According to a new report released by the Institute for Fiscal Studies (IFS), it’s not good news for British youngsters hoping to surpass their parents in the economic stakes.
According to the report, young people in Britain are on track to be poorer than their parents at every life stage, despite the fact that households actually grew richer during the 2006 to 2012 financial meltdown. That increase came about by rising pension values for those aged between 45 and 54.
The report says the growth in pension values did not however improve the slow rate of growth in overall wealth, suggesting the younger generation will lag behind their predecessors.
IFS research economist and the report’s lead author Dave Innes says, “Despite the financial crisis, household wealth on average increased in real terms over the late 2000s, driven by increases in private pension entitlements.”
But he added, “Even with these increases in average wealth, working-age households are at risk of being less wealthy at each age than those born a decade earlier.”
The study also examined people’s attitudes towards saving and pensions, with 30 percent of individuals saying they put money aside for unexpected expenses, 23 percent saying they saved only for holidays or leisure, 15 percent for known upcoming expenses, 10 percent saving for other people like their children, and only 10 percent saving for their retirement.
One third of those surveyed aged 25-34 expected their retirement to come from federal social security, while a quarter did not expect to see any federal income support.
Despite new legislation in Great Britain that automatically enrolls workers into workplace pension schemes, 44 percent did not expect to see retirement income from a private pension.
Senior IFS Research Economist Rowena Crawford says, “It is striking how many individuals do not expect private pensions to have a role in financing their retirement, let alone be their main source of income. It will be interesting to see how these attitudes change as auto enrolment into workplace pensions is rolled out.”