Millennials are saving £400 more per year than their Generation X counterparts, but saving for retirement remains a low priority, according to the Pensions and Lifetime Savings Association and Close Brothers.

The Lifetime Savings Challenge Report 2017, a survey of 1,000 employers with 200 or more employees, found that just 20 per cent of 18-34-year olds prioritise saving for a desired lifestyle in retirement, compared to 34 per cent of those aged between 34-54 and 50 per cent of those aged over 55.

The report found that the average millennial worker was saving £3,445 per year, compared to £3,073 by those aged 35-54, but were more focused on saving for holidays (34 per cent), paying down debt (25 per cent) and saving for a house (33 per cent), than saving for a pension.

Close Brothers head of financial education, Jeanette Makings, said: “Millennials are often a prime media target when looking at poor savings habits, but as this research shows despite being the workplace generation that earns the least, they save the most.”

Makings also noted the unparalleled saving power of millennials, highlighting the increases in working life and choice of pension freedoms, meaning they could achieve “50 plus years of savings and 65 plus years of investment performance”.

Despite this, the report found that just 44 per cent of millennials believe the savings landscape is confusing, and need more guidance to ensure they make the right decisions when choosing how to save.

“This is exemplified by the poor take-up of the Lifetime ISA (LISA). While it is certainly important and hugely welcome that the government is looking to tackle the issue of intergenerational fairness, they need to work with employers to make sure that employees know the best ways to achieve their savings goals”, Makings said.

Due to the lacklustre take up of LISA the Office of Budget Responsibility (OBR) reduced their forecast for the cost to government by an average of around 40 per cent a year, with only 4 per cent of 18-34 year olds taking up a LISA.

Makings added: “The generation of most concern is the 35-54 year olds who, without the cushion of a defined benefit pension like the generation before them, and without the time to build up their long-term savings, like millennials, there is the increased risk of them being unprepared for retirement with all the issues that brings for them and their employer.”

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