Just under half (44 per cent) of UK adults said they didn’t know what pension tax relief was, while 31 per cent could identify the purpose of pension tax relief, research from Hargreaves Lansdown has found.

A survey of 2,000 people conducted by Opinium for HL in October 2025 found varied opinions among those aware of pension tax relief.

According to the research, 8 per cent of people thought pension tax relief was a means by which the government matched people’s pension contributions, while 7 per cent said it enabled pensioners to take income tax-free, no matter how much it was.

Meanwhile, 7 per cent of respondents thought it enabled people to claim back tax once they had retired.

The research also highlighted a difference in understanding between the amount of tax paid by a person, as 47 per cent of higher-rate taxpayers said they understood what pension tax relief was, compared to 35 per cent of basic-rate taxpayers.

Commenting on the findings, Hargreaves Lansdown head of retirement analysis, Helen Morrissey, said that pension tax relief is a “major incentive” to get people saving for retirement, yet the majority of people don’t know what it is.

“We need to raise awareness of this hidden hero of pensions to help people make the most of their retirement saving and save them from any nasty surprises,” she said, warning that the current uncertainty could be mean many aren't making the most of it.

This comes amid growing focus on pension tax relief, as the run-up to the Autumn Budget saw intense speculation about possible changes to pension tax relief and the tax-free lump sum, with people fearing that the Treasury could target the pension tax-free allowance as part of efforts to raise revenue.

Indeed,research from Nucleus revealed that 59 per cent of people were concerned about potential changes to pension tax-free cash in the Autumn Budget.

In addition to this, there was increased concern over the impact of Budget speculation on saver behaviour, with data from the Financial Conduct Authority (FCA) revealing a significant increase in the amount of money being withdrawn from pensions.

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