Iona Bain is the founder of Young Money Blog, and will be releasing her first book, aimed at helping young people navigate the financial issues, early next year. She will be speaking at Pension Insight’s Workplace Pensions Live conference in May this year.
As a young financial journalist, I am constantly asked the same question; how can we persuade Generation Y to save into a pension?
We’re all living longer but with no guarantee that the state can afford to pay us generous benefits towards the end of our lives. A charm offensive is now afoot - the financial sector is desperate to persuade us youngsters to put more into our retirement funds, knowing all too well that minimum contribution rates will be painfully inadequate.
I’ve got bad news, folks. It’s going to be an uphill struggle all the way.
Auto enrolment champions may point to high opt-in rates but let’s take a rain check when mortgage rates eventually rise, taking up an ever greater share of our stubbornly stagnant wages.
A concurrent rise in interest on our savings would also make Isas a far more appealing option for those who don’t fancy locking away their cash until…well, who knows when?
In truth, we need vigorous and quick reforms to the industry to put all this right”
Plus, the much-discussed revolution to the pension system, aimed at preventing another wave of disillusionment among bedraggled savers, have mostly served to highlight its vast failings, further putting off a generation who has little to stash away at the end of each month.
Sneaky charges, pathetic annuity rates, meagre long-term returns, the wasteland of small pension pots and the disappearance of more generous defined benefit schemes have all left a sour taste in the mouth.
To hear more about how to get young people saving enough for retirement, come to Workplace Pensions Live, our flagship annual event in May.
Iona Bain will be part of a panel of twenty-somethings tackling the retirement conundrum and how to get generation Y engaged with pensions.
In truth, we need vigorous and quick reforms to the industry to put all this right, yet it is the consumer who has been expected to change.
One pension firm admonished us, much like a head teacher, for wasting money on satellite and gym subscriptions”
Since I began writing about money and young people four years ago, I have been amazed at the out-of-touch press releases knocked up by publicity-hungry companies, determined to paint young people as fickle hedonists determined to live for today and doom themselves to an impoverished retirement.
One pension firm admonished us, much like a head teacher, for wasting money on satellite and gym subscriptions while a financial adviser implored a worker on an average salary of £26,000 to save more than £800 a month into a pension, putting them firmly in cloud cuckoo land when you consider the household pressures facing your typical 30 year old.
Thankfully, there have been fewer demoralising lectures in recent times and more attempts to educate consumers so they can commit to pensions with confidence. Let’s build on that progress with pensions guidance for all employees, not just those in their fifties and sixties.
Pushing Generation Y into workplace schemes and ‘checking in’ just before retirement simply won’t do.