Low Income And Lack Of Understanding Blamed By Those Not Paying Into Pensions

04 September 2018
  • 55% report low income reason behind not contributing to a pension, up from 38% in 2010-12
  • Four in ten say they don’t understand enough about pensions to make decisions
  • Equiniti backs the idea of national retirement income targets to battle against inaction and increase understanding of the benefits of pension saving

Analysis from Equiniti, one of the UK’s largest pension administrators, finds that people are increasingly blaming low income on why they do not contribute to a pension, according to recent figures from the ONS1.

When asked for the reasons why they were not contributing to a pension, 55% of people in the 2016-17 cohort said that either low income, lack of work or still being in education were to blame. This marked a rise of 17 percentage points from the 38% of people who cited this as a reason in 2010-2012.

Further answers revealed how crucial disposable income is to pension saving, with a third saying they couldn’t afford to contribute in general and 18% had too many other expenses.

Chris Connelly, Propositions and Solutions Director at Equiniti, believes the responses demonstrate a need for better communication around the benefits and importance of pension saving, commenting:

This survey clearly emphasises that pension saving is one of the first outgoings to be cut when money is tight – it is not prioritised. However, with the State Pension unlikely to sustain a good standard of living in retirement, it is absolutely crucial that people do put away money for later life whenever they possibly can – particularly given the additional payments that employers will make in workplace schemes.

“Auto-enrolment has been a fantastic stimulus in getting people to save and keeping them contributing on a monthly basis. The low opt-out rates perhaps even indicate that while many people think they cannot afford to put away a portion of their salary each month, when this decision is processed automatically the reality is that they are still able to make ends meet.”

As well as affordability, another key area the survey examined was knowledge of pensions with 13% saying they did not know enough about them to contribute financially. 39% also said that they did not understand enough about pensions to make decisions about saving for retirement.

This lack of confidence could lead to damaging inaction from people who feel too spooked about the pensions industry to save for their retirement, according to Chris Connelly, who supports the PLSA’s proposed ‘national retirement income targets2’ to get people valuing the worth of their pension.

“At present, people don’t understand a pension: don’t value the benefit and it is not seen as a priority which is naturally going to lead to the conclusion that the monthly contributions could be better utilised. The PLSA’s plans would be a great idea as it would get people to focus explicitly on how much they need to put away before retirement, to plan ahead financially and increase support through the accumulation period.

“Until people value the benefits of building up retirement savings (for example, the ability to stop working earlier or travel more in retirement) then it will remain bottom of the list when the monthly pay packet comes in. Making the process of saving (in whatever vehicle) more accessible and putting a tangible objective in place that will result in tangible rewards and should encourage better behaviours and continue to build on the good work of auto-enrolment.”



For more information:

Temple Bar Advisory

William Barker / Sam Livingstone
Tel: 078 2796 0151 / 077 6965 5437
Email: williamb@templebaradvisory.com / saml@templebaradvisory.com

Notes to Editor:


  1. Early Indicator estimates from the Wealth and Assets Survey
  2. PLSA: Hitting the target – delivering better retirement outcomes

About Equiniti

Equiniti Group is a specialist administrator delivering technology-enabled solutions to some of the world’s best-known brands and UK’s largest public-sector organisations. 

It is the UK’s leading provider of share registration, employee share plans, and associated investor services, and also has market leading positions in pension administration and software, and employee benefit schemes. Equiniti’s services, which are delivered by over 5,000 employees, benefit 28 million people in the UK and 120 countries around the world.

Equiniti is one of the largest providers of outsourced pension administration in the UK, working with schemes in the public and private sectors with complex defined benefit, defined contribution and hybrid arrangements. In addition, Equiniti also provides specialist pensions savings and retirement income administration services to the insurance sector as well as services to the Principal Civil Service Pension Scheme through MyCSP.

The wide array of administration services provided include; member record keeping and maintenance; web; treasury; accounts; communications; and pensioner payroll.

Equiniti supports around eight million pension scheme members and pays around 20% of UK pensioners, delivering £11 billion in payments per annum to 2.2 million pensioners and annuitants.