News

Young people shun private pensions for ISAs

Young people shun private pensions for ISAs

Category: Retirement
Date: 27/12/2012

Private pensions may cease to exist by 2050 as young people favour short-term savings over long-term investments, according to the Centre for Policy Studies (CPS).

High living costs, existing debt and low wages, combined with low returns and the rising cost of running a pension, has meant many young people are placing their money in savings accounts such as ISAs, which allow them to access funds at short notice.

Uncertain economic times are also believed to be dissuading a large number of people in their twenties and thirties from investing over a 30 or 40-year period.

It is thought that only 12% of people aged between 25 and 34 are paying into a private pension, despite the Government's efforts to boost retirement saving by way of a tax relief incentive.

A lack of demand for private pension schemes is predicted to spell disaster for the ailing pensions industry, which has encountered a testing few years since the financial crisis began.

Michael Johnson, a research fellow at the CPS, said: "Pensions will cease to exist before 2050. I don't say that lightheartedly.

"They will cease to exist for a variety of reasons but the one at the top of the tree is that if you go and talk to people in their 20s and 30s today the word pension does not resonate with them."

Find the best cash ISA rates


Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Retirement saving at record – but it’s not enough

Are you saving enough for retirement? Or, perhaps a more pressing question, are you saving anything at all? Research shows that, even though the highest proportion on record now save adequately, a worrying number still fail to put anything away.

Next generation of retirees expect lower income

Retirees in 2015 have some of the highest retirement expectations of any group since the financial crisis, but it seems that the next generation have far weaker hopes.

When will YOU be a millionaire?

Earning £1 million in a lifetime may seem like a far-off dream when you take your first step onto the career ladder, but an investigation carried out by Prudential has revealed that the time it takes to bank £1 million has fallen.