Younger generation lacks pension understanding

This article has been reproduced with kind permission of Openwork Limited.

Government research has found that many young adults fail to understand the value of saving for retirement, the details of the State Pension, and how the pensions system works.

When asked ‘Do you need to find out more about saving for retirement?’, 53% of 22-34 year-olds said they did. This is compared to 44% of those aged 35-49 and 30% of those aged 50-64.

Meanwhile, pupils quizzed by the Pensions Minister, Steve Webb, during a visit to their school, offered some surprising answers. Seven out of 10 of the teenagers asked thought the government could

provide most of their income when they retired, while eight out of 10 thought they would retire in their mid-60s.

Expectations of how much income would be provided varied between £9 per week to £800 per week.

Automatic enrolment

Pensions are more relevant to young people about to enter the world of work than ever before, thanks to the introduction of auto enrolment. This compels employers to automatically enrol workers from age 22 into a workplace pension. Those aged 16-22 can opt in, provided they earn more than £10,000 (2014 to 2015) a year. Figures show that automatic enrolment into workplace pensions is laying a major role in reversing the decade-long decline in private sector pension saving. Young people working in the private sector showed the largest increase in the proportion saving into a pension, growing more than any other age group – 30% of those aged 22 to 29 saved in 2013 compared with 24% in 2012.

It is never too early to start saving

Pension planning should be an important part of everyone’s financial plan. There is no minimum age for a personal pension, although contributions to a child’s plan are currently limited to £3,600 per tax year. It’s never too early to start saving so, if you don’t have a pension in place, it might be time to consider your options.

Contains public sector information licensed under the Open Government Licence v3.0.