Millennial workers are not saving enough money into their pensions. Despite the fact that more millennials are making pension contributions, the fact is that the overall payments into pension schemes have dropped. While Generation Z are seeing their pension wealth almost double, millennials are facing a difficult future. This is largely due to a lack of awareness of how pensions work, and what they can do for you. Failing to understand even the most basic of facts about how pensions function is one of the reasons why so few millennials are focusing on their retirement fund. The key appears to be making pension information more accessible and easy to understand.
What Are Pensions For?
It seems obvious to say that a pension is there for you to contribute to in order to have a large amount of money in your savings for when you retire. That pension will allow you to live a life more free from financial worries, and no matter how you plan to spend your retirement years, a pension is an essential factor to consider.
This may sound like a simple and straightforward explanation, but it’s not just millennials who find the concept of pensions confusing.
Although 53% of millennials are confused over how pensions work, even the over-55s are not happy with the resources available. When 27% of the over-55 age group have said that they would prefer there to be more info about retirement savings, it’s clear that there is a problem for workers of all ages. Pension experts Portafina have been collating resources, advice, and guides for making pensions easier to understand, and that may go some way to providing help for those that remain confused.
Pensions in the News
Some of the changes that are expected this year are beneficial. One of the most useful for employees is that workplace pensions are set to see an increase. Whereas the current laws state that the employee has to pay 3% of their wages toward pensions, with the employer topping up that payment with an additional 2%, April 2019 will see new laws in place. These will result in every employee increasing their pension contributions to 5%, with employers then paying an additional 3%. This could have some long-term positive effects on the amount that you will receive when it comes to your retirement.
It is no real surprise just why millennials are making fewer contributions into their pensions. The high cost of living, along with the difficulties of transitioning from renting property to buying it, as well as other modern financial commitments, is obviously having an effect on how the younger generation sees their future. With more accessible and helpful information, millennials may feel more comfortable when it comes to managing their finances.
If you’re concerned about how little you understand pensions, consider looking at Portafina Discovery and their pension resources. Look at their YouTube channel and you might learn more about pensions than you ever have before. Portafina are also easy to find on Twitter, @Portafina_UK and LinkedIn.