Young people 'more interested in pensions than elders'Posted on: 17 April 2013 by Andrew Stallard
Younger generations not taking pensions for granted as continued recession increases need for retirement planning
It may come as a surprise to many but recent research has suggested that the 1980s generation are more “switched on” to pensions than many of their older peers and is also more determined to save extra in the coming year.
This comes despite the pressures of student debt or trying to get on the property ladder, people aged between 25 and 34 years old are more likely than many older workers to be planning to increase their retirement saving over the next year, the National Association of Pension Funds (NAPF) found (1).
More than half (53%) of the younger workers surveyed said they planned to put more money by for their later years over 2013, compared with 26% of 45 to 54-year-olds. Across the board, 38% of people plan to increase their retirement saving this year. (1)
State pension reforms
Meanwhile, almost half (43%) of those aged 25 to 34 said they had talked about pensions more in the past year than they had done previously. Only those much closer to retirement aged between 55 and 64 showed more interest, at 56%. (1)
Half of the 1980s generation (47%) said they regretted not taking a bigger interest in retirement saving at an earlier stage, marking the highest proportion of any age group. (1)
The NAPF described the results of its survey as "surprising" and said that in the past it has found that interest in pensions increases as people become older.
We have to ask why this may be the case and we don’t have to look far to see how the big shake up in pensions has raised awareness in all age groups. With plans for state pension reforms to simplify the current system as well as the Government's automatic enrolment scheme, which started last autumn and will eventually place up to 10 million people into workplace pensions.
For businesses thestart date for auto-enrolment, which is known as the staging date, depends on the number of employees on a company's PAYE Scheme at 1 April 2012. Employers with less than 250 employees don’t have to enroll until 1 April 2014 at the earliest, and for employers with less than 50 employees it's even later.
Confidence in retirement saving
Much debate has also been taking place over how to make pensions clearer to understand and give people confidence in retirement saving. So perhaps a wider age group are seeing, reading and becoming more aware and proactive in asking how it affects them and their future retirement plans.
Of the 25 to 34 year olds surveyed, 48% are already a member of a workplace pension. Out of the young people who are not in a pension scheme, 65% said they were likely to stay in their new pension when they were auto-enrolled, which is higher than the average of 50%. (1)
But there were also causes for concern, with 44% of younger people who are in a pension saying they do not know if it is a good one or not, compared with 32% on average. (1)
If you are an employer or employee of any age and are at all uncertain about what these changes mean to you, then speak to your independent financial adviser. Speaking to an expert now will allow you time to make an informed decision on what is right for your individual circumstances.
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.All information is based on our understanding of current tax practices, which are subject to change. The value of shares and investments can go down as well as up. Your home may be repossessed if you do not keep up repayments on your mortgage.
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