It’s a story we’ve become used to hearing in recent years. How millennials are the sensible generation. They’ve turned their backs on alcohol and going out every single night. They smoke less than other age groups, and have fewer sexual partners. And here’s another string to add to their bow – it turns out that they are also keen to invest in their retirement, even now, when that could be fifty years away.
Research released today by Royal London show that auto-enrolment in workplace pensions schemes hasn’t put off those aged 24-35 from saving for retirement. 71% of those questioned said that they decided not to opt out of their workplace pension scheme, while 8% of those questioned did initially choose to opt out but then changed their minds. It isn’t just because it’s the ‘easy’ option that this age group are choosing to put money into a pension plan. Three quarters of the people who were polled by Royal London would choose to increase their pension payments in line with any pay increase, with 40% saying they would be increasing their monthly pension payments next year.
But what’s the reason behind it? Is it because millennials are so conscientious that they are concerned, even at their tender age, about their long-term future and retirement? After all, as retirement age increases steadily, who knows at what age today’s twenty-somethings might end up taking their pension.
Or could it be that younger generations are signing up to pensions schemes without quite understand what they are doing? Royal London’s Jamie Clark commented that ‘almost a third (28%) of millennials with a pension didn’t know what pension contributions were being made.’ The worry is that although they are saving, the amounts being invested simply won’t be enough to fund their retirements. With 76% of those quizzed saying that they would be willing to invest 4% of their salary in their pension if that were matched by their employer (taking it to a total of 8%), perhaps the answer to helping twenty-somethings to enjoy a decent income when they do retire is pushing people to increase their payments in line with pay increases. Royal London also suggests that plans be put in place to allow total pension payments to go beyond a total of 8%.
Given the cost of living compared to wages, it’s hugely promising that millennials are choosing to invest in their futures now. They are keen to save. That doesn’t mean, however, that they couldn’t do with a helping hand.