Confidence in retirement prospects among Brits surged in 2024, according to PensionBee’s Pension Confidence Index highlighting a “substantial” shift in public sentiment.
The Pension Confidence Indicator jumped from -10 in December 2023 to +29 in December 2024 reflecting “growing optimism overall about financial futures.”
But the data continues to reveal a contrast between the “confidence of older and younger savers.”
Confidence peaked in June 2024 (+30) following the General Election, dipped slightly “in September 2024 (+28), and stabilized (+29) in December 2024.”
This suggests the Autumn Budget, initially expected to bring significant economic strain, may have had “a milder impact than initially feared.”
But, with many of the policies announced yet “to take effect, their full influence is only likely to be seen at a later date.”
Retirement confidence saw the most significant gains among those aged 55 and older, who consistently “reported higher optimism compared to their younger counterparts (under 55s).”
In December 2024, 65% of older savers expressed “confidence in their pensions, matching the record high in March 2024.”
The slight increase (3%) in positivity among older savers from September 2024 to December 2024 “reflects positive trends in pension security, with a growing proportion of older people reporting a ‘good Defined Benefit’ pension (up from 22% to 26% over the same period) and greater satisfaction with pension performance (up from 14% to 17% over the same period).”
Persistent concerns around the longevity of the State Pension and “regrets over insufficient savings eased slightly for this group.”
The proportion of older savers citing State Pension concerns “dropped from 27% in September 2024 to 24% in December 2024, while those expressing regrets over insufficient savings declined from 29% to 24%.”
In contrast, savers under the age of 55 continue to trail “behind in confidence.”
Confidence among this group climbed from “39% in March 2024 to 49% in September 2024, before slipping to 47% by December 2024.”
Key drivers of this decline include waning “trust that employer contributions will provide a sufficient pension (down from 47% in September 2024 to 42% in December 2024), possibly driven by concerns that employers may reduce pension generosity to offset the rising cost of National Insurance payments.”
Similarly, confidence in personal contributions also “declined, falling from 42% to 38% over the same period.”
Additionally, the percentage of savers planning to “increase contributions dropped 4%, from 42% in September 2024 to 38% in December 2024, while those intending to pause contributions rose from 7% to 10% over the same period.”
Amid these challenges, confidence in pension performance among under 55s grew from “20% in July 2024 to 27% in December 2024, signaling a more positive outlook on returns and the potential for long-term financial growth.”
Lisa Picardo, Chief Business Officer UK at PensionBee, commented:
“The rise in overall pension confidence is a positive indicator of resilience among savers in the UK, particularly older generations. However, younger savers face persistent challenges, underscoring the need for consistent policy measures to support retirement security for all workers. Ensuring the stability of the State Pension and promoting regular pension saving habits, particularly among younger generations, will be crucial for long-term financial well-being.”