By Ilonka Oudenampsen
The best time to start saving for retirement is under the age of 25, according to 89% of pension scheme members on Friends Life’s corporate benefits customer panel, with those who did claiming a better understanding of their pension.
The panel was launched in December 2011 and is made up of 500 of Friends Life’s pension scheme members. The company today announced its first findings, based on 160 interviews conducted over the phone or online.
Other findings included that 49% started paying into their pension before the age of 25, 78% started paying in before the age of 35, and men were more likely to start paying into their pension before 25 then women, 55% compared to 37% respectively.
Of those who started saving before 25, 61% claimed they understand their pension, compared to 39% who started saving over the age of 25. When asked about contributions, 68% said they pay the highest possible amount into their employer pension, while one in ten said they didn't know if they did.
The majority of the panel (64%) plans to retire around 60-65 years old, while 27% expects to retire after 65. Only 37% believe they are currently saving enough to fund their retirement, with 24% of panellists revising the age at which they plan to retire. Plans have changed as a result of changes to when they will receive the state pension (31%) and concerns about having enough money to live on (26%).
Furthermore, 68% believe they will increase contributions in the future, with those saying they will not increase their contributions in the future citing insufficient funds/other commitments (43%), believe they are already well covered (16%), prefer to develop alternative investments/savings (12%) or are put off by negative information about their returns (10%).
Friends Life head of corporate benefits marketing Martin Palmer said: "It's interesting that so many panellists would recommend starting a pension before the age of 25. Whilst employees at the start of their careers will have other financial commitments, perhaps saving for a house deposit or repaying student debt, the vast majority of the panel advocate starting retirement saving at an early age.
“As the largest employers start auto-enrolling eligible employees into a pension scheme from October 2012, employees over the age of 22 will be able to take advantage of employer contributions alongside their own to help get them in the savings habit, which may be the catalyst to help young people take advantage of our panellists' advice."