Topic overview: pensions and retirement

• Working age adults often have low understanding of peneions, which makes retirement planning feel difficult. Many put off taking action, making saving for retirement a challenge, particularly for self-employed people.
• While older people generally have higher financial capability, they are more likely to face poor health, cognitive decline, isolation and low digital skills. All of these can affect long-term financial planning.
• Pension scams cause older and working-age people significant financial and emotional harm. Once someone has been targeted, they are at greater risk of being targeted again.
• Improving financial wellbeing in retirement requires holistic, system-level approaches.

The decisions people make about retirement are important for their future wellbeing. Despite this, 20.9 million UK adults do not understand enough about pensions to make decisions about retirement, and less than one in ten older people have a specific plan in place to pay for long-term care.

Around half of UK working-age adults do not understand pensions well enough to make decisions and lack a retirement plan.

Even among workplace pension scheme members, only a minority feel they understand how pensions work, and the large majority don’t know what happens at retirement.

Lower financial understanding is closely linked to lower levels of planning. Groups more likely to report not understanding enough about pensions, or not having a plan for retirement, include :

• women
• renters
• people with disabilities or a recent mental health concern 
• those with low incomes. 

In contrast, higher‑income, older and homeowner groups are more likely to say they understand enough and have a plan. Younger adults expect to engage more as they age.

Retirement saving is closely linked to budgeting, credit use and resilience. It also reflects how far ahead people think and plan, as well as their confidence in long‑term decisions. People who save regularly tend to be more engaged in retirement planning.

Just 4% of people who rely on self-employment as their only source of income save into a pension.

Automatic enrolment has increased workplace pension participation partly by making saving the default and relying on inertia to keep employees enrolled.

Self-employed people do not benefit from that default structure, so the same inertia that helps employees remain in pension saving can leave self-employed workers outside pension saving altogether. 

Immediate financial pressures can push long‑term saving out of focus. Evidence also shows that some common tendencies also reduce engagement, including:

• prioritising the present
• delayed decision-making, and
• avoiding information which might reveal inadequate saving.

Low confidence, low self-belief, feeling inadequate and self-blame are also barriers to engagement, as well as low trust in financial services.

Many people do not see pensions as ‘their money’. A weak emotional connection to pension savings, a focus on ‘living for today’ and difficulty imagining life in the future can all reduce the motivation to save.

Approaches that require little or no action from the person, such as automatic enrolment, have proven to be effective at increasing participation. Many savers stay at minimum contribution levels, so auto-enrolment works best alongside gradual increases in contributions, for example linked to pay rises.

However, the use of default settings within workplace schemes, including auto-enrolment, can potentially have unintended consequences such as increased borrowing to fund savings levels that are otherwise unaffordable. 

Beyond the use of default settings in such schemes, little evidence exists on what works to support retirement planning.

Life events are powerful triggers for engagement, particularly starting a new job, moving house, pay rises, family changes and nearing retirement. They provide an opportunity to start ‘good conversations’ about pensions.

Scheme members value human support and easy‑to‑use digital access. Dashboards, apps and digital tools help provide access to pensions, but depend on people’s own digital access and capability.

Effective communication is visible, relevant and jargon‑free. Sceptical savers need transparency and reassurance. 

Values-based and personalised communications, including examples based around the ESG (Environmental, Social, Governance) investing framework, can help make pension savings feel more tangible and rewarding.

However, poor health, cognitive decline and low digital skills can reduce capability and access to services, potentially affecting long-term financial wellbeing. Older people face particular risks to their financial capability and long-term financial wellbeing.

Around 1.3 million eligible older people in Great Britain are not claiming Pension Credit. Many are digitally excluded – especially women, those over 75 and on those on lower incomes – limiting their ability to access information and guidance, shop around, switch services, bank and make payments.

With fixed and lower incomes, borrowing can become problematic in retirement, making targeted debt advice important.

The risk of being scammed is higher due to:

• perceived wealth
• cognitive decline
• isolation
• bereavement.

The tactics used in pension scams are similar to those used in investment scams, and repeat targeting is common. Pension scams cause significant financial and emotional harm and reduce trust.

Interventions to improve financial wellbeing among older people have mainly focused on:

• maximising income
• safeguarding from fraud
• planning for care and bereavement
• mortgages
• equity release.

This particularly affects women aged 55 to 74 living alone and men who live alone, reflecting limited opportunity rather than other barriers. People often avoid pension conversations due to low confidence.

While older people benefit from holistic advice, the effects of financial capability interventions are more apparent when targeting specific issues or groups. Women over 75 on low incomes and those at risk of problem debt may be among the groups set to benefit most.

Given the connection of retirement saving to other aspects of financial wellbeing, holistic system‑level approaches are needed rather than viewing pensions and retirement planning in isolation.

A better grasp is needed of how to overcome people’s barriers to engaging with pensions and retirement planning, particularly around:

• low confidence
• difficulties understanding pensions
• the tendency to put planning for the future off
• what works beyond auto-enrolment into workplace pension schemes.

Stronger evidence is also needed on the types of interventions that improve financial capability and wellbeing for older people. Evidence is also needed to show how and why interventions are effective, and for whom.

A key area of concern should be older people’s susceptibility to scams, including pension scams. The role of digital inclusion and ‘good conversations’ in supporting older people’s financial wellbeing is a particular gap requiring further research. 

Key sources informing this overview are:

• What works? A review of the evidence on financial capability interventions and older people in retirementOpens in a new window - International Longevity Centre (2016) 
• Understanding Retirement: A deep dive into financial capability amongst older peopleOpens in a new window - Money Advice Service (2016) 
• MoneyView 2026 - Money and Pensions Service (2026) 
• Financial Behaviour: Understanding the psychological principles that underpin financial behaviour to inform intervention developmentOpens in a new window - Strong et al (2020) 

You can also see:

• our full list of topic overviews, covering a range of themes related to financial wellbeing 
• our financial wellbeing evidence hub, a database of research and evidence.

This overview has been prepared with reference to a wide range of literature, including an earlier series of thematic reviews produced by the Money and Pensions Service.