Young people are not a homogenous group, with some feeling hopeful and even confident about their pensions and retirement planning, while more associate it with negative emotions, according to research from The Pensions Policy institute (PPI).
The young people and pensions survey 2021 examines how people between the ages of 18 and 35 are preparing for later life and retirement, how their retirement expectations differ from previous generations of savers, and the specific challenges they face in preparing for good retirement outcomes.
According to 93 per cent of survey respondents, financial and retirement planning should be taught as a required subject.
27 per cent of respondents said they knew a bit about pensions and understood the importance of retirement planning, but that they could benefit from additional support and guidance to maximise retirement outcomes.
A further 40 per cent of respondents had negative attitudes toward pensions, including those who recognise their importance and those who expressed disinterest in pensions or did not see the point in them.
Finally, three-thirds of respondents were concerned about their lack of knowledge and understanding of pensions and their ability to save adequately for retirement.
PPI says that young people must be educated about pensions and financial planning in general from an early age to achieve positive retirement outcomes. This could be most effective if implemented early, such as in elementary school and followed by additional employer support.
PPI senior policy researcher Lauren Wilkinson says: “Young people in all of these groups could benefit from greater support from educators and employers. However, efforts to further engage and educate younger people about pensions need to reflect these differences in knowledge and attitude towards retirement planning, rather than treating young people as a homogenous group. Most young people recognise the importance of pension saving but need support to become more engaged and knowledgeable in order to make appropriate decisions about contribution rates that will enable them to achieve adequate retirement outcomes later in life.
“The industry has done a lot of work to develop education and guidance as people approach retirement, but there is not currently much support for those at the beginning of their saving journey. Although pensions are complex, many young people have not received any targeted education or guidance, and levels of financial literacy and capability are relatively low, especially among younger people. There is clearly more work to be done engaging and educating young people as early as possible, while also recognising the importance of pitching this at the right level to minimise the risk that increased engagement could lead to an increase in those making less optimal active choices.”
