insight
Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
The financial decisions that people make throughout their working lives can have a huge impact on their future retirement. Early engagement and active planning are key to ensuring pensions and other savings are safeguarded and will meet individual retirement needs. The FSCS has long highlighted the need for a review of the pensions compensation limit, as loss of pension savings can be devastating, and the current limit is typically up to only £85,000. This research is important in that it contributes to collective insight that will help the financial services industry to reduce harm to consumers.
The FSCS is an independent body, funded by the financial services sector, which pays out compensation when financial firms go out of business. The goal of the research is to help FSCS and stakeholders across the financial services sector to identify gaps and opportunities to provide consumers with accurate information about FSCS protection. In particular, the Financial Conduct Authority has committed to reviewing compensation limits for pensions, and this research will contribute to this debate.
The study comprised an online survey of a representative quota sample of 2,013 UK adults aged 18–65 who are not retired, conducted by research company Ipsos UK. Survey data were weighted to the known profile of this audience. The research was conducted between the 28th July and 1st August 2023.
Provision for retirement: the main concerns among consumers relate to funding and retirement income options, which together with low levels of engagement suggest a mismatch between people’s expectations for their lifestyle in retirement and the reality of how they will pay for it. Only 27% of adults under 65, who are not yet retired, are actively saving for it. This rises to 42% among those aged 55–65, compared to only 12% of 18–24s.
Confidence: many consumers have low levels of confidence and lack understanding of the right products for their needs. Most (82%) of respondents can identify at least one concern about saving for their retirement. The main worry is not having enough money to last the duration of their retirement.
Age of retirement: 22% of respondents see themselves retiring from work at or around the state pension age, while 27% plan to retire early. 17% expect to stop working beyond state pension age and a further 11% don’t ever see themselves retiring. Inability to afford living expenses is the most common reason given for those who expect to continue working past state pension age.
Optimism: around a third (35%) of people who plan to retire believe that their retirement will be better than that of their parents’ generation, compared to 30% who think it will be worse. Younger people aged 18–24 are most optimistic with 44% thinking their retirement will be better, compared with only 24% who believe it will be worse. In comparison, 35–44-year-olds are more likely to be pessimistic.
Worry: in contrast to the optimism of some, 69% of working age adults worry that the
rising cost of living will mean their money won’t go far enough in retirement. 56% worry their standard of living will drop once retired, while 47% worry about how they will cover their housing costs.
Scams: 65% agree that retirement scams are getting more sophisticated, although 48% say they are unlikely to fall for one.
