Young people need better financial education to combat generational retirement inequality, with 38 per cent in the UK not starting their pension contributions until age 35 or later, according to Scottish Widows.
According to data, more than three-quarters or 78 per cent of people believe that the generation before them had greater pensions or better retirement prospects.
More than half or 51 per cent are prepared to give up things for their pensions. The need for financial planning is highlighted by the 66 per cent of retirees who intend to travel. Scottish Widows is in favour of removing the £10,000 earnings cap and expanding auto-enrolment to 18-year-olds.
As a result, the median private pension income may increase to £20,100, increasing pension savings by 150 per cent. Additionally, it will help disadvantaged communities.
According to Scottish Widows, by removing the lower age restriction, an 18-year-old’s pension might increase by £5,000, reaching a retirement pool of £136,000 on the assumption of a 2 per cent real investment growth.
Scottish Widows pensions expert Robert Cochran says: “There might be nothing ‘cool’ about pensions, for younger people today, but they’re an important financial safety net and need to be part of financial education, whether that’s at home, at school or at work, to help people make better decisions that will pay off for them at the right time.
“Stripping away complexity and helping people understand how small savings now will translate into things they can picture more clearly in the future, like travel or holidays, using new digital tools (including our pension mirror) and AI are all part of closing the generation gap and helping people achieve their financial goals – they also enable engagement with young people like we’ve never seen before.
“A pound saved into a workplace pension can double from day one thanks to employer contributions, compound interest and tax relief, so while it’s never too late to start saving, one pound saved by someone in their twenties can bring four times as much buying power as a pound saved by someone in their fifties.”
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