Businesses cautioned to be ready for undergrad commitment to save
As students head to university for the start of the academic year, new research has revealed that the current batch of undergraduates would sooner save money into a pension than spend it on holidays or cars. The findings from Capita’s employee benefits business, Bluefin Corporate Consulting, caution that businesses must be prepared for this year’s quarter of a million graduates to opt in to company pension schemes, and the costs that will entail.
With 2012 seeing the introduction of pensions automatic enrolment and higher student fees, Bluefin’s results contradict common perceptions that young people would rather spend than save, and suggest that the message to take financial responsibility for retirement is getting through to Britain’s young people. Bluefin asked students across the UK what expenditure they would cut if they were struggling with student loan repayments after graduation. Nearly half of students (49%) said that they would stop saving for a holiday or to go travelling, whilst one in five (22%) said they would stop saving for a new car. In comparison, just 14% said that they would stop saving into a pension for retirement.
Students were also asked what they thought they would do once they qualified for automatic enrolment into a company pension scheme and almost three quarters (72%) said they would choose to stay in the scheme. When asked why, over half (54%) said they would stay in the scheme because they think that starting to save for a pension early is a good idea. In contrast, only 20% said they would choose to opt out.
Robin Hames, Head of Technical, Marketing and Research at Bluefin, said: “The old stereotype of students as financially complacent now looks inaccurate. Today’s students clearly understand the importance of pensions and the need to start saving for retirement as early as possible – despite having to manage larger than ever student loan repayments. It’s early days, but giving people a nudge into saving by introducing auto enrolment seems like a well judged move – for the young at least.
“Forward thinking graduate employers will have in place realistic plans and budgets to handle the administrative and financial impact of auto enrolment, including planning for likely high levels of take up by today’s graduates.”
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