'It could cost me £10k but I need the money now': Why Gen Z are opting out of pensions
In today's quizSummary
Many young people in the UK, especially those in their 20s and 30s, are choosing to stop paying into their workplace pensions because they need money now for living expenses like rent, loans, and saving for a home. Experts warn this could lead to lower pension incomes when they retire because they miss out on employer contributions and the benefits of compound interest.Key Facts
- Employees aged 22 or over who earn more than £10,000 are usually automatically enrolled in workplace pensions.
- Around 90% of eligible workers are paying into a pension, but about 2.5 million have opted out.
- The number of young workers opting out has increased, with 11.5% of new workers aged 22-29 opting out by the end of 2023, up from 6.6% in 2020.
- Many young workers say cost-of-living pressures make it hard to save for the long term.
- Employers like the NHS do not allow staff to reduce pension contributions during hard times, while some other employers do.
- Pension experts advise reducing contributions rather than stopping them to keep benefiting from employer contributions and compound growth.
- Compound interest means money saved now grows over time, so early pension contributions have a bigger value by retirement.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.
