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 Any products featured may be withdrawn by their provider or changed at any time.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

How regulatory changes could improve your income

Securing a decent retirement income will be key to ensuring you live your post-work years in comfort, but it can sometimes be easier said than done. Luckily, the regulator has stepped in to ensure a better outcome, with a number of changes in store.

1.4m could face inadequate retirement incomes

Are you adequately prepared for retirement? Hopefully you’ve got your income stream organised, but there are fears that many could be in for a shock.

Would you work longer to boost your pension?

If you knew you could substantially boost your retirement income simply by staying in work for a few more years, would you do it? Well, if the figures are anything to go by, it could be worth considering.