Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
An account already exists for this email address, please log in.
Missing the whole point of pensions
Over half of 15-35 year olds say they would start a pension if they could buy a house with it. Which is entirely missing the point of pensions, says Merryn Somerset Webb.
Young people would rather thave a house than a pension
An odd press release arrives from the usually relatively sensible group, Now: Pensions'. It calls for "greater flexibility in pensions to encourage young people to save".
The reasoning is simple 58% of 18-35 year olds aren't saving into a pension. Now: Pensions thinks they should be, so it asked them what would make them do it.
According to 54% of them, the answer is the ability to use their pension pot "to fund a first-time property deposit". Another 42% say they would be more likely to save if they were offered a financial "kickstart" by "the government" (I think we can safely assume they mean the taxpayer).
Start your trial of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
This is all absurd. The whole point, I repeat the whole point, of a pension is that it is very long-term saving for a defined purpose the financial support of a pensioner in retirement.* If you can take the money out whenever you want to buy houses, the whole point is therefore lost.
And as for the business of a kick start, what on earth do Now: Pensions and the 18-35s think the tax relief is? Every time they save into a pension they get all the tax they might have paid on the money back. That's a huge kick start at the expense of other taxpayers.
Finally, I would say that the fact that 58% of the young aren't saving for retirement isn't all bad news at all. It means that 42% are a number much higher than I would have expected given that there is no such thing as an 18-27 year old who could care less about pensions.
Auto enrolment muddies the waters here, but look at it like this: if 18-27 year olds aren't saving for retirement at all it would suggest that not far off 80% of the rest are. Amazing!
*Although I guess that is changing with inheritability the whole point for the rich is now to use pensions to avoid IHT we'll have a report coming out on this soon.
Explore More
Sign up for MoneyWeek's newsletters
Join more than 165,000 subscribers and keep yourself informed with the latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
