Workers jeopardise pension security

19-07-2006

The poor pension planning skills of many young British workers could be putting their future security at risk.

A new survey found that while around 20 per cent of 18 to 34-year-olds admitted that they never think about their pensions, almost half (49 per cent) are worried about how they are going to fund their retirement.

Around a quarter of workers surveyed said that they would opt out of the government's proposed National Pension Savings Scheme and instead would use the money for short term costs, such as paying off debts or saving for a holiday.

Under the terms of the scheme, workers would be automatically enrolled unless they opted out, contributing four per cent of their yearly salary to their pension, with employers putting in a further three per cent.

But young workers may not realise that solving short term financial issues now and ignoring long term issues could be jeopardising their future security, according to JP Morgan Invest, which carried out the poll.

"The statistics show that young professionals have a poor grasp of exactly how their long-term financial security is going to be impacted by their lack of pension planning," said JP Morgan Invest director, Jonathan Watts-Lay.

The company has called for employers to play an active role in educating their employees about the implications of the pension reforms.



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