British adults’ confidence in their retirement prospects has fallen slightly ahead of what is expected to be a ‘painful’ first Budget from the new Labour government, analysis from PensionBee has revealed.

The research showed that, following a “surge” to 30 after the General Election in July 2024, the pension confidence indicator has dipped to 28 ahead of Labour's Budget on 30 October.

Despite the overall decline, confidence amongst under 55s has increased for the first time, rising from 45 per cent in June 2024 to 49 per cent in September 2024.

PensionBee found that while pension confidence among under 55s has fluctuated throughout the year, having initially fallen between September 2023 and March 2024, it has since shown a steady improvement, resulting in higher levels of optimism now than this time last year.

The key drivers of confidence for this group were employer contributions (47 per cent) and personal contributions (42 per cent), followed by satisfaction with fund performance (24 per cent).

In contrast, pension confidence for over 55s has fallen from the 65 per cent peak seen in March 2024 to 62 per cent, which PensionBee highlighted as reflection of a more cautious sentiment among this group since Labour has taken office.

This is compounded by increasing distrust in the government’s commitment to maintaining a sufficient state pension, up from 18 per cent in March 2024 to 27 per cent in September 2024.

However, the future of the state pension was less of a concern for working age adults, as confidence that it will form part of their retirement held steady among 18 per cent of respondents from March 2024 to September 2024.

Adequacy was instead a larger challenge for this age group, with 34 per cent identifying it as their primary worry for the third consecutive Index.

There are encouraging signs for the future though, as PensionBee found that the proportion of under 55s looking to increase their contributions rose from 29 per cent in September 2023 to 42 per cent now, suggesting potentially some relief from economic pressures or a greater focus on accumulating pension wealth.

At the same time, concerns about not being able to contribute enough to their pension have decreased from 34 per cent to 29 per cent over the same period.

Commenting on the findings, PensionBee director of public affairs, Becky O’Connor, said: “The increase in pension confidence among the working population in the first few months of a Labour government suggests high hopes for improvement in long-term finances.

“However, the slight decline in confidence among those in or nearing retirement may indicate increased insecurity as a result of policy signals so far, including cuts to the winter fuel allowance, and general uncertainty.

“Pension confidence is fragile, appearing to be very swayed by sentiment, speculation and general political measures.

“This underscores how important the tone and content of the upcoming Budget will be to the way people plan and manage their long-term finances.

“The Chancellor’s moves have real world consequences for people’s retirements. The Pension Confidence Index suggests that far from pensions being under people’s radar, both working and retired populations are acutely aware of how policy moves can impact them meaningfully.”

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