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Under 40s are saving but not into pensions

4 December 2018

Less than half of under-40s are saving into pensions, despite the majority regularly putting money aside for savings accounts and ISAs. 

A nationwide study by The Nottingham Building Society found just 46% of 18 to 40 years old have started a pension.

The under-40s are more likely to have savings accounts or cash ISAs which they can access easily rather than pensions which are restricted. Around 78% of those surveyed have savings accounts, while 51% have cash ISAs.

The study found just one in ten is not saving or investing each month outside of pensions and on average, are putting away around £370 a month.

Nearly a quarter (22%) of respondents cited a desire to pay off debt in the short term as the main reason for not saving into a pension, while one in five say they prefer to spend their money.

However, the research also showed that saving into a pension grew more important as respondents approached 40, with 52% of 35 to 40 years old having a pension, compared to just 21% of 18 to 24 year olds.

Tina Hayton Banks, Nottingham’s director of member services, said: “It’s refreshing to hear so many under-40s have developed a savings habit and are disciplined about putting away money each month but disappointing that they’re clearly not as committed to pensions.

“With an ageing population that sees people living longer, many will experience a retirement shortfall if they don’t pro-actively prepare whilst they are young and this generation will need to do more due to rising house prices and changes in state pensions.”

Professional Paraplanner