MILLENNIALS NEED ENCOURAGEMENT TO KEEP SAVING
Research has shown that 23% of UK millennials don’t have any savings. The reason may lie in data from the Resolution Foundation Report (2), which shows that average real hourly earnings for British under-30s fell by 13% between 2007 and 2014.
The pensions bright spot
However, it’s not all bad news. From 2012, employers have been required to automatically enrol nearly all their employees into a workplace pension. While employees can opt out, if they don’t, then both they and their employers pay in to their pension account. This has been a very successful move, resulting in around 10 million extra workers saving for their retirement.
Department for Work & Pensions analysis of employer schemes started in 2013 and 2014, shows that millennials were least likely to opt out of making contributions.
A step in the right direction
From 6 April 2019, the total combined contribution for an auto enrolled workplace pension scheme increased from 5% to 8% of qualifying earnings. Employers must make at least the minimum employer contribution of 3%, with the staff member making up the difference, usually with the help of Income Tax relief.
However, experts have suggested that in order to have a pension that equates to around 70% of pre-retirement earnings, the total combined contribution percentage needs to be between 10% and 15%.
(2) Resolution Foundation, 2018