Young people confident of affording retirement despite Covid

Auto enrolment into pensions is the main driver of interest in pensions, according to Hargreaves Lansdown

Young people now care much more about pensions, with interest often sparked after they save a £5,000 pot, new research claims.

Over the past three years, there has been a 58 per cent rise in 18 to 34-year-olds who feel confident that they will be able to afford retirement.

What that requires varies according to the individual, but the goal is typically to save enough to have an income worth two thirds of your salary in old age.

Confidence in being able to retire is up about 15 per cent across every age group over the past three years, although among women it's up just 8 per cent, according to a series of annual surveys by Hargreaves Lansdown.

Hargreaves says auto enrolment into pensions, which means most workers now save unless they actively opt out, is the main driver of interest - although it attributes some of it to 'the confidence of youth' among those newest to working life.

The firm cites separate research among members of its workplace pension schemes which shows having £5,000 in a pension is a trigger for greater engagement.

It measures this in terms of actions like registering to check how much you have saved, investing outside the 'default' fund, transferring in old pensions, and increasing contributions above the minimum.

There's been a massive surge in young people's pensions knowledge and confidence over the past three years - although they were starting from a very low base, says Sarah Coles, personal finance analyst at Hargreaves Lansdown. Paying for our retirement is an expensive business, and now employers and the state are keen to play a smaller role, the heavy lifting is down to us.

Hargreaves has carried out an annual pension survey among 2,000 people, weighted to be representative of the population, for the past three years.

Confidence in being able to afford to retire has risen from about one in four among 18 to 34-year-olds to well over one in three in that period.