The need to develop people’s financial resilience has become more pressing than ever as young people start on their pensions and savings journey amid an economy hit by the Covid-19 pandemic.
But what sort of products and services are available to them - and are these good enough to help them on the right path, especially as the great wealth transfer takes place and intergenerational wealth planning becomes ever-more important?
Moreover, are the products currently available going to be suitable for subsequent generations of savers, and what sort of pensions strategies or services might work best for the generations to come?
Younger adults aged 18-34 and the self-employed saw a 40 per cent increase in their financial vulnerability last year, according to the Financial Conduct Authority.
Despite some studies suggesting young people were able to set more aside last year, with the Office for National Statistics suggesting the household savings rate rose to a record of 16.3 per cent in 2020, young people are on average much worse off financially than before the pandemic.
According to the latest parliamentary UK employment report, the number of 18-24 year olds claiming unemployment-related benefits increased by 114 per cent between March 2020 and April 2021.
Under-40s were also more likely than older people to have lost work and income, tumbling into debt, drawn on their savings and been forced to stop pension contributions.
Importance of starting early
Given so many are in a worse financial position than before the pandemic, many young people will have stopped saving altogether, which does not bode well for long-term pensions savings.
Earlier this year, a survey by workplace savings provider Cushon found concerns about saving for retirement reduced by 20 per cent in May compared with the same period last year, while 75 per cent of respondents said the coronavirus made them realise having accessible savings was ‘equally important’ to having a pension.
However, saving for the future is now more important than ever.
House prices have risen by 8.5 per cent in 2020 alone, according to the ONS, and the average age of first-time buyers in the UK has risen to 31 over the past 10 years.
Despite these pressures, if younger adults do not start saving now, they will be missing out on the longer-term benefits of compound interest.
Advice firm Purely Pensions has warned that savers in their 20s could lose more than £21,000 at retirement if they put off making contributions to their pensions for the first five years of working.
But many of the financial products currently available are ill-suited to the next generation and little tangible effort has been made to research their new needs, some specialists have claimed. Moreover, they suffer from a lack of advice and education.
Rob Brockington, chief executive of savings app Claro Money, says: "Young people are often overlooked but are the most affected by the lack of advice.
