Research and analysis

Pension tax relief: awareness, understanding and saving behaviours

Research that explored awareness and understanding of, and attitudes to, the pension tax system, and individuals’ and employers’ reactions to alternative systems.

• From: HM Revenue & Customs
• Published: 13 April 2022
• Last updated: 29 April 2022 — See all updates

Documents

Pension tax relief: awareness, understanding and saving behaviours

Ref: HMRC research report 422

ODT, 442 KB

This file is in an OpenDocument format

Details

In 2015, HM Revenue and Customs (HMRC) commissioned research agency Ipsos to conduct independent research with individuals and employers on pension tax relief. The research explored awareness and understanding of, and attitudes to, the pension tax system, and individuals’ and employers’ reactions to alternative systems.

The research was both quantitative and qualitative. It included discussion groups with individuals and in-depth interviews with small and medium employers, as well as a representative telephone survey of 703 British adults aged 16 to 55.

Results

The key research findings were:

• many people were not aware of the tax system in place for pensions. Four in ten (41%) adults correctly believed that the government tops up people’s pension contributions through tax relief. A quarter (26%) thought the government provides no top-up, and a third (33%) did not know
• people with pensions who were aware of pension tax relief underestimated how much the government had topped up their contributions. Basic rate taxpayers estimated the government had topped up their contributions by around 6% (around 25% in reality), whilst higher or additional rate taxpayers estimated the government had topped up by around 15% (around 67% or higher in reality)
• given their lack of awareness, most people were willing to consider an alternative pension tax system, although this would not necessarily change the amount they saved
• most people wanted more information about their pension, regardless of the pension tax system in place. Among people who had pensions and remembered receiving pension statements, 6 in 10 (62%) thought it would be very useful to have their statements tell them how much they needed to save to live comfortably and 5 in 10 (53%) thought it would be very useful to know how much their retirement income would rise from paying an extra £20 a month

Published 13 April 2022
Last updated 29 April 2022 + show all updates

1. 29 April 2022

   Publishing the report in full.

2. 13 April 2022

   First published.