Financial security for both younger and older employees is reducing, according to new research from Smarterly.
Its research shows that a significant proportion of younger employees (one in four) now expect to financially support their parents in later life. This is a higher percentage that those who worry about their own retirement funds.
At the same time an increased number of older workers are now providing loans and financial gifts to help get their own children onto the housing ladder. In some cases this is potentially putting their own retirement plans at risk.
Smarterly’s head of proposition Steve Watson says: “The new reality for younger people – rocketing housing prices, low pay and a culture that normalises getting by on credit – is eroding financial security for younger and older alike.
“According to Legal & General’s report, the Bank of Mum and Dad is involved in more than a quarter of million (259,400) property purchases. Yet, we’re in a situation where over a quarter of millennials have added ‘Mum and Dad’s finances’ to their own list of money worries, and fewer than a tenth (9 per cent ) see their retirement funds as the biggest financial concern.”
Smarterly says that employees of all ages need support to save throughout their careers, and workplaces are ideally placed to provide a range of products.
The research found a third (33 per cent) of 18-35 year old employees receive no financial support from their parents or family and would welcome more support on making savings for the short to medium term.
Watson adds: “In isolation, pensions are no longer enough to support financial wellbeing. Although retirement is still the final destination, there are many other stops along the way. The key is for people to shift to accessible savings that can be used for all events during their lives. Employers are the first port of call to help them do this”.
Michael Johnson, research fellow for the Centre for Policy Studies and corporate affairs and policy adviser to Smarterly, adds: “We need to tackle intergenerational inequity at its roots. Millennials are having to support an increasingly ageing population by funding the rising cost of health and social care, in addition to a panoply of pensioner benefits. Today there are 3.5 people of working-age for every pensioner; this is expected to fall to 2.5 by 2036.
“Consequently, many millennials are likely to experience a lesser quality of life than that of their parents. The traditional savings vehicles, including pension pots, no longer serve their needs. They require access to much more flexible, innovative savings schemes.”