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Young Workers Need to Start Saving

April 2 2006 - Most employees between 18 - 24 are not contributing to a pension and face a poor retirement if they do not start saving soon, according to the TUC.

Only 26% of male workers and a third (33%) of working women in in their late teens and early twenties have a pension. Of the minority who are saving, 9 out of ten are members of an occupational pension scheme - the kind of pension most likely to provide a decent retirement income, say the TUC.

The TUC has produced a pensions advice leaflet for young people that explains the different kind of pensions available. The leaflet points out that the longer you delay saving for retirement, the more you have to contribute to your pension pot:

  • 11% of earnings if you start saving at 25
  • 14% if you wait until you are 30, and
  • 18% if you delay until the age of 35.

TUC Deputy General Secretary Frances O'Grady said:

"Young people struggling with debts and housing costs are faced with tough choices. And many are putting off saving or think they will be able to get by without their own pension. But if pensions saving is left too long, reality will bite hard for young people when they hit retirement.

"The simplest way to increase saving amongst young people so that they will enjoy a decent retirement is to ensure they have access to a decent work pension with some compulsory employer and employee contribution, as Turner has recommended. But the government will need to be bold and brave, and stand up to the employer onslaught against even the modest level of compulsion that is being proposed."

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