Generation Y expect £100,000 pension but over half haven’t started saving

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For immediate release: Tuesday 21 April 2015

New research* from workplace pensions provider NOW: Pensions reveals that Generation Y think they’ll have around £95,000 in their pension pot when they retire with men expecting £111,000 and women expecting £82,000. This comes despite over half (58%) admitting that they haven’t started saving yet.

Of those surveyed, 65% of 18-25 year olds say they aren’t saving into a workplace pension with 53% of 26-35 year olds stating that they are yet to begin saving.

When presented with information about how much would potentially come out of their pay packet each month, only a third (31%) say they could afford to save while 44% say they can’t afford the contribution now but believe they will be able to in future.

The average salary young people say they would need to earn in order to be able to afford to make a pension contribution is £26,836.

Of those that are saving, the average amount being set aside each month is £22. If contributions continued at this level, this would deliver a pension pot of £18,000 over 30 years of saving and £56,500 over 40 years of saving assuming 5% per year investment growth.

To achieve a pension pot of around £100,000, savers would need to set aside approximately £120 each month if they saved over 30 years and £70 if they saved over 40 years.

If used to buy an annuity at retirement, a £100,000 pension pot would buy a fixed income of between £5,000 and £6,000 a year.

Morten Nilsson, CEO of NOW: Pensions said: “Auto enrolment will go a long way to getting young people into the savings habit but the sooner they start saving and the more they set aside each month, the easier it will be.

“While a £100,000 pension pot seems like a healthy amount, men aged 25 today are likely to live until they are 88 and women are likely to live until they are 91** which means that this pot has to fund around two decades of retirement.”

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For further information:

Amy Mankelow
NOW: Pensions
Tel: 020 3640 9075

Valentina Kristensen
Lansons Communications
Tel: +44 207 566 9720

Notes to editors

* Research conducted by Censuswide online between 11 February 2015 and 13 February 2015 with 2,002 UK respondents between the ages of 18-35 years old.

**Based on ONS 2012 cohort life expectancies.

NOW: Pensions @nowpensions

NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.

A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.

In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.

In January 2015, NOW: Pensions achieved independent assurance of scheme quality in accordance with the new master trust assurance framework AAF02/07 introduced by The Pensions Regulator (TPR) in conjunction with the Institute of Chartered Accountants in England and Wales (ICAEW).

The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Jocelyn Blackwell, founding partner Dunnett Shaw
  • Christopher Daykin, former Government Actuary
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors
  • Nigel Waterson, former Shadow Pensions Minister

Charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.

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