When it comes to realistic retirement planning, the most pension-savvy savers live in the East Midlands, according to new findings by Unbiased. But some areas of the country aren’t nearly as confident or well-prepared. Where are you? Article by Nick Green.
East Midlanders tend to be the best at keeping on top of how much they have accumulated in pension savings, according to a recent survey1. They are also among the most likely to have at least some pension savings, and to have a clear idea of how much retirement income they would like, and how much pension they’d need to save for this.
The findings form part of a wider survey by Unbiased into levels of pension awareness in the UK population. As well as significant variations by age group and gender, big differences were identified from region to region, with some areas seemingly much more alert to the need for retirement savings, with others trailing behind. Some areas also displayed more confidence about their retirement prospects – although interestingly, the most confident are not necessarily the best prepared, with some appearing to be in a state of denial.
East Midlanders know their pensions…
When asked how much they had saved up in their pension pots to date, many people in the UK are unsure (despite this information being provided on regular pension statements). However, this is least likely to be the case in the East Midlands, where 87% of respondents can give a figure. Londoners are similarly on the ball, with 85% having some idea of their pension savings levels. Those who are most unsure can be found in Scotland and the North East of England, where just 68% and 74% respectively have this knowledge to hand.
…while Scots keep their prudent reputations
However, Scots show themselves to be better prepared than those figures might suggest. Despite the relatively high level of uncertainty over exactly how much they have, Scots (like the East Midlanders) are among the least likely to have no pension savings at all. Some 84% have at least something in the kitty, surpassed only by the South East of England (the East Midlands rank next, with 82% having pension savings). Despite this, Scots are also the least sure about how much income they might need in retirement, with 42% of respondents not willing to guess at their desired income. Taken together, these figures hint that financial prudence isn’t just a cultural stereotype but is alive and well among Scottish pension savers – who seem unwilling to make financial guesses or predictions, but nonetheless have savings stashed away for the unexpected.
What’s up with the West Midlands?
One of the surprises to emerge from the research was the sharp divide between the East and West Midlands in terms of pension readiness. On the face of it, the two regions look similar. Both are equally willing to target a particular retirement income (69%-70% of people have a figure in mind) and similar numbers believe they know how big a pension pot they’d need to save.
However, there the parallels fall away. Although just 18% of East Midlanders have no pension savings, this rises to 29% in the West Midlands – the worst region in the whole UK for having no pension savings, above the North East at 27%. This is in spite of them being as confident as the East Midlands that they know how much income they want and how much they should save.
It’s a sobering reminder than confidence isn’t the same as preparedness, and that thinking you know isn’t the same as actually knowing. In the East Midlands, the confidence is underpinned by higher levels of pension saving, while in Scotland the lack of confidence is offset by genuine preparedness. This doesn’t seem to be so much the case in the West Midlands – though the region still demonstrates reasonable levels of pension saving, with some 58% of people having pots of £50,000 or above.
Pension uncertainty affects many other regions
Other areas that show high uncertainty over how much pension they need to save include Yorkshire and Humberside, where 51% can’t guess how big a pension pot they’d need, and 42% won’t even estimate the income they would want in retirement. The South West also seems unsure about this, with 41% not ready to predict their pension savings goals.
Full-time or part-time makes a difference, too
Perhaps unsurprisingly, levels of pension certainty are also strongest among those who work full-time, compared to those with part-time jobs. Though both groups are similarly aware of how much they have in existing pension savings (21% to 22%), part-timers are much more unsure over what income they can aim for in retirement, or how to achieve this.
There are a number of possible reasons for this discrepancy. One is that people in full-time work have more exposure to information about workplace pension schemes, so are more engaged with them. Another is simply that part-timers are despondent about their retirement prospects. They are far more likely than full-timers to have no pension savings (24% vs 8%) so may simply avoid thinking about pension questions at all. The same may apply to those regions of the UK where pension awareness seems low.
However, such a gloomy outlook isn’t really justified – as the Unbiased Pension Calculator can demonstrate.
Calculating future pension income and current savings
Karen Barrett, CEO and founder of Unbiased, recently announced the launch of the Pension Calculator, describing it as ‘a wonderful free tool to encourage people to engage with the process of pension saving.’ Karen said, ‘It’s easy to make the mistake of believing you’re too young to think about pensions. We want to remind everyone that it’s never too soon to start doing that – or too late. We’ve long known that many in the UK aren’t saving enough for retirement, and regularly encourage people to seek advice to improve their prospects. But the eye-opening revelation in our research is how many people simply don’t know how much to aim for. Our Pension Calculator offers extra help on that journey. It shows how a little regular saving can build up over time, and how small changes now can make a big difference in the future.’
You can try out the Pension Calculator below. Simply enter a few details about your current situation, and it’ll give you an estimation of how much pension income you can expect in retirement – and most importantly, what you can do to improve it.
1 Survey by Unbiased and Opinium of 2,000 non-retired UK adults in June-July 2020.