A National Pensions Savings Scheme (NPSS) is needed to help young people save for retirement, claims the Trades Union Congress (TUC).
While launching a new leaflet, explaining pension choices available, at the TUC Young Member’s Conference, the organisation warns young people are facing a poor retirement if they don’t start saving now.
It claims only 26% of men and 33% of women between the ages of 18 and 24 have a pension, although nine out of the ten young workers who are saving, do so into an occupational pension scheme, which it says is most likely to provide a decent retirement income.
The leaflet published by the TUC on Saturday explains the different kinds of pensions available, but points out to afford a decent retirement, at the age of 25 most people need to be saving 11% of their earnings, which increases to 14% at age 30, and 18% if they wait until they reach 35.
Meanwhile, research from the Financial Services Authority (FSA), reveals 19% of people over the age of 18 expect to have a higher standard of living in retirement compared to now, as younger people are more likely to think things will improve, with 41% of 18 to 24 year olds expecting improved standards of living compared to just 25% of those aged between 25 and 34.
As a result the TUC is urging the Government to help young people save by introducing an NPSS as recommended by the Pensions Commission.
Frances O’Grady, deputy general secretary of the TUC, says young people struggling with debts and housing costs are faced with tough choices, and many are putting off saving or think they will be able to get by without their own pension.
She warns if pension saving is left too long, reality will bite hard for young people when they hit retirement, so she says the Government needs to be “bold and brave, and stand up to the employer onslaught against the model of compulsion which is being proposed.”
O’Grady adds: “The simplest way to increase saving amongst young people so they will enjoy a decent retirement is to ensure they have access to a decent work pension with some compulsory employer and employee contribution, as Turner has recommended.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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