'I don’t understand my pension.’ Don’t worry – you’re not alone
One of the most common things we hear from people when we first meet with them to discuss their financial planning is: “I don’t understand my pension!” In fact, many people admit they’ve never sorted out their pensions properly because it feels too complex or daunting. If that sounds familiar, you are not alone – and that’s exactly where expert financial planning can make a difference, giving you clarity, confidence and a plan that puts you in control of your financial future.
Pensions research
Recent research from Julie Dick and Jacqueline Harvey of the University of Cambridge found that a significant proportion of people lack even the most basic pension knowledge. The study revealed that 20.8% of participants did not know what type of pension they had: whether defined benefit, defined contribution, or otherwise1.
Worryingly, the study also showed that many people overestimate their pension knowledge. When tested, participants performed worse than expected, leading them to downgrade their own self-assessment afterwards. This mismatch between what people think they know and what they actually understand highlights the scale of “pension illiteracy” in the UK.
The study also uncovered a paradox: those with the lowest levels of pension literacy were the least likely to seek advice – even though they are the ones who would benefit most from professional support.
Those closest to retirement
You might assume that people approaching retirement feel most confident about their pensions, but the research suggests otherwise. Even among those aged 55 and over, around a third said they did not feel confident making pension decisions.
This matters because decisions around drawdown, annuities, tax efficiency, and intergenerational planning carry high stakes at this stage of life. The study reinforces what we often see in practice: even successful professionals can feel uncertain about their retirement finances; and that is perfectly normal. With expert advice, however, those uncertainties can be turned into a clear, actionable plan.
Mid-life pension planning
The study also highlighted that people in their 40s and early 50s – an ideal time to put robust retirement plans in place – often lack pension confidence. Many participants in this age group reported not fully understanding their pensions or how to prepare for retirement.
In our work with our clients, this is especially true for those with multiple pensions from different employers, or those in senior roles used to managing company finances but less confident about their personal retirement planning. The good news is that by working with a professional financial planner, you can consolidate your pension knowledge, align your investments with your timeframe and goals, and make informed decisions for the future.
Attitudes to resources for improving pension literacy
The Department for Work and Pensions has recently examined how people can be better supported to prepare for later life, including through new pension products and services. Their survey found strong interest in practical tools: 50% of respondents said they would be ‘very likely’ to use a pensions dashboard, and a further 31% said ‘fairly likely’. This suggests that clear, user-friendly digital tools could help convert curiosity into genuine engagement2.
Yet when it comes to paying for support, the picture is more complex. While many see basics such as annual benefit statements as essential, willingness to pay for additional services increases only when the value is obvious. Participants reported they would be prepared to pay if a product or service helped them understand their pension more easily, offered trusted guidance, or supported confident long-term decisions2. At the same time, a significant proportion were reluctant to spend money if the benefits were unclear.
This reluctance persists despite some striking gaps in engagement:
- Only 16% of people aged 40–75 had used a regulated advice or guidance source (such as a Financial Adviser or Pension Wise) in the past year².
- Average confidence in managing private pensions was just 5.1 out of 10².
- Around 24% of pension holders aged 40–75 said they find it fairly or very difficult to keep track of their pensions².
Together, these findings underline the importance of financial planners clearly demonstrating the value of advice. At Amanda Redman Financial Planning, we do exactly that – demystifying pensions, showing the tangible benefits of professional guidance, and creating tailored strategies that give our clients clarity and confidence about their financial future.
Understanding your pension
The good news is that your pension doesn’t have to remain a mystery. A trusted financial planner will help you understand what you already have in place, explain your options, and create a plan to help you retire when you want, with the lifestyle you want.
That’s what we do at Amanda Redman Financial Planning. Whether it’s reviewing retirement planning, optimising investment planning, or supporting intergenerational wealth management, our approach is collaborative, strategic, and focused on empowering you to feel confident about your financial future.
The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
Even if you don’t understand your pension today, with the right advice and resources, tomorrow you can.
If you would like to work with an expert, regulated, collaborative financial planner, we are happy to offer an initial no-obligation consultation – call 01732 449 799 to book your appointment.
Based in Tonbridge and West Sussex, Amanda Redman Financial Planning supports clients across Kent, Sussex, Surrey, and Greater London.
1The Importance of Financial and Pension Literacy in Closing the Financial Advice Gap in the U.K. - Cambridge University - 26 May 2025
2Planning and Preparing for Later Life 2024: Willingness to pay for pension products and services - DWP - 14 August 2025
Clicking a link will open a new window. Any external sites are not endorsed by St. James's Place.
Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.
