A quarter of 18-24 year olds hasn't heard of auto-enrolment

A quarter of young people aged 18-24 years has not heard of auto-enrolment, despite new proposals being published that will extend the scheme to 18-year-olds. Research from Standard Life, part of Phoenix Group, revealed that more than a third of young adults are not really familiar with AE. Its 2023 Retirement Voice survey showed that almost a quarter of them have never heard of AE while a tenth of are only vaguely familiar with it. Meanwhile just a fifth say that they know a lot about it. One of the reasons for the lack of knowledge is that pension savings are understandably not the first financial priority for those entering the workforce for the first time. The study showed that inflation (54%), interest rates (52%) and energy prices (49%) were bigger worries for youngsters. However low awareness of the scheme was not universal and 42% of the 18-24 group who were familiar with AE believed it be an important stimulant in encouraging people to save. Phoenix Group has recently published a report to consider the circumstances under which minimum contributions could rise to 12%, which is considered to be a more adequate level. The analysis shows that someone who started saving at 22 and paid the minimum AE contributions (5% employee, 3% employer) until retirement at 66 could build up a pot of £434,000, not taking inflation into account. However, if they topped up their contributions to the Living Pension target of 12% from 22, they could secure a pot of £651,000 - £217,000 more. Gail Izat, managing director for workplace pensions at Standard Life said: “Over a decade on, auto-enrolment has clearly had huge benefits for the UK’s pension savers, helping to fill the gap created by the demise of defined benefit schemes and establishing retirement saving as the norm in workplaces across the country.” She said one of the biggest successes of auto-enrolment has been the low level of opt-outs, partly due to the rise of saving by inertia. But she said the importance of taking an active role in retirement planning increases as people move through their career. In the Autumn Statement the Government announced a consultation into legislating for a pot for life, which would give people the option of choosing a pension that would follow them from job to job. Ms Izat said: “There are significant steps currently being taken to increase the amount people are saving into their auto-enrolled pension scheme, including a new law to lower the minimum age to 18 and remove the ‘lower earnings trigger’ of £6,240. However, the single biggest thing that people can do to boost their chances of securing a decent fund for their retirement is raise their contributions as soon as they can to benefit from investment over a longer period.”

A quarter of 18-24 year olds hasn't heard of auto-enrolment

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