Think tank’s call to encourage the young to plan for retirement

The International Longevity Centre-UK said increased life expectancy, growing care costs and the impact an ageing population would have on the country, meant it was important that more was done to encourage young people to plan for their retirement.

The group called for a ‘savings rule of thumb’ to be developed, similar to the five-a-day healthy eating message, to encourage young people to set aside more of their money.

It said existing incentives to save, such as tax relief on pension contributions, should also be promoted better, while saving into a pension should be made as easy as online banking.

But it warned that the Government may need to go further and introduce a plan B in case young people opted out of auto-enrolment into pension schemes when the move is introduced in October next year. It added that the Government should consider introducing a graduated state pension, to reflect changing expectations about retirement, including the fact that people are likely to continue working part-time after they reach the state pension age.

Dr Craig Berry, senior researcher at ILC-UK and author of the report, said: “Planning for retirement may be an alien concept for many young people, but delayed transitions to adulthood in terms of owning a home, establishing a career and starting a family mean that young people need to start saving for a pension now.

“Crucially, however, Government policy to encourage saving must be informed by generational perspective.”

Pensions Minister Steve Webb said: “We have to get young people engaged in pensions as they will live longer than us and will have to take more responsibility for saving for their retirement.”