Residents in Edinburgh and Southampton have the highest levels of pensions knowledge in the UK, according to new research from Portafina.

The company has discovered that five per cent of people living in the two cities were able to explain every pension term they were asked about.

Savers in Norwich were the most likely to know about pension contributions (82 per cent), with Southampton (79 per cent) and Leeds (78 per cent) residents also confident that pension contributions can be made by a worker, their employer or another third party.

Those living in Glasgow were the least likely to know what a pension contribution is with 14 per cent believing this is money paid into your pension solely by the government.

Portafina asked 2,002 UK adults in June 2019 about whether or not they understood terms such as tax-free cash, a final salary scheme and drawdown.

The firm also found that, despite 84 per cent of respondents understanding that the state pension is a regular payment from the government that most people can claim when they reach state pension age, 15 per cent of respondents in Manchester and Bristol wrongly believed that they can pay into it themselves.

Meanwhile, nearly three quarters of people in Liverpool were unable to correctly define what a personal pension is.

The biggest gaps in pension knowledge came from those living in Coventry, Belfast, Aberdeen and York, with no respondents from these cities able to answer every question correctly.

Jamie Smith-Thompson, managing director at Portafina, said: “Pensions are notoriously complicated to understand.

"And as the pension industry and the government look to make pensions more accessible with developments such as the pensions dashboard, we need to make sure that we’re helping people across the country to have the basic knowledge and information they need about pensions.”

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