Rising house prices, burdensome student debt and a low-wage economy have all contributed to millennials feeling under financial pressure.

However, the good news is that many more people in the 18 to 35 age range are regularly saving into a pension than ever before. According to data from the Intergenerational Commission, a decent pension ranks as the second biggest area of concern for young people’s prospects, second only to housing.

PENSION SAVING IS BECOMING THE NORM

Auto-enrolment has been a great success in improving the proportion of pension savers, particularly among the younger age group, where participation levels have increased significantly. However, it is crucial that those being auto-enrolled into pension schemes for the first time do not consider it ‘job done’ and disengage from their savings.

April saw the minimum auto-enrolment contribution increased to 3% of qualifying earnings for employees and 2% for employers, and although staff can opt out of their workplace pension scheme, figures to date show that fewer than expected have chosen to do so.

Whether more will opt out as the minimum contribution increases to 5% for employees and 3% for employers in April 2019 remains to be seen. It’s to be hoped that having embraced the pension saving habit and got used to receiving regular statements showing how their money is growing, people will be sufficiently incentivised to stay the course.

MORE IS NEEDED TO SECURE A COMFORTABLE RETIREMENT

The problem remains that to retire with pensions that are comparable to those of their parents generation, millennials will need to think about contributing far more than auto-enrolment. This could prove difficult if they simply don’t have the spare cash available to top up their pension savings.

Employers will have an important role to play in ensuring that employees receive every encouragement to keep saving during their working lives; they could help by allowing workers to sacrifice part of their salary or bonus to make pension contributions.

Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering early retirement advicepension advicemortgage advice and more. You can read our VoucherFor reviews here. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.

It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within the blog is for information purposes only and does not constitute financial advice.

The purpose of the blog is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.