Over a fifth of people aged between 18 and 35 are unsure of how their pension works and 45 per cent don’t know how much money they will have accrued at the time of retirement, according to research.
Online printing business Printerland.co.uk that caters to the small business-to-business market, conducted research that showed many people are still in the dark about pensions. It discovered that 21 per cent didn’t know how their pensions worked, according to an article in Employee Benefits magazine.
Of the 2,000 respondents aged between 18 and 35, 45 per cent didn’t know how much they will have in their pot when they retire.
Around 24 per cent believe that they wouldn’t be able to afford to retire and 24 per cent expect to continue working beyond the retirement age.
The research also found that 19 per cent cannot afford to invest in their pension savings and 18 per cent don’t have enough spare cash to save outside their pension contributions.
Catherine Bannan, HR manager at Printerland.co.uk, said: “While millennials are aware of pensions, and understand they should be investing in them, some important details are still misunderstood.
“Researching and becoming educated in these details may be the next step for this generation.”
Aon’s Chris McWilliam explained that auto-enrolment had been a success, with 9 million individuals being auto-enrolled since 2012. However, even when total contributions reach 8 per cent, he said this would fall well below the amount needed to provide an adequate income in retirement, with Aon’s Defined contribution survey in 2017 estimating that a 25-year-old man will need to save 18 per cent of their salary to maintain their lifestyle in retirement.
He said: “The Printerland survey aptly demonstrates that with people struggling with issues such as being able to buy and even rent their own properties, student debt and generally making ends meet, many see retirement as too far away to do anything about or unaffordable even if they do recognise the importance of saving for their old age.
“Employers that have a financial wellbeing strategy designed at helping employees gain an understanding of basic financial management techniques can pay dividends in terms of increases in productivity, better use and appreciation of an employer’s benefits programme (many of which may help an employee’s financial wellness) and, in the medium to long-term, with succession planning.”
McWilliam explained that Aon’s 2018 Global Financial Wellbeing Survey showed that although only 14 per cent of respondents currently have a financial wellbeing in strategy in place, 62 per cent expect to have one in three years’ time.
He concluded: “Acting in this area can help reduce the number of employees saving too little, whilst bringing tangible benefits to the employer.”
Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.