Over two thirds of young savers have negative perception of pensions

More than a third (39.9 per cent) savers aged 18-35 are 'pessimistic and disinterested' towards pensions, whilst a further 32.9 per cent are 'worried and unsure', according to research from the Pension Policy Institute (PPI).

The Young People and Pensions Survey 2021, sponsored by Capita, found that whilst there some “positive” and “hopeful” respondents, there were “many more” who associated negative feelings with pensions, using words such as “unrealistic”, “pointless” and “unsupported”.

More than a quarter (27.2 per cent) of respondents were engaged with their pension, however, although they felt they could benefit from additional support and guidance to maximise retirement outcomes.

Indeed, the vast majority (92.6 per cent) of respondents agreed that financial and retirement planning should be taught at school or university as a mandatory subject.

Currently, around 54.5 per cent of savers said that they had received education or guidance about pensions from their employer, while 36.6 per cent heard from parents or other family members, and 23.8 per cent had received none.

Intergenerational tensions were also found, as 47.3 per cent of younger savers said that they expect their retirement experience to be “significantly worse” than previous generations’, whilst 28.5 per cent think it will be “a bit worse”.

Affordability was highlighted as a key issue amongst younger savers, with 76.3 per cent of savers stating that increased earnings would be most likely to increase their individual contribution rates.

Around 71.6 per cent suggested that increased employer contributions would also prompt an increase in individual contributions, and 44.6 per cent of savers pointed to higher levels of tax relief.

More flexible access to pension savings, meanwhile, was highlighted by 28.4 per cent of savers as a route to increase contributions, while 28.9 per cent called for a better understanding of how pensions work, and 28.9 per cent asked for access to better information or tools.

In light of the findings, the PPI has emphasised that any policies aimed at improving the future retirement outcomes will need to address affordability concerns, financial literacy and social inequalities that increase the risk of poor retirement outcomes.

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