King’s College London Research Traces Poor Understanding Of State Pension Basics, With Misconceptions Commonplace

A new study into public attitudes towards the state pension has found understanding of the state pension is poor, with participants often struggling to explain even basic aspects of how the system works.

Participants tended to overestimate their knowledge about the state pension and were subsequently embarrassed and concerned when revealed to be wrong on key details.

But when more information was given, there were concerns about the equity of the system, as well as strong support for reforms to ensure the long-term sustainability of the state pension and to help the most vulnerable approaching retirement.

Carried out by the Policy Institute at King’s College London in partnership with Phoenix Insights, Phoenix Group’s longevity think tank, the research included two deliberative workshops, each bringing together 50 members of the public in London and Birmingham.

Expert presentations and stimulus such as case studies and potential policy reforms were used to aid participants’ understanding of the context and support discussions during the workshops. These were followed by in-depth interviews with participants and a stakeholder roundtable event.

A survey carried out before each of the workshops revealed around half of the participants claimed to have a reasonable, basic knowledge of the state pension – but in reality, “their working knowledge…was actually very limited,” the researchers said.

The study identified five main knowledge gaps covering most of the core elements of how the state pension system works: the number of years of National Insurance contributions needed to qualify for the full state pension, eligibility criteria, the value of payments, what the “triple lock” is, and how the state pension differs from workplace savings.

One participant at the workshop said:

“I think it’s a shame to say but I don’t know enough [about the state pension]. And now as I’m getting older, I’m starting to read up a little bit more and I’m thinking wow…I don’t know enough.”

Another said:

“I thought when you retire everyone is entitled to the pensions. I don’t know why…I thought this is what happens.”

These knowledge gaps have led to a number of misconceptions. The most prominent was that each person’s National Insurance contributions are kept in a personal pot to be accessed when they reach state pension age. This was a strongly held belief that impacted participants’ views about the fairness of the system.

Once the amount the state pension provides was explained, there was general agreement it was not an adequate amount to live comfortably on in retirement, and people would need to supplement the payments from the state with a workplace pension, private pension, or additional assets such as property. This view was reflected by retirees in the workshops whose income has struggled to keep pace with rising prices.

As participants learned more, concerns also grew about the equity of the system: before the deliberative workshops, one in five participants thought the state pension was an unfair system – but this rose to half by the end of the session.

Geographical inequality was a worry for some, as they questioned why the state pension wasn’t weighted to reflect the higher costs associated with living in some parts of the country.

The fairness of the process for qualifying for the full state pension was also raised, and there was strong support for reforms, in particular introducing greater flexibility around access for those who can’t work until state pension age.

But while early access was welcomed, there was a general feeling this should be limited to specific groups, such as those who can no longer work due to health reasons or the physical demands of their role, and people with caring responsibilities.

With the exception of those unable to remain in work, the public viewed age as fairest way to determine access to the state pension, despite an acknowledgement that life expectancies vary widely across the UK.

And, having been presented with the challenge the government faces in terms of the future affordability of the state pension against the context of our ageing population, they accepted the need for an increase to the state pension age to ensure its sustainability.

However, while participants were in favour of providing support to those nearing retirement age who are in need, there were questions around whether it would be more appropriate to reform working age benefits. This would remove the need to lower the state pension age and help remove the cliff-edge between retirement and pre-retirement systems.

Suzanne Hall, director of engagement at the Policy Institute at King’s College London, said:

“For participants, financial security is the foundation for a good retirement. Yet a lack of understanding and a number of misperceptions concerning basic elements of how the state pension works, and who qualifies, is hindering people’s ability to prepare effectively for later life. What’s more, on learning about the state pension participants questioned how fair this system is – particularly for those unable to work due to their own ill health or because of caring responsibilities. Against this backdrop participants were keen on reforms – both to the state pension itself but also the broader welfare system so as to ensure more people can have the quality if life in retirement they deserve”.

Patrick Thomson, head of research and policy at Phoenix Insights, said:


“The state pension matters to all of us, that’s why understanding what people think about it can help to identify areas for improvements and shape policy decision-making for the better. It’s clear that knowledge around the system is low and the communication, around eligibility, how to achieve the full state pension and what this will provide, needs to improve. Acting on this will mean people have a clearer understanding of what is needed to meet their retirement goals and put plans in place to plug any gaps in savings.

“As large numbers of our ageing society reach state pension age in the coming decades it is important that the system is trusted, sustainable, understandable and supports the financial security of retirees. The public are strongly supportive of reforms but rightly recognise they should be focused on helping the most vulnerable without adding complexity.”