More than two-fifths (44%) of workers aged between 25 and 34 admit to putting off saving for or investing in long-term prospects such as retirement, according to research by investment management organisation Blackrock.
In July 2018, the organisation’s annual DC pulse survey polled 1,000 UK working adults aged between 25 and 69 with at least one workplace defined contribution (DC) pension. The research also found that only 14% of young savers know exactly how much money they have in their current DC pot.
On the other hand, 39% of individuals between 25 and 34 years of age stated that they feel confident in that their retirement savings are on track. This proportion drops to 31% for those aged between 55 and 64, and 18% for respondents between 45 and 54 years old.
Paying into their pension is the priority for 52% of respondents aged between 25 and 34, but this is superseded by saving for a ‘rainy day’ (71%), and matched by spending money on day-to-day luxuries (52%).
Income does not appear to change these results, as only 2% said they would use an extra £200 per month to contribute to their pensions.
Almost half of younger respondents stated that ideally they should, between them and their employer, be contributing 15% or more into their pensions. However, less than a third (29%) are doing so.
Claire Felgate, head of UK DC at Blackrock, said: “Auto-enrolment has played a very important role in reiterating the importance of planning for later stages of life, by nudging people to start saving through a pension scheme at work. But we worry that, for younger savers, it’s given them a false sense of security.
“The government’s move to increase the rate to 8% from April 2019 is a step in the right direction, but our concern is that individuals will think the number is enough. We need to start thinking of 15% as the rule of thumb to help everyone secure a comfortable living in their old age.”