Back in 2002 Donald Rumsfeld, US Secretary of Defence, coined a phrase which has been repeated a million times since but I’m increasingly wondering whether it could be applied to UK pensions and ultimately financial advice (or rather lack of it).

He said: “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know.”

People have scratched their heads on this one for a very long time but his point, that there are many things we do not know, was an insightful one. In this case lack of pensions knowledge, at least as far as the UK is concerned, is a known unknown or, for many, an unknown unknown, I suspect.

I was reminded of this during the week with our report on a pensions (almost) unknown. You can read the story here: 2 in 3 unaware of State Pension deferral boost

In essence, the story, based on DWP data and analysis by retirement provider Just Group, reveals that the vast majority of State Pension members seem to be worryingly unaware of a valuable benefit - the ability to defer the State Pension to boost payments.

The data suggest that only one in 10 adults receiving the State Pension delayed doing so and 8.5m of the 13m State Pension members were unaware they could defer to boost pension income.

People who reach State Pension age on or after 6 April 2016 can get a 1% boost to their weekly State Pension for every nine weeks that payments are deferred, equating to about 5.8% extra income for every full year. Of course it’s not for everyone and some need the money the minute they reach State Pension age but it seems pretty likely that this useful benefit boost is something many more could consider - but don't.

So what’s stopping them? Back to Donald Rumsfeld again.

State Pensions are a ‘known known’ - nearly everyone knows they are part of the State Pension scheme (although I suspect many do not know it’s a benefit rather than a right but that’s a topic for another column). What is an ‘unknown unknown’ for many is that the State Pension can be deferred to boost income on retirement. There are other deferral options too.

Many miss out on this benefit due to lack of financial advice or guidance. With some financial advice, even at the most basic level, the people who missed out on this benefit could have done so much better.

No-one in their right mind would consider buying a property without legal advice and a survey of some kind yet millions seem to blunder into retirement without ever seeking any professional guidance. Mostly because they are allowed to by law.

I suspect that if more had received some kind of guidance a very large number, perhaps millions, would have deferred their State Pension for at least a year or two. It’s been down to journalists to write about this deferral benefit, which has been in place for many years.

I was pleased to see a Daily Mail story this week which covered how one man had doubled his State Pension by using the deferral technique. Again this is technique is not for everyone and deferring the State Pension may well be the wrong move for most people but it should be considered.

The point here is that many millions are ignorant about simple changes that could have boosted their State Pension income. I wonder how many who did not defer now wish they had?

Lack of advice and guidance in the run up to retirement is the culprit here and there has to be a case for a national campaign to educate pension savers to help them make much better choices. The FCA and others are inching towards this with targeted support and other plans and it can’t come soon enough.

It’s clear many are poorer in retirement than they should be simply because of bad choices and lack of support, not just lack of money. That needs to change.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin 

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