28th June 2011
The study carried out by provider Fidelity found that while young people realise they need to plan for their pensions, they are likely to need incentives to make it a priority.
Fidelity surveyed people aged 25-35 on their views on retirement and found more than 60% believe the buck stops with them when it comes to financial security in retirement, with just 23% believing it is up to the state to take primary responsibility for looking after them when they stop working.
More than half of those surveyed realise their current savings will not provide them with the sort of retirement they would like; 40% of those surveyed appreciated the value of tax relief on pension contributions, saying it encourages them to save more, while 61% would want to take advantage of extra money on offer if their employer contributed to their pension on the basis they did too.
Few of those surveyed were taking the action needed to provide for their retirement; 62% admitted they don't currently save enough, with paying off debt, saving for a home deposit and travel rated above retirement as a priority.
Fidelity found that more than half of young people save less than £100 per month overall, with 17% saving nothing; and almost half of those who do save admitting that none of their savings is going towards retirement.
When questioned about why they don't save more for retirement, the majority (64%) said they do not earn enough to save after living costs. A third said they were saving for other things, while 14% said they had plenty of time to do so.
Julian Webb, head of DC and workplace saving at Fidelity International, says: "Young people know they need to do more to achieve a good outcome in retirement and have said they are willing to take steps to get there. It is heartening to find that they understand the need to save and now more work needs to be done to nudge them to take action.
"Innovative workplace savings models will be part of the solution to get young people saving more. In February, we launched a Workplace ISA to sit alongside companies' DC pension schemes and give employees greater flexibility and choice in preparing financially for their retirement. The value of workplace savings is clear and, with the right incentives, many young people could be convinced to take steps to get themselves on track for a more comfortable retirement."
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