Confidence in pensions dips as ‘painful’ Budget looms | Personal Finance | Finance
Confidence in retirement prospects among Britons has fallen slightly amid speculation about changes to pensions in the Budget.
Rumours about the way pensions will be taxed, for example, changing tax relief on contributions and slashing the lump sum people can take from their nest eggs free of tax, appears to have hit confidence.
The uncertainty has been picked up by the latest Pension Confidence Index from investment experts PensionBee, who said people’s view of their retirement prospects have dipped from a figure of +30 to +28.
Looking at older workers, those over 55, optimism about pensions peaked at 65 percent in March this year but has now fallen back to 62 percent “reflecting a more cautious sentiment among this group since Labour has taken office”.
PensionBee said: “This is compounded by increasing distrust in the government’s commitment to maintaining a sufficient State Pension, up from 18 percent in March 2024 to 27 percent in September 2024.”
The company said pension confidence among under 55s has fluctuated throughout the year, but this group is generally more optimistic than a year ago – up from 45 percent to 49 percent.
It said: “Tthere are encouraging signs for the future, as a growing priority for under 55s has been increasing their pension contributions.
“In September 2023, 29 percent expressed a desire to contribute more, and this figure has since risen to 42 percent, suggesting potentially some relief from economic pressures or a greater focus on accumulating pension wealth.
“Concurrently, concerns about not being able to contribute enough to their pension have decreased from 34 percent to 29 percent over the same period.”
Becky O’Connor, Director of Public Affairs at PensionBee, commented: “The slight decline in confidence among those in or nearing retirement may indicate increased insecurity as a result of policy signals so far, including cuts to the winter fuel allowance, and general uncertainty.
“Pension confidence is fragile, appearing to be very swayed by sentiment, speculation and general political measures.
“This underscores how important the tone and content of the upcoming Budget will be to the way people plan and manage their long-term finances. The Chancellor’s moves have real world consequences for people’s retirements.
“The Pension Confidence Index suggests that far from pensions being under people’s radar, both working and retired populations are acutely aware of how policy moves can impact them meaningfully.”
