Young people may live fast but could die poor
Today’s young employees risk becoming the live fast, die poor generation due to their savings habits, according to Minister for Pensions Reform James Purnell.
He said that between 2000 and 2005, the proportion of 20-29 year olds contributing to a private pension had fallen from one in three to one in four. In contrast, figures for their parents’ generation remained unchanged over the same period.
Speaking at an Institute of Public Policy Research event, Purnell added: “At the moment young people are acting as if they expect to be able to fund a longer and longer retirement with less and less saving. It is striking how fast time spent in retirement is lengthening. In 1950, the average retirement lasted about 10 years – today it’s around 20. In 2050, if we didn’t increase the State Pension Age, it would be around 25 years.”
The Pensions Commission estimated that 3.7 million people aged 26-35 are either under-saving, or not saving at all. Purnell told the audience that the Government is determined to change this.
“We believe that our reforms make it easier for people to save. Auto-enrolment will tackle the inertia which can stop people saving. Personal accounts should also deliver an improved return on savings,” he said.