Brits felt more positive than negative about their retirement prospects for the first time in six months in March, although expectations for the state pension are waning amongst younger savers, PensionBee’s latest Pension Confidence Index has found.

The index showed that positive pension sentiment "surged" in the past three months, with the Pension Confidence Indicator “soaring” to +22 in March 2024, marking a “notable increase” from -10 in December 2023 and -9 in September 2023.

PensionBee attributed this shift to a "significant" decrease in negativity among those under the age of 55 and a further increase in confidence among those at and near retirement age.

Indeed, the research showed that negative pension sentiment fell “significantly” for under 55s since the beginning of the year, dropping from 56 per cent to 38 per cent, while positive pension sentiment increased slightly from 34 per cent to 39 per cent in the same period, becoming the dominant perspective amongst under 55s.

However, PensionBee argued that the proximity of this figure to positive sentiment suggests an absence of a clear consensus when it comes to retirement and pensions.

And sentiment also varied by age, as the index showed that while more than half (54 per cent) of 18-25 years old felt positive about their pension, this gradually diminished as retirement approached, with almost half (47 per cent) of workers aged 44 to 54 feeling negative about their pension, higher than any other age group.

But the opposite was true for those near or at retirement, as almost two thirds (63 per cent) of over 55s said they fel positive in March 2024, up from 47 per cent in December 2023, while negative pension sentiment fell to 24 per cent, a significant drop from its peak at 52 per cent six months prior.

In particular, the index found that the majority (54 per cent) of 55-64 year olds felt positive about their pension, while over two-thirds (78 per cent) of over 65s expressed the same sentiment.

Notably, the highest level of pension confidence was observed among males aged 65 and above, with an "impressive" 82 per cent of this group reporting pension confidence.

State pension was a key provider of confidence for these older savers, as more than half (60 per cent) of over 55s identified it as a top reason for positive pension sentiment, marking a "noticeable increase" from 38 per cent in December.

But expectations of the state pension waned amongst under 55s, as PensionBee revealed that, for the first time since the index’s inception, the state pension dropped out of the top three reasons for positive pension sentiment.

Instead, there was a greater emphasis placed on ‘increasing contributions’, which rose from 27 per cent to 35 per cent from December to March, suggesting a greater focus on funding retirement through personal contributions rather than a reliance on the state pension.

An increased importance on fund performance was also evident among working age savers, as ‘changing plans to improve investment performance’ emerged as a top priority, up from 13 per cent in December to 19 per cent in March.

In addition, ‘satisfaction with fund performance’ emerged as a top reason (21 per cent) for feeling positive, marking a significant jump from 11 per cent in December and 7 per cent in September.

Gender differences were also highlighted, as PensionBee found that, despite overall positive trends, men continued to exhibit greater pension positivity than women across all age groups.

This contrast was particularly "striking" amongst individuals near or at retirement age, as over half (58 per cent) of men expressed positive pension sentiments compared to 37 per cent of women.

Commenting on the findings, PensionBee director of public affairs, Becky O’Connor, stated: “It’s encouraging to see a growing sense of pension optimism in the UK, suggesting factors such as falling inflation rates and reduced cost of living pressures, in addition to a recovery in stock market fortunes and the state pension increase, have played an important role in bolstering confidence.

“While it’s often assumed that younger individuals feel more confident when it comes to their pension, due to having a longer period to save, this research highlights a nuanced reality. Initial zeal for pension savings can give way to competing financial demands during the middle of one’s career.

“It appears for many, it's the proximity to retirement and the attainment of financial clarity that reignites this pension confidence later in life. However, it’s crucial to acknowledge the persistence of the gender gap in pension confidence.

“These dynamics highlight the multifaceted nature of pension confidence, underscoring the importance of financial planning for all individuals across all stages of life.”


.

---