As the Government announces plans to lower the automatic enrolment age for pension saving from 22 to 18, a new study has found that 69% of 16 to 21-year-olds think that extending auto-enrolment would be a good idea.
Clearly, 69% of the young people surveyed for NOW: Pensions see the benefit of starting to save for retirement as early as possible, and yet 66% of this group are not currently contributing to a pension. This just goes to show how automatic enrolment into a workplace pension can help give people that little extra push to start saving for their future, especially considering the addition of employer contributions.
Indeed, further data reveals that 64% of 16 to 21-year-olds plan to stay in the scheme once auto-enrolled, with 38% doing so because they recognise the benefits of saving from a young age. Of the 36% who would opt out, furthermore, 12% would mainly do so because they believe they wouldn't be able to afford setting aside 2-4% of their earnings each month.
They may not need to worry though, as under the current rules, only those who earn over £10,000 a year or have weekly earnings over £192 are eligible for auto-enrolment. This constitutes 45% of the surveyed 18-21 year olds, but only 18% of the 16-17 year olds.
As such, the Government's newly proposed starting age of 18 might be ideal. It won't be coming into effect before 2020, though, so if you're under 22 and find you can afford to set aside a small percentage of your earnings every month, consider opening a savings account now to get the ball rolling.
If you're 18 or over you could even open a lifetime ISA, which won't let you withdraw any funds unless you're buying your first home or reach the age of 65. Note, however, that there is currently only one cash lifetime ISA available, and this deal is due to disappear early next year.
If you're under 18, you may benefit from a double ISA allowance, so you could save more in ISAs than anyone else! If you'd rather save small amounts every month, a regular savings account might be for you. Then, once you're old enough to become auto-enrolled in a workplace pension, you can decide whether to add your previous savings to it or keep them separate.
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