To help people enjoy better outcomes in retirement, that work does not start when they are already years into working life or just years away from retirement.
Many retirement experts agree that the work needs to start many years before that.
But with conflicting obligations, younger people might struggle to fully understand the benefits of saving for retirement, a period in life they would consider to be many years into the future.
Kirsty Anderson, pensions specialist at M&G Wealth, says: “There's lots of research on this topic and as an industry we need to evolve in how we engage and educate the next generation of savers. One of the challenges we face is that our industry is predominantly made up of men over the age of 50.
"Moving away from this stereotype requires us to employ younger advisers and encourage more women to take up roles in financial advice and ultimately start to engage with clients in different ways.”
She points to a study from consultancy firm AKG, which shows 91 per cent of advisers see the need to develop distinct types of service and fee models for different client segments, and more generally they know they need to change their advice models.
Anderson adds: “My personal opinion is that there needs to be more financial education as part of the curriculum in schools. The Personal Finance Society has a great programme to do exactly this in schools.”
Dominic James Murray, chief executive of Cameron James, agrees: “I think young people are going to struggle with the commitment and sacrifice that it takes to build pension pots. Moreover, they can largely wave goodbye to generous defined benefit schemes that some of their parents received.
“The best way to get young people thinking more about pensions is for them to be educated correctly at school.”
Lucie Spencer, director – financial planning at Evelyn Partners, says she often speak with parents of younger people and advises them if they wish to make a gift to their children or grandchildren to start by putting it into a pension for them.
This then gets young people involved with pensions at an early stage and they are then more likely to take notice of them.
Spencer adds: “With the new [auto-enrolment] legislation around pensions ensuring that employers and employees have to contribute to pensions from age 22 this helps to support young people becoming more involved with pensions as they have one from a younger age.”
While AE is helping to fund retirement, it does not give the guaranteed income of DB pensions and the accompanying spouses’ pensions, says Justin Corliss, senior pensions development manager at Royal London.
Additionally, paying anything extra into a pension is currently competing with increasing mortgage costs and the general increase in the cost of living.
