Parental leave, self-employment and ill-health are UK’s pensions blind spots

• 57% of UK adults don’t know you can access your pension early due to severe ill health.
• 56% don’t know they can contribute to a pension while on parental leave.
• Almost two thirds don’t know self-employed can benefit from tax relief on pension savings.

The findings reveal the key blind spots when it comes to pensions knowledge. More than half don’t know that:

• You can access your pension early if you have to retire due to severe ill health (57%).
• Self-employed people can benefit from tax relief on pension savings (63%). 
• You can contribute to your pension while on parental leave (56%). 

Women were less likely to know they can keep topping up their pension while on parental leave (61%) than men (51%).

The picture is more positive when it comes to knowledge of automatic enrolment and pensions: 

• Almost eight in ten (78%) know that they can start saving into a pension as soon as they have started working, whatever their age. 
• Almost two thirds (65%) know that automatic enrolment doesn’t guarantee that you’re saving enough for retirement. 

The research also demonstrates a lack of awareness about the growth of pension savings and what happens to your pension when your employer goes bust. 

Caroline Siarkiewicz, Acting Chief Executive at the Money and Pensions Service said:

“It’s clear that many people are unaware of their options when it comes to important events in their lives that can impact their pensions such as becoming a parent or starting their own business. Women in particular have many important financial decisions to make when transitioning into parenthood but our findings suggest they are less likely to be aware of their pension options.

“It is positive to see that people have an understanding of how automatic enrolment works. However, our findings suggest that many might be missing out on important information when making decisions affecting their pensions. You can speak to a pensions specialist for free, confidential help by contacting The Pensions Advisory Service helpline or webchat.”

MaPS offers the following top tips to avoid pensions blind spots:

• Continue to make contributions to your pension while on parental leave. Check with your employer how this will work. This will vary depending on whether you’re part of a defined contribution scheme or defined benefit scheme.
• If you’re suffering from severe ill health and wondering what your options are to access your pension, talk to your pension provider. They will be able to explain whether you are eligible to access your pension early (1).
• If you are self-employed, you could receive tax relief on the amounts you put into your pension so it’s worth making contributions if you can. Further support for self-employed people with their pensions is available through the Pensions Advisory Service who offer a specialist telephone-based appointment service. 
• Members of the public can get free guidance about their money and pensions via: MoneyHelperOpens in a new window / 0800 138 7777

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Research conducted by Opinium. 2,008 non-retired UK adults were surveyed between 30th September-3rd October 2019.

(1) If you cannot work any longer due to sickness, you may be able to take your pension benefits early, even before the age of 55. This is generally known as taking an ill-health pension.

Your scheme will have its own definition of what ill-health (sickness) means, but usually you will be considered for an ill-health pension if you’re unable to carry out your normal job because you’re physically or mentally ill.

If you’re in serious ill-health (you have less than a year to live), you may be able to take the whole of your pension pot as a lump sum. A serious ill-health lump sum paid before you reach the age of 75 will be paid tax-free provided you have available lifetime allowance.  If you’re over the age of 75, the lump sum will be taxed at your marginal rate of income tax.