The Centre for Policy Studies think tank is predicting private pensions will cease to exist by 2050 as young people shun retirement savings they cannot access for years.
Centre for Policy Studies research fellow Michael Johnson (pictured) told the Daily Telegraph he believes 25-34 year olds should be encouraged to save into easy access Isas rather than pensions.
Johnson told the newspaper: “Pensions will cease to exist before 2050. I do not say that lightheartedly. They will cease to exist for a variety of reasons but the one at the top of the tree is if you go and talk to people in their 20s and 30s today the word pension does not resonate with them.
“It is such a distant concept in terms of [young people’s] ability to afford putting funds aside for a pension that the next cohort of the pension customer base is not going to materialise.”
He argued against young people being auto-enrolled in their workplace scheme unless their employer is making a “sizeable contribution” and they pay 40 per cent tax.
Johnson said: “In time, demand for pension products will diminish. This will hasten the demise of the tax relief, which will accelerate the contraction in demand.
“The fundamental problem with pension saving is if you are someone who is 25 today, it is going to be 45 years before you can touch it. That is just insane, particularly when you are struggling with very high housing prices and college debts.”
He added: “The long term objective for youngsters is to aim to be a debt-free homeowner when they reach retirement. Nothing else.”