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Young shun company pensions

Younger employees are failing to save for their retirement, according to Aon Consulting.

The figures show that four in five young employees now shun company pensions schemes, despite eligibility.

The study of 1,500 UK individuals found that 53 per cent of respondents aged between 18 and 29 years do not participate in their organisation’s pension scheme.

The results reflect a lack of awareness of the importance of retirement savings and inertia, with one in five feeling they are too young to worry about a pension scheme.

Only 7 per cent of 18 to 29 year olds believe they can obtain a better pension scheme independently, with 15 per cent of men, compared with 9 per cent of women believing this to be the case.

The findings show that 64 per cent aged 18 to 29 believe that a contribution from their employer is very important or critical and 58 per cent rank predictability of retirement income as very important.

Aon Consulting consultant and actuary Chris Squirell believes the figures reflect a “dangerous cocktail” of high expectation and too much faith in the UK pensions system. He says the onus will be on individuals to ensure their pension is sufficient but adds that this message does not seem to be reaching the 18 to 29 age group.

He warns that the trend to bank on property to provide for retirement will not be good enough and any retirement scheme needs to include a pensions scheme.

Squirell says: “Despite the fact that the structure of money-purchase plans inevitably leads to a less predictable retirement income, younger people are more likely to believe that their pension income will be adequate. They are also the least inclined, of all age groups surveyed, to make pension contributions.”


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