Young workers must change their saving habits or risk poverty in older age, according to the minister for pensions reform, James Purnell. He told delegates at an Institute of Public Policy Research event that today’s “20- and 30-somethings” will live longer than previous generations but “risk becoming the live fast, die poor generation” if they did not start to save. Purnell said that in the last five years the proportion of 20- to 29-year-olds contributing to a private pension has fallen from one in three to one in four. In contrast, figures for their parents’ generation remained unchanged over the same period. “At the moment young people are acting as if they expect to be able to fund a longer and longer retirement with less and less saving, but it is striking how fast time spent in retirement is lengthening,” he said. “In 1950, the average retirement lasted about 10 years. Today it’s around 20. In 2050, if we didn’t increase the state pension age, it would be around 25 years.” The Pensions Commission has estimated that 3.7 million people aged between 26 and 35 are either not saving enough, or not saving at all. Under plans outlined in May, the government will create a national pensions saving scheme which will require both staff and employers to pay into an occupational scheme unless the employees choose to opt out.
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