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58% of 18-35 year olds aren’t saving for their retirement
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54% say that they would be more inclined to save into a pension or would save more if they could use their pension pot to fund a first-time property deposit
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86% think more education around pensions is needed
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NOW: Pensions calls for greater flexibility in pensions to encourage young people to save
The main reason generation Y give for side-stepping pension saving is that they are prioritising saving elsewhere cited by 43% with a quarter (25%) saying that they simply don’t have enough money left at the end of the month. For 14% of those surveyed, their debt is too much of a burden to allow saving.
As a result, nearly two thirds (61%) say they are concerned or very concerned that they won’t have enough money when they retire.
Incentives to save
Over half (52%) of those that don’t currently save would begin doing so if their employer offered a more generous contribution, while four in ten (42%) would start putting money aside if a kick start payment was offered by the government.
A quarter (25%) say being able to access savings during times of financial hardship or when facing serious illness would encourage them to save or save more into a workplace pension.
Morten Nilsson, CEO of NOW: Pensions said:
“The nature of pension saving is fundamentally changing. With over 55s being afforded greater flexibility with how they access their pension pot at retirement, perhaps now is the time to think about whether more flexibility should be extended to young savers to help incentivise saving.
“With so many pressures on young people’s finances, it’s understandable that pension saving can fall down the priority list.
“The average deposit paid by a first time buyer last year was a staggering £29,218** putting home ownership out of the reach of many. By giving young savers the option to access a portion of their pension fund to get on the property ladder, the government could simultaneously boost pension saving and ease the financial pressure on first time buyers.
“A similar initiative has worked well in New Zealand with savers in the country’s KiwiSaver workplace pension scheme having the option to receive a first home subsidy after 3 years of saving.”
Angus Hanton, Intergenerational Foundation Co-Founder comments: "It seems particularly unfair that young people may have to choose between saving for their old age or buying a home when previous generations could afford to do both."
Demand for education
Although positive steps have been taken in terms of getting personal finance education introduced to secondary school curriculums, there is a clear need for more education around pensions specifically.
Four in five (86%) 18-35 year olds say more education on pensions is needed with almost a quarter (23%) saying they would be more inclined to save if they had a better understanding of what a pension is. Four in ten (40%) of those who think more education is needed, believe the responsibility lies with the government to educate them.
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