It’s an age old question – why aren’t more young people putting money into a pension? It’s one I took to my friends and football team. They responded with some surprising and predictable answers…
Over the past two weeks, I’ve been carrying out some undercover research. It differs slightly from the thorough investigations we usually carry out here at Which?, but it has offered some pertinent and concerning insights nonetheless.
After playing football a couple of weeks ago (we won three nil and I scored an accidental header, if you’re interested), I casually dropped the word ‘pension’ into our post-match pub debate…
Pensions on the pitch
I was surprised by how engaged my team-mates, all in their late 20s, were. Out of the 14 people sat around me:
- Eight had signed up to their employer’s pension scheme.
- Two had stakeholder pensions.
- One had a property they were letting, which they planned to use for retirement income.
- And the final two were too busy shouting at the rugby to answer.
Of the ones who saved through their workplace pension, three knew both their employer’s and their own contribution in pounds and pence. The others only knew how much they were contributing themselves.
That’s apart from one player, who said he’d been too lazy to cancel payments when he started his job. He only persevered when he’d looked at his pension statement and found that he had much more in his pot than he’d put in.
Pension talk over Sunday lunch
Fast forward to the weekend just gone, and I was having Sunday lunch with six friends of the same age. Only one of them had signed up to any form of pension savings scheme. This was my flatmate, who I’d managed to bully into saving a few years ago – he now contributes a significant sum into a stakeholder scheme each month.
The reasons cited for this lack of saving were as follows:
- I have to pay off my credit card, that’s more important.
- I don’t know what a pension is or what it does.
- I can’t afford to make any contributions.
- My dad got ripped off by his pension, so I don’t trust them.
- My employer won’t make any contributions for three years, so neither will I.
After that discussion, we resumed our talk about holidays, played with someone’s new iPad, while others swooned over some new shoes.
Come on, start saving
So, there are two sides to the pension story, and my quick straw poll is an indication of the challenge to get people saving for retirement. On the one hand, you’ve got young people who understand the importance of a pension and are doing something about it. And on the other, there are heads buried in sand.
The introduction of auto-enrolment pensions, which will force employers to offer a pension scheme to their staff, should sweep the inert and unengaged into a savings habit. And the National Earning Savings Trust (Nest), the government backed pension scheme that’s being offered to employers, should ease young people’s fears of a pension rip-off. Given the two extremes I’ve witnessed, it can’t come soon enough.
Are you putting cash away for your latter years? If so, when did you start and do you know how your pension’s growing?
Loading ...
