For immediate release: Wednesday, 28 August 2013
RETIREMENT COULD BE MISSION IMPOSSIBLE FOR GENERATION Y
- A third of Brits believe Generation Y (those aged between 18 and 31) will struggle to save enough for retirement
- Almost half (46%) of Generation Y do not save regularly
- Half (51%) of Generation Y believe they will be worse off than their parents in retirement due to rising living costs and a less generous state pension
Generation Y 1, those aged between 18 and 31, will have it the worst when it comes to funding their retirement, according to a third (33%) of Brits surveyed by NOW: Pensions. Two thirds (65%) predict the baby-boom generation Y 2, those aged between 51 and 71, may be the last able to retire with sufficient savings. Nearly a third (29%) believe those born today will struggle the most.
According to a study conducted by the workplace pensions provider, over half (51%) of Generation Y expect to be worse off than their parents in retirement, with the majority (68%) blaming rising living costs and a less generous state pension (57%). Over a third (38%) think increased longevity will put a strain on their retirement income while 30% say they don’t anticipate being able to cash in on property to fund their retirement. Over a quarter believe that the burden of student debt will hold them back.
Top reasons why Generation Y believe they will be worse off in retirement:
|Reason||Percentage of generation Y (18-31 year olds)|
|Rising living costs||68%|
|Less generous state pension||57%|
|Going to live longer so money will have to stretch further||38%|
|Won’t have a property to cash in||30%|
|Cost of caring for older generations||27%|
|Student debts will have held us back||26%|
Yet despite this, Generation Y appear unconcerned about their long term financial future, with only 37% saying they are worried about funding their retirement, compared to almost half (45%) of baby-boomers.
This sentiment is clearly reflected in their savings habits, with almost half (46%) currently failing to save on a regular basis.
When it comes to how Generation Y expects to fund the shortfall in their retirement savings, over half (56%) plan to save or invest more, 55% will work longer, 31% intend to increase pension contributions while 30% anticipate working part time in retirement.
Morten Nilsson, CEO of NOW: Pensions said: “Sky high rents, the rising cost of living and stagnant wages have all made saving for the future near mission impossible for Generation Y.
“But, with final salary pension schemes relegated to the history books and state pension provision just £110 per week, saving for retirement has never been more important.
“Automatic enrolment into workplace pensions will help those that are struggling to save, get into the savings habit but it’s important that employers and pension providers drive home the importance of staying in the scheme.
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Notes for editors:
For the purposes of this press release:
1 Generation Y defined as 18 – 31 year olds
2 Babyboom Generation/Babyboomers defined as 51 – 71 year olds
Research conducted by OnePoll in May 2013 with 2,000 respondents.
NOW: Pensions www.nowpensions.com
NOW: Pensions is a multi-employer trust. The investments are managed by NOW: Pensions Investments, a subsidiary of ATP in Denmark, and the administration is carried out by Paymaster, an established UK third party administrator.
The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:
- Nigel Waterson, former Shadow Pensions Minister
- Imelda Walsh, former Group HR Director of Sainsbury’s
- John Monks, member of House of Lords and former General Secretary of ETUC and TUC
- Christopher Daykin, former Government Actuary
- Win Robbins, former Head of European Fixed Income at Barclays Global Investors
NOW: Pensions is committed to developing a better workplace pension provision in the UK by offering a simple, high quality, cost efficient and systematically risk managed pension product that delivers better retirement savings for UK employees. With over 45 years’ experience providing Denmark’s working population with stable and consistent pensions returns, NOW: Pensions is set to transfer the knowledge acquired in Denmark to the UK pension market. 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.
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.
The ATP Group www.atp.dk
Arbejdsmarkedets Tillaegspension (ATP) / Danish Labour Market Supplementary Pension is a statutory pension fund. It was established as an independent entity in 1964 with the objective of ensuring a greater retirement income for the Danish population. ATP has since developed to become the largest pension fund in Denmark. Together with the tax-financed basic state pension, ATP provides basic income security in old age for the Danish population.
ATP covers almost the entire Danish population representing 4.7 million members and 160,000 employers. In addition to the ATP Scheme, the ATP Group administers a number of pension and social insurance schemes, including several for the Danish state.
The ATP Group total assets under management amounted to DKK 624 billion/approximately GBP 68.4bn (i.e. assets: DKK 540 billion/GBP 62.3 billion + reserves: DKK 84 billion/GBP 9.2bn) at 31 December 2012. ATP invests in a wide variety of assets globally. Investment categories are broadly: equities, interest rates, credit, inflation and commodities.