Majority of young people favour earlier pension saving

More than four in five (82 per cent) young people in work aged between 18 and 22 believe that individuals in employment should start saving for retirement before the auto-enrolment age of 22, research by the Pensions Management Institute (PMI) has revealed.

The PMI’s study also showed 61 per cent of young people believed that all of an individual’s salary should be included for the calculation of pension contributions, not just income above the lower threshold.

Additionally, 59 per cent stated that the current statutory minimum contribution rate of 8 per cent was too low and would prefer a rate of up to 12 per cent.

The research also demonstrated the extent to which the cost of living affects young savers, with 49 per cent of respondents citing either existing rent or mortgage commitments, or saving for a deposit, as presenting serious obstacles to long-term pension saving.

PMI president, Lesley Alexander, commented: “The results of this research should kill off the lazy assumption that young people do not give serious consideration to preparing for their retirement.

“A popular cliché of a generation more concerned with cheap holidays and Netflix has been exposed for the lie that it is.

“It is emphatically clear that young people would be prepared to make a greater commitment to pension saving were they encouraged to do so.

“At the same time, however, we should not make light if the serious obstacles that Millennials and Zoomers face in bearing the financial cost of saving for retirement.

“There is much that government could do to ensure that young people are sufficiently incentivised.

“This research shows that the scheduled reforms to auto-enrolment should now be introduced as a matter of some urgency.

“Richard Holden MP is to be congratulated for his initiative in prompting pension saving at a time when society might not consider this to be a priority.”

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