New research has revealed that 82% of young employees aged between 18 and 22 believe that individuals in employment should start saving for their pensions and retirement before the current default age of 22.
The Pensions Management Institute’s (PMI) findings also highlighted that more than six in 10 (61%) think that all of an employee’s salary should be included for the pension contributions calculation, rather than just that part that is above the current lower threshold of £6,240 per annum.
Additionally, 59% believe that the current statutory minimum contribution rates of 8% are too low and would prefer a rate of up to 12%.
According to the PMI, these rates are consistent with reforms to automatic enrolment scheduled for implementation later this decade, but there is no formal implementation date for this just yet.
The research also demonstrated the extent to which the cost of living affects young savers, with almost half (49%) 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 that the results of the research should kill off the assumption that young people do not give serious consideration to preparing for their retirement, as it is “emphatically clear” that they 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 of the serious obstacles that millennials and zoomers face in bearing the financial cost of saving for retirement. There is much that the 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 promoting pension saving at a time when society might not consider this to be a priority,” Alexander said.
