Zurich's analysis shows that three quarters of Brits (75%) are unaware that they are eligible for tax relief on pension contributions. Whilst the younger generation are unaware of the tax benefits of saving for a pension, with nine out of ten (91%) unaware of the tax advantages, it seems the older generation are also missing out.
Worryingly, the research shows that over eight out of ten people (82%) aged 25 to 34yrs are unaware of the tax relief available on pensions. Furthermore, of those aged 35-44yrs over three quarters of Brits (77%) are unaware of the tax benefits available. Equally surprisingly, it seems those people approaching retirement, aged 55yrs and over, over two thirds (69%) are unaware of the tax advantages of pensions.
As well as the older generation potentially missing out, it seems women are also failing to take advantage of pension benefits. Only a fifth of women (20%) aware that pensions qualify for tax relief, compared to nearly a third (30%) of men.
Commenting on the findings, Tony Solomon, Business Development Director said, "Our results indicate that there is still a lot of work to be done in getting across the message about making the most of the tax advantages from saving within a pension.
"The UK as a whole is undersaving for retirement and this needs to be addressed. Providers, the government and advisers must work together to help people understand the importance of saving for a decent income in retirement. Increased confidence will, in part, come with increased understanding."
As well as considering pensions awareness, Zurich's survey also examined tax awareness of other long term financial planning products.
Zurich's findings also show that Brits are unaware of the tax treatment for other long term savings vehicles. Of those surveyed, less than one in ten are aware of the tax rules regarding income bonds, whilst just a tenth (10%) of people are aware of the tax treatment when investing in stocks and shares.
Encouragingly, the research shows that more people are aware of the tax rules on ISAs compared to any other financial product. Nearly half of those surveyed (48%) claim that they are aware of the tax relief on ISAs. It seems that Londoners are the most tax savvy with over half of those surveyed (53%) aware of the tax relief available on ISAs.
As well as being knowledgeable about ISAs, it seems Brits are also aware of the tax relief available on charity donations. Over a third of those surveyed (34%) are aware of the tax benefits, with knowledge increasing with age.
Concludes Solomon, "Whilst it is encouraging to see that people are aware of the tax relief available on ISAs and charity donations, there is still clearly a lot of work to be done in other areas.
As an industry we believe we have a responsibility to raise awareness of the benefits of long term financial planning, particularly in these turbulent economic times. It's important that people review their finances regularly and seek independent financial advice. By taking control of their finances, people can plan effectively for the future as well as making the most of their money today."
