The biggest incentive to encourage the nation to save for retirement would be to raise awareness of the benefits of tax relief, Legal & General Investment Management (LGIM) has said.

Research released today, by LGIM and Boring Money, to mark Pension Awareness Day has found that retirement is firmly on people’s minds.

The study looked at the saving habits and plans of four groups of people categorised as ‘rebellious renters’ – those trying to save for their first property, ‘tired parents’ juggling numerous expenses, ‘ladies losing out’ who prioritise happiness in later working life and the ‘sandwich man’ caught between providing financial support for elderly parents and his own adult children.

When questioned about the current pension tax relief, a significant 65 per cent of ‘rebellious renters’ had either not heard of the system or do not understand it. Twenty seven per cent, however, pointed to the statement ‘if you save £80 into a pension, the government pays in £20 for free’ as the most likely to encourage them to save.

Twenty five per cent of ‘tired parents’, 21 per cent of ‘ladies losing out’ and 22 per cent of the ‘sandwich man’ category also said this statement is the most likely to motivate them to save.

LGIM and Boring Money’s research also indicated, an already known pension gender gap which was seen across all categories. The difference was particularly apparent in the ‘tired parents’ group as 42 per cent of men said that they had a workplace pension and knew how much was in it, while only 22 per cent of females have one.

With ‘rebellious renters’ 30 per cent of men have a workplace pension in comparison to 20 per cent of women. Forty six per cent of the ‘sandwich man’ group have a workplace pension and know how much is in it, in comparison to 33 per cent of ‘ladies losing out’.

When asked which they think would be the safest way to save for retirement, the majority of people asked, 40 per cent said an employer pension, closely followed by property with just over 25 per cent. Premium bonds and stocks and shares scored lowest with under 5 per cent each.

LGIM head of DC Emma Douglas, said: “Whilst it is encouraging to see that saving for retirement is important for each of these groups, we now need to motivate people to become more active about doing so. As an industry, we also need to do a better job of raising awareness about the benefits of pension tax relief.”

Boring Money founder and CEO Holly Mackay added: “Surely tax relief is one of the great benefits of a pension, yet all our focus groups and consumer research tell us that this remains poorly understood across all age brackets. Although we are firm advocates of talking to financial tribes about their particular stages in life, we can see that this is one message which resonates loud and clear across all segments, and one we think the industry should make clearer.”

Share Story: