The Department for Work and Pensions (DWP) has published its Planning and Preparing for Later Life 2024 report, revealing that more than a third (38 per cent) of UK adults aged 40 to 75 have no savings at all, pointing to widespread financial insecurity ahead of retirement.

This is the second report in the series, following the previous survey conducted between 2020 and 2021 and published in 2022, and was commissioned by the DWP and carried out by the National Centre for Social Research, in collaboration with WPI Economics, the Institute for Employment Studies, and the Pensions Policy Institute.

The report was launched alongside two other pension-related reports (Analysis of Automatic Enrolment Saving Levels and Gender Pensions Gap in Private Pensions), both of which focus on pension adequacy.

Its release also follows the government’s announcement of the relaunch of the Pensions Commission, which will explore the barriers preventing individuals from saving enough for retirement, with a final report due in 2027.

The Planning and Preparing for Later Life 2024 report had four core objectives: to understand attitudes and behaviours around pension saving and planning for later life, provide evidence to support policy development around income adequacy in retirement, gather evidence on attitudes and knowledge around the state pension system and the value consumers place on DWP products, policies and services.

It found that 60 per cent of people aged 40 to 75 in paid work said they wanted to work less as they approached retirement, and when asked what would help them keep working longer, 46 per cent of people who had not yet retired from paid work mentioned working fewer hours or being able to take more holidays.

In addition to this, the research showed that 75 per cent of people aged 40 to 75 had a private pension, while those on lower incomes, renters and with a long-term limiting health condition were less likely to have one.

In terms of the reasoning for this, 54 per cent of people without a pension mentioned not being able to afford it.

The report also highlighted that 38 per cent of 40- to 75-year-olds had no savings, while a further 20 per cent had savings of under £15,000.

Almost eight in 10 (78 per cent) of social renters and 66 per cent of private renters reported having no savings, compared with 17 per cent of people who owned their home outright.

In terms of expectations for retirement, 65 per cent of people below the state pension age (SPA) said the amount of state pension they receive would be very important or important in their decision on when to retire.

The median ideal retirement age for 40- to 75-year-olds who had not yet retired was 60. Their median expected retirement age was 66.

Despite this, 44 per cent of people expected to retire before their SPA and working beyond SPA was more common among the self-employed, people without a private pension, people on low incomes and renters.

In relation to the age to begin saving for retirement, the Planning and Preparing for Later Life 2024 report found that people were most likely to suggest they started saving for their retirement in their 20s or 30s, with 59 per cent having done so.

The research also highlighted that people started actively planning for their retirement at a later age, with 45 per cent of people who were semi-retired and 40 per cent of people who were fully retired starting to plan in their 50s.

Meanwhile, only 22 per cent of semi-retired people and 21 per cent fully retired said they started planning for retirement earlier.

When it came to confidence in decisions about pensions, the level varied, with the mean confidence score on a 0 to 10 scale being 5.1.

Indeed, 46 per cent of 40- to 75-year-olds rated their confidence between 6 and 10 on the scale, but 13 per cent rated their confidence as 0.

People with high financial literacy, who had used regulated advice or guidance in the last 12 months and had a private pension, felt more confident making decisions about pensions.

Almost a quarter (24 per cent) of private pension holders aged 40 to 75 said they found it fairly or very difficult to keep track of their pension.

Given this, people aged 40 to 75 said they would be very (50 per cent) or fairly likely (31 per cent) to use a pensions dashboard.

The survey also examined income adequacy in retirement, which revealed that people aged 40 to 75 were less confident that they would be able to achieve the lifestyle they wanted in retirement in 2024 compared with 2020 to 2021.

When asked to rate their confidence on a scale from 0 to 10, the mean confidence score in 2024 was 4.7, compared with 5.8 in 2020 to 2021.

In particular, 41 per cent of people aged 40 to 75 said they ’had no idea’ how much income they would need in retirement, with this figure being higher among younger age groups and the less financially secure (those on lower incomes and renters compared with owner occupiers).

Meanwhile, when asked about how reliant people expected to be on their partner’s income in retirement, the reaction varied, with women rating their level of reliance on a partner (5.3 on a 0 – 10 scale) higher than men did (three on a 0 – 10 scale).

The report also analysed pension decision-making and found that 53 per cent of people aged 40 to 75 wanted their pension to provide them with a guaranteed income for life.

This is compared to 31 per cent who wanted a flexible income and 12 per cent who wanted a flexible income up to a certain age and then a guaranteed income thereafter.

In terms of the likelihood of wanting to have a guaranteed income for life, younger age groups and people with smaller pension savings were the most likely.

The majority (77 per cent) of defined contribution (DC) pension holders yet to access their pension did not have a clear plan for how to do this.

This includes 56 per cent who knew they had to make a choice but did not have a clear plan, 21 per cent who were not aware they had to make a choice and 22 per cent who had a clear plan.

The research suggested that confidence may increase over time, as people aged 55 and over who had accessed their DC pension since 2015 were generally confident that they had made the right choice to meet their retirement goals.

When asked to rate their confidence on a scale from 0 to 10, the mean score was 7.3.

This survey included a new module that was not included in the 2022 publication of the Planning and Preparing for Later Life 2024 report, which looked at the value people place on – or the average ‘willingness to pay’ for – products and services to support retirement planning and decision-making.

The survey gathered insights on a range of guidance and information services such as simple annual benefit statements, which 92 per cent of 40- to 75-year-olds thought should continue to be provided.

The mean amount that the respondents would be willing to pay annually for a simple annual benefit statement was £6.60.

The survey also questioned respondents about their willingness to pay for new default policies that the government are currently developing.

For example, 73 per cent of 40- to 75-year-olds and 74 per cent of private pension holders believed automatic consolidation of small pension pots should be offered.
The mean amount that people said they would be willing to pay, each time pots were consolidated, was £8.80.

The DWP said that in recent years, and since the first version of this research was conducted, the pensions landscape, as well as the wider socio-economic context, has changed.

It highlighted that cost-of-living pressures and the impact of Covid-19 are undoubtedly still felt by some and that the ageing population has necessitated a review of SPA, and the introduction of the new state pension in 2016 aimed to simplify the system.

The DWP said increased life expectancy has also necessitated that people continue working for longer.

It noted the private pensions landscape has also seen “considerable” changes in recent years, including the introduction of automatic enrolment and Pension Freedoms and a general move away from defined benefit to DC schemes.

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