incomes and not in employment – a similar profile to those without private pension provision. Most people who had savings appeared to be saving for the long term - for the future in general, retirement, or a 'rainy day'. People had different savings priorities at different ages - for example, saving for retirement specifically became increasingly important as people got older. The main reasons people gave for not planning to use their savings or assets for retirement were that they had other priorities at the moment, that retirement was too far off, or that they were making other provision.
Expectations of retirement income
Working age people were broadly confident that they would have an adequate income in retirement and most could envisage being able to afford essential clothing, housing and food, and have money to spare for treats or luxuries. Those who were least confident that their retirement income would be adequate tended to be on lower incomes, were not making any form of non-state pension provision, or did not have any savings or investments. People who were not working (especially the long term sick) had particularly low expectations of their retirement income, as did those aged 40 and over who did not have savings and were not currently contributing to a non-state pension. As people approached retirement age, they were less likely to think that their retirement income would be adequate, although overall, the majority of people in their fifties and sixties thought that they would have more than just enough to cover essential items such as food clothing and housing.
People in retirement
More than half of retired respondents (59 per cent) received an income from an occupational or personal pension. Those most likely to have some form of private pension provision were: men, people who had worked full-time prior to retirement and people who said that they had given at least some thought to their retirement income, before they retired. As would be expected, retired people who were in receipt of an occupational or personal pension had higher incomes than those who were not. The differences in pension provision among retired people to some extent mirrored those among people of working age. For example, among the working age respondents in the sample, women and part-time workers were less likely to have private pension provision. Among the retired respondents in the sample, women and those who had worked part-time prior to retirement were less likely to be in receipt of an occupational or personal pension.
Publication details
Mayhew, V. (2001), “Pensions 2000: Public Attitudes to Pensions and Planning for Retirement” (DSS Research Report No. 130) Leeds: CDS (£33.00)
Relevant publications
Other relevant publications on individuals’ pension provision
Knight, G. and McKay, S. (2000) “Lifetime Experiences of Self-employment” (DSS Research Report No. 120) Leeds: CDS (£31.50)
Walker, R., Heaver, C. and McKay, S. (2000) “Building up pension rights” (DSS Research Report No. 114) Leeds: CDS (£33.50)
Hedges, A. (1998) “Pensions and Retirement Planning” (DSS Research Report No. 83) Leeds: CDS (£28.00)
Disney, R., Grundy, E. and Johnson, P. (1997) “The Dynamics of Retirement” (DSS Research Report No 72) London: TSO (£36.00)
Field J. and Prior G. (1996) “Women and Pensions” (DSS Research Report No. 49) London: HMSO (£35.00)
Hawkes, C. and Garman A. (1995) “Perceptions of Non State Pensions ”(DSS In-house report No.8)
Bone, M., Gregory, J., Gill, B. and Lader D. (1992) “Retirement and retirement plans” (Social Survey Division, Office of Population Censuses and Surveys) London: HMSO