- 57% of UK adults don’t know you can access your pension early due to severe ill health
- 56% don’t know they can contribute to a pension while on parental leave
- Almost two thirds don’t know self-employed can benefit from tax relief on pension savings
More than half of UK adults didn’t know they can contribute to their pension while on parental leave, or that they can access their pension early due to severe ill health, according to new research from the Money and Pensions Service (MaPS).
The findings reveal the key blind spots when it comes to pensions knowledge. More than half don’t know that:
- You can access your pension early if you have to retire due to severe ill health (57%)
- Self-employed people can benefit from tax relief on pension savings (63%)
- You can contribute to your pension while on parental leave (56%).
Women were less likely to know they can keep topping up their pension while on parental leave (61%) than men (51%).
The picture is more positive when it comes to knowledge of automatic enrolment and pensions:
- Almost eight in ten (78%) know that they can start saving into a pension as soon as they have started working, whatever their age
- Almost two thirds (65%) know that automatic enrolment doesn’t guarantee that you’re saving enough for retirement
The research also demonstrates a lack of awareness about the growth of pension savings and what happens to your pension when your employer goes bust.
|If you are forced to retire early due to severe ill health, you can access your pension early||True||43 %||18%||39%|
|You can leave money to grow in pension schemes until you need to access it||True||67%||10%||23%|
|People can start saving into a pension as soon as they have started working, whatever their age||True||78%||10%||12%|
|Self-employed people can’t benefit from tax relief on pension savings||False||15%||37%||48%|
|Money invested in a pension tends to grow at the same rate as you would get in a savings account||False||18%||48%||34%|
|Workers can not contribute to their pension while on parental leave||False||14%||44%||42%|
|There’s no benefit to contributing more into a pension than the amount your employer will match||False||15%||60%||26%|
|If your employer automatically enrolls you into a pension scheme, you don’t have to worry about not saving enough||False||15%||65%||19%|
|If you save into a workplace pension and your employer goes bust, you will lose all your money invested in the scheme||False||13%||51%||36%|
Caroline Siarkiewicz, Acting Chief Executive at the Money and Pensions Service said:
“It’s clear that many people are unaware of their options when it comes to important events in their lives that can impact their pensions such as becoming a parent or starting their own business. Women in particular have many important financial decisions to make when transitioning into parenthood but our findings suggest they are less likely to be aware of their pension options.
“It is positive to see that people have an understanding of how automatic enrolment works. However, our findings suggest that many might be missing out on important information when making decisions affecting their pensions. You can speak to a pensions specialist for free, confidential help by contacting The Pensions Advisory Service helpline or webchat.”
MaPS offers the following top tips to avoid pensions blind spots:
- Continue to make contributions to your pension while on parental leave. Check with your employer how this will work. This will vary depending on whether you’re part of a defined contribution scheme or defined benefit scheme.
- If you’re suffering from severe ill health and wondering what your options are to access your pension, talk to your pension provider. They will be able to explain whether you are eligible to access your pension early.1
- If you are self-employed, you could receive tax relief on the amounts you put into your pension so it’s worth making contributions if you can. Further support for self-employed people with their pensions is available through the Pensions Advisory Service who offer a specialist telephone-based appointment service.
- For free, confidential help from pensions specialists call The Pensions Advisory Service helpline on 0800 011 3797 or visit www.pensionsadvisoryservice.org.uk
Notes to editors
Research conducted by Opinium. 2,008 non-retired UK adults were surveyed between 30th September-3rd October 2019.
1 If you cannot work any longer due to sickness, you may be able to take your pension benefits early, even before the age of 55. This is generally known as taking an ill-health pension.
Your scheme will have its own definition of what ill-health (sickness) means, but usually you will be considered for an ill-health pension if you’re unable to carry out your normal job because you’re physically or mentally ill.
If you’re in serious ill-health (you have less than a year to live), you may be able to take the whole of your pension pot as a lump sum. A serious ill-health lump sum paid before you reach the age of 75 will be paid tax-free provided you have available lifetime allowance. If you’re over the age of 75, the lump sum will be taxed at your marginal rate of income tax.
About the Money and Pensions Service
The Money and Pensions Service vision is everyone making the most of their money and pensions.
The new organisation brings together the free services delivered by the Money Advice Service, The Pensions Advisory Service and Pension Wise.
The arm’s-length organisation is sponsored by the Department for Work and Pensions, with a joint commitment to ensuring that people have access and guidance to the information they need to make effective financial decisions over their lifetime. The organisation also engages with HM Treasury, which is responsible for policy on financial capability and debt advice.
Working hand-in-hand with stakeholders throughout the UK, the Money and Pensions Service ensures that money and pensions guidance is available to those that need it, adapting to people’s changing needs throughout their lives, offering services and appointments over the telephone, online and in person where appropriate.
For further information for stakeholders, they should visit the Money and Pensions Service website www.moneyandpensionsservice.org.uk
Consumers can continue to access free guidance about their money and pensions via the following websites and help lines:
www.moneyadviceservice.org.uk 0800 138 7777
www.pensionsadvisoryservice.org.uk 0800 011 3797
https://www.pensionwise.gov.uk/en 0800 138 3944