‘Tough retirement’ for under-35s
Under-35s without a nest egg or savings face a ‘tough middle age’ working hard to catch-up to build up a pension, according to research published today.
The National Consumer Council (NCC) is warning that young people on low incomes face significant barriers to saving that puts any prospect of a comfortable retirement at severe risk.
The research reveals that young people have little confidence that saving for their future will pay off.
The NCC also warns that there is little trust among young people for the Government on pensions and if the Government tried to force compulsory savings the move would be unpopular.
NCC chairman, Deirdre Hutton, commented: ‘Thanks to the recent decline in good quality occupational pension schemes, low returns for savers, and the dwindling purchasing power of the state pension, government policy requires young adults to start saving for retirement earlier than their parents. But the reality is that this is not happening.’
The research highlighted that only one in three people under-30 are putting aside for their pension.
Ms Hutton added: ‘Our research sheds light on why. Young people are aware of and unsettled by the pensions crisis, but they are suspicious of solutions that mean they must make big sacrifices today with no guarantees that this will bring them any real benefit tomorrow.’
The NCC claimed that young people are more concerned with keeping up their repayments on mortgages, loans and credit cards. Mortgages and property ownership is seen as a better investment in the future by young people. The NCC claimed that young people are more concerned by struggling with day-to-day living expenses rather than saving for their retirement.
Ms Hutton stated: ‘Lack of trust in the pension providers – government, employers and the pensions industry – shines through as one of the reasons for their reluctance to save more. But just as significant among those we spoke to is a lack of spare cash to save.’
The NCC wants the Government to provide ‘an adequate, secure and simple’ state pension. They also want the Government to consider offering people better financial incentives to save, with a scheme along the lines of the Child Trust Fund where the Government would give a progressive lump sum to kick-start a personal savings fund.
