“As we reflect on the fall-out of this, it is important to consider the detrimental long-term impact that high unemployment in younger age groups could have on their future financial security and wellbeing. One of the prime examples of this is workplace pensions. Over the last decade, millions of young workers have kickstarted their retirement savings through auto-enrolment into a workplace pension scheme, benefiting from employer contributions on top of their personal contributions. However, with an increasing number of younger people now out of jobs or facing delays to their careers, many will have gaps in their savings with long-term implications. Aegon analysis shows that for a 25-year-old employee on average earnings, stopping contributions for 3 years could mean losing out on £15,500 at state pension age.
“The government has acknowledged the importance of auto-enrolment during the pandemic, maintaining support for furloughed workers, but any future policy should consider the changing financial dynamics of different age groups to ensure support is offered through a lens of intergenerational fairness to avoid creating problems for the future. Those who have left school or university in the last year have entered a difficult jobs market, and they will soon have to compete with this year’s leavers too. Policy should acknowledge these challenges and the importance of getting a good start on the career ladder.”
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