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Young people struggle to save, says PLSA

26 August 2016

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People aged between 18 and 35 feel pressured to save but feel they can't, according to new research from the Pensions and Lifetime Savings Association (PLSA).

The research found that, contrary to popular opinion, the so-called 'YOLO (you only live once)' generation said they got more satisfaction from saving than from spending.

But despite good intentions, respondents to the survey said they struggled to invest savings in long term investments such as a pension or ISA.

Joanne Segars, chief executive of PLSA, said although short term pressures prevented younger people from committing to long term investments, the opt out rate for workplace pensions was low.

She said: "Younger savers staying in their workplace pensions are smart - automatic enrolment provides them with a hassle-free way to save for the long-term – they don't have to think about the investment strategy, or choosing the product, or moving their money, rthey just have to keep saving.

"Their own contributions are doubled by contributions from their employer and tax relief from the government; and they have time on their side – early savings benefit from compound interest, investment growth and time to recoup any losses."

Eighteen to 35 year olds are no different from everyone else in their ambitions to save for a secure future but, Segars said, given the current rock-bottom interest rates and low wage increases it wasn't surprising they felt under pressure.

Our research suggests many 18-35 year olds shy away from the sort of investments that give better returns over the long-term, but it also suggests that where a financial decision or situation becomes a fact of life, for example student loans, this group quickly accepts it and adapts.

"We've seen this behaviour in workplace pensions with a very low opt out rate from automatic enrolment of just 7% by those aged under 35."

First published 26.08.2016

Lindsay.sharman@wilmingtonplc.com