Pensions - Articles - Young people saving for retirement - JPMorgan comments

 It’s great to see a larger proportion of younger people entering workplace pensions, thanks largely to the introduction of auto-enrolment and low opt out rates. However, past research has shown that the workers most likely to opt out of a pension scheme are the younger generation who felt they couldn’t afford to save into a pension while having to pay for other financial commitments, such as student loans and saving for a deposit to buy a home. Does this change in sentiment signal an increase in awareness and understanding around the importance of pension saving amongst Generation Y, or is it the consequence of a successful auto-enrolment launch?

  

 The risk here is to assume these young savers will remain engaged when contributions reach 8%, while they’re faced with immediate long-term debt to pay off and their retirement is decades away. While these figures show we’re moving in the right direction, more intervention is clearly needed. The average defined contribution pot size is £35,6001 meaning a median earner has less than a 50:50 chance of reaching their target replacement income from state and private pensions if they don’t contribute more than the minimum required by automatic enrolment. The challenge for the government, adviser community and financial industry is how to maintain this momentum? These are the savers who will make the most significant difference to future capital, and it is essential these stakeholders engage with them to ensure they make sufficient contributions in order to be retirement ready.