Only about half as many Millennials in the UK have a pension as do Generation Xers and Baby Boomers, according to a new report from market research company YouGov.
According to the recently released “Bridging the Young Adults Pension Gap” report, 44% of 18-34 year olds say they have no pension provision, compared to 22% of 35-54 year olds, and 20% of those older than 55.
“For retirement to work, there must be balance between young people paying in and old people not being entirely reliant on the state,” said the report. “However, many Millennials either simply can’t afford to, while for those that can, financial pressures not necessarily faced by their parents mean that they have other priorities.”
One the main reasons Millennials lag behind in terms of having a pension provision is due to a limited knowledge about pensions. According to the report, 27% say they simply don’t understand enough about pensions in general, and the 14% of Millennials who do have a pension say they aren’t sure what it entails.
The report also highlights Millennials’ skepticism when it comes to pensions, as 35% believe pensions will cease to exist at some point due to a lack of funding. And 58% said they are concerned about whether they will have enough money to support themselves when they reach retirement age. The report also found that 18% of Millennials don’t think the state pension will be enough to support them in retirement, but believe they will have to rely on it anyway.
Saving for retirement is also a relatively low priority for Millennials, according to YouGov. The report found that only 21% of those ages 18-34 who are currently able to save money said saving for retirement was a priority for them, which was below that of saving for a rainy day (29%) and saving for a vacation (32%). However, it was higher than saving to buy property (14%) and paying for home improvements (10%).
The report also offered the following tips that might help close the generational gap in pension participation:
- 18-34 year olds want information. Be clear, straightforward and don’t overcomplicate things.
- They are often hesitant toward making financial decisions. Provide them with clear guidance so they will be able to make informed decisions and understand exactly what it is they’re looking at.
- Target Millennials through online methods instead of offline. Younger people are more likely to see the internet as their main source of information and will turn to it to try to find out what they can.
- Millennials are also more likely to speak to their friends, family, or colleagues before making any financial decisions. Put your messages out there and take the lead when it comes to recommendations. They may be more likely to use less-traditional methods to gain information, but that doesn’t mean those they look to for advice do too.
- Many are unsure if the state pension will be around when they retire, and don’t think they should be forced to retire. There may be scope for a product that supports people as they scale back work, for example.
“With a large aging population eating into the government’s ability to provide a state pension, and many young people unwilling or unable to feed in to pensions of their own,” said the report, “these figures again suggest a tricky retirement for many.”