- Three quarters of Brits (75%) unaware of the tax relief on pension contributions
- Fiftysomethings approaching retirement missing out on tax relief
3 November 2008 – New research from life insurer Zurich shows that Brits are failing to safeguard their future with effective long term financial planning.
Knowledge of tax relief on pension contributions
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.
Knowledge of investments
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.
Knowledge of tax relief on ISAs
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.”
-ends-
Media information:
Susannah Mogg, UK Media Relations Manager T: 01489 561559
Susannah.mogg@uk.zurich.com
Sara Lister, Senior Media Relations Consultant T: 01793 503810
Sara.lister@uk.zurich.com
Marlene Scott/Vanessa Chance T: 020 7655 0510
Polhill Communications
m_scott@polhill.com v_chance@polhill.com
About the survey
The research was conducted by YouGov on behalf of Zurich Financial Services Group based on interviews with 2,000 people of retirement age or close to retirement age. Fieldwork was undertaken between 6th and 8th May 2008.
Q1) Are you aware of the tax relief/tax rules on any of the following?
|
|
Total |
Male |
Female |
|
Pension contributions |
25 |
30 |
20 |
|
ISAs |
48 |
51 |
45 |
|
Income Bonds |
7 |
9 |
6 |
|
Stocks and shares |
10 |
14 |
6 |
|
Charity donations |
34 |
38 |
31 |
|
Inheritance tax |
19 |
22 |
16 |
|
None of these |
22 |
21 |
23 |
|
Don’t know |
18 |
16 |
20 |
|
|
18-24yrs |
25-34yrs |
34-44yrs |
45-54yrs |
55+yrs |
|
Pension contributions |
9 |
18 |
23 |
33 |
31 |
|
ISAs |
25 |
45 |
41 |
50 |
59 |
|
Income bonds |
6 |
5 |
4 |
5 |
11 |
|
Stocks and shares |
3 |
6 |
8 |
9 |
16 |
|
Trust funds |
9 |
17 |
20 |
13 |
19 |
|
Gifts from family members |
9 |
12 |
14 |
21 |
28 |
|
Charity donations |
21 |
30 |
31 |
35 |
43 |
|
Inheritance tax |
9 |
12 |
13 |
19 |
28 |
|
None of these |
36 |
23 |
28 |
19 |
16 |
|
Don’t know |
29 |
20 |
17 |
16 |
15 |
|
|
London |
Rest of South |
Midlands & Wales |
North
|
Scotland |
|
Pension contributions |
24 |
28 |
25 |
21 |
25 |
|
ISAs |
53 |
47 |
47 |
47 |
49 |
|
Income bonds |
8 |
6 |
9 |
7 |
5 |
|
Stocks and shares |
11 |
13 |
9 |
6 |
11 |
|
Trust funds |
18 |
17 |
17 |
17 |
15 |
|
Gifts from family members |
22 |
22 |
20 |
18 |
13 |
|
Charity donations |
36 |
39 |
33 |
30 |
33 |
|
Inheritance tax |
24 |
22 |
16 |
17 |
11 |
|
None of these |
19 |
21 |
22 |
25 |
20 |
|
Don’t know |
15 |
17 |
18 |
19 |
19 |
About Zurich
Zurich Financial Services Group (Zurich) is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets. Founded in 1872, the Group is headquartered in Zurich, Switzerland. It employs approximately 60,000 people serving customers in more than 170 countries.
