British savers’ confidence in their pension prospects has seen a remarkable turnaround, with sentiment surging from -10 to +29 over the course of 2024, according to the latest PensionBee Pension Confidence Index.
The dramatic shift reflects a growing optimism among the public about their financial futures in retirement. However, the data reveals a stark contrast between age groups, with older and younger savers showing significantly different levels of confidence about their pension prospects.
Confidence in pension prospects reached its peak in June 2024 following the General Election, hitting +30 on the index. The measure showed remarkable stability through the latter half of the year, with only minor fluctuations.
September 2024 saw a slight dip to +28, before settling at +29 by December 2024. This sustained confidence came despite initial concerns about the potential impact of the Autumn Budget on economic conditions.
The Budget’s effects appear to have been less severe than originally anticipated, though the full impact of many policies remains to be seen. The steady confidence levels throughout the second half of 2024 suggest a resilient outlook among British savers, even in the face of economic uncertainty.
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Britons’ confidence in their pension pots has surged, according to new research
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Older savers aged 55 and above demonstrated record levels of confidence in their pension prospects throughout 2024. By December 2024, 65 per cent of older savers expressed confidence in their pensions, matching the previous high set in March of the same year.
The final quarter of 2024 saw a three per cent increase in positivity among this age group, driven by improvements in pension security indicators. The proportion of older savers with good defined benefit pensions rose from 22 per cent to 26 per cent between September and December.
Satisfaction with pension performance also improved, climbing from 14 per cent to 17 per cent during the same period. Concerns about state pension longevity eased, dropping from 27 per cent to 24 per cent in the final quarter.
Similarly, regrets about insufficient savings decreased from 29 per cent to 24 per cent among older savers. In stark contrast, savers under 55 continue to face significant challenges, with confidence levels lagging behind their older counterparts.
While confidence among younger savers initially rose from 39 per cent in March to 49 per cent in September 2024, it declined to 47 per cent by December. Trust in employer pension contributions fell notably, dropping from 47 per cent to 42 per cent in the final quarter of 2024.
Confidence in personal contributions also weakened, declining from 42 per cent to 38 per cent over the same period. The data shows a concerning trend in contribution plans among younger savers.
Those planning to increase their pension contributions fell from 42 per cent to 38 per cent between September and December 2024. More worryingly, the proportion of younger savers considering pausing their contributions rose from seven per cent to 10 per cent.
Despite these challenges, confidence in pension performance among under-55s showed improvement, rising from 20 per cent in July to 27 per cent by December 2024.
Lisa Picardo, the chief business officer UK at PensionBee, highlighted both the positive trends and ongoing challenges in pension confidence. “The rise in overall pension confidence is a positive indicator of resilience among savers in the UK, particularly older generations,” she said.
However, she emphasised the persistent challenges faced by younger savers. Picardo stressed “the need for consistent policy measures to support retirement security for all workers”.
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She pointed to two key areas requiring attention: ensuring state pension stability and promoting regular pension saving habits among younger generations.
These measures, she noted, would be “crucial for long-term financial well-being”.
This divide is particularly evident in contribution patterns, with younger savers showing increasing hesitancy to commit to pension savings.
The trend of declining contribution plans among under-55s, coupled with rising numbers considering contribution pauses, suggests potential long-term implications for retirement security.
