Mapping UK pension benefits and the intended purchase of annuities in the aftermath of the 1990s stock market bubble

Abstract

Many people rely upon personal and employer‐sponsored pensions to supplement the basic state pension. As such, the soon‐to‐retire baby‐boom generation will depend on the nature and number of their pension entitlements as well as the performance of global stock markets – a fact of life ignored when market prospects appear on an upwards trajectory but of considerable concern when markets decline. There are increasing concerns about the social and geographical stratification of pension entitlements. Just as importantly, it appears that individual risk attitudes and financial decisionmaking are associated with the social identity of respondents, including their age, gender, marital status and income. Here, we test whether access to supplementary pension benefits is related to socio‐demographic status or region of residence or both. Having determined that social status is the crucial determinant of the number of pension entitlements held by respondents, we test whether the intended purchase of an annuity can be correlated with socio‐demographic status or region of residence or both. Based upon a unique and large data base of 50–64‐year‐olds – people with an immediate and tangible interest in their pension prospects – it is shown that respondents’ region of residence is significant in explaining the variance in individual's pension‐related risk management strategies. Implications are drawn for the map of UK pension benefits and for the existence of regional subcultures of financial decisionmaking.

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