A THIRD of young Brits aren’t saving up for their retirement due to confusion over pension rules.
Research showed that three in 10 millennials aren’t saving into a pension pot, sparking concerns that young people won’t have enough saved for retirement.
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Millennials are more likely to be in unstable employment than previous generations.
Many of them work more flexibly and are in multiple short-term employments, zero hours contracts and ‘gig economy’ work.
This can make saving for retirement harder.
A quarter of millennials find retirement saving rules “very confusing” and 53% said they wished their employer would explain pensions to them.
Top tips to boost your pension pot
DON’T know where to start? Here are some tips from financial provider Aviva on how to get going.
- Understand where you start: Before you consider your plans for tomorrow, you’ll need to understand where you stand today. Look into your current pension savings and research when you’ll be eligible for the state pension, and how much support you’ll receive.
- Take advantage of your workplace pension: All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
- Take advantage of online planning tools: Financial providers Aviva and Royal London have tools that give you an idea of what your retirement income will be based on how much you’re saving.
- Find out if your workplace offers advice: Many employers offer sessions with financial advisers to help you plan for your future retirement.
The study by Profile Pensions showed that 23% of Brits aged between 23 and 38 weren’t sure if they’re on target to have enough to retire with.
Meanwhile, 28% had a lack of confidence with money and financial matters.
More than a third said they’re saving as much as they can but don’t think it’ll be enough for a comfortable retirement.
A further 16% don’t think they’ll ever have enough money to afford to retire.
Despite the figures, the number of millennials paying into a pension has been boosted in recent years.
This is due to the introduction of the auto-enrolment scheme, which provides access to workplace pensions unless employees opt out.
Automatic enrolment has almost doubled the number of 22 to 29-year-olds saving into their pension pots.
Jordan Mayo, chief executive of Profile Pensions, said: “Unfortunately, what we’ve seen here is that while the majority of young people are, quite rightly, investing time into understanding what their pensions mean for them, there is still a large amount of the millennial generation who feel uneducated when it comes to saving for retirement.
“There is a wealth of information on pensions out there, but making sure the right stuff reaches young people in a way that’s engaging and informative, is what we need to work towards together.”
How to boost your retirement savings
It’s likely that you already have a pension – even if you’re not aware of it – due to auto-enrolment.
All employees over the age of 22, that work in the UK and earn more than £10,000 a year are automatically included in a workplace scheme.
This means you’ll already be paying into a pension set up by your employer – with the government and your employer both contributing to it.
The first thing you should do is check that you’ve been auto-enroled by your employer and how much you have already saved.
To do this you should ask your employer who your pension provider is, and most will let you track your savings online.
Once you’ve done that, there are online tools you can use to calculate how much income you’ll receive when you retire, such as the Money Advice Service.
Salman Haqqi, personal finance expert at Money.co.uk, said: “If you perform the calculations and realise your pension doesn’t suit your personal circumstances, then it’s time to do something about it.”
You can use the Money.co.uk website to compare which pension scheme is right for you.
If you’re concerned about your pension pot – or your lack of one – it’s important to start saving as soon as you can.
Investment firm Royal London said millennials should start stashing away cash to contribute to their retirement savings – no matter how small the amount.
It also recommended that you increase your pension contributions if you are given a pay rise.
You should also max out on any employer pension contributions that are available. Speak to your employer to find out how much they will contribute.
Finally, it might be helpful to speak to an independent financial adviser to get help planning your pension savings.
According to Royal London, those who took financial advice had around £47,000 more in total across their pension pot and other financial assets.
You can find a list of approved financial advisers through the Money Advice Service.
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