Generation differences in pensions

The 1980s generation are more "switched on" to pensions than many of their older colleagues and are also more determined to save extra in the coming year, research suggests.

Despite the pressures of student debt or trying to get on the property ladder, people aged between 25 and 34 are more likely than many older workers to be planning to increase their retirement saving over the next year, the National Association of Pension Funds (NAPF) found.%VIRTUAL-SkimlinksPromo%
More than half (53%) of the younger workers surveyed said that they plan to put more money by for their later years over 2013, compared with 26% of 45 to 54-year-olds. Across the board, 38% of people plan to increase their retirement saving this year.

Meanwhile, almost half (43%) of those aged 25 to 34 said they had talked about pensions more in the past year than they had done previously. Only those much closer to retirement aged between 55 and 64 showed more interest, at 56%.

Half of the 1980s generation (47%) said they regretted not taking a bigger interest in retirement saving at an earlier stage, marking the highest proportion of any age group.

The NAPF described the results of its survey as "surprising" and said that in the past it has found that interest in pensions increases as people become older.

It put the rise in awareness among young people down to the debate sparked by a huge pension shake-up currently under way. The overhaul includes plans for state pension reforms to simplify the current system as well as the Government's landmark automatic enrolment scheme, which started last autumn and will eventually place up to 10 million people into workplace pensions.

Much debate has also been taking place over how to make pensions clearer to understand and give people confidence in retirement saving.

Of the 25 to 34-year-olds surveyed, 48% are already a member of a workplace pension. Of the young people who are not in a pension scheme, 65% said they were likely to stay in their new pension when they were auto-enrolled, which is higher than the average of 50%.

But there were also causes for concern, with 44% of younger people who are in a pension saying they do not know if it is a good one or not, compared with 32% on average.

Joanne Segars, chief executive of the NAPF, said: "These results are counterintuitive but encouraging. A few years ago these young workers were nicknamed the ostrich generation, because they knew they needed to plan their retirement, but were doing nothing about it. Their retirement might be decades away, but it looks like many younger people are taking their heads out of the sand when it comes to pensions." More than 2,000 people were surveyed for the NAPF's workplace pensions survey in February.

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Generation differences in pensions
Figures from charity Age UK show that 29% of those over 60 feel uncertain or negative about their current financial situation - with millions facing poverty and hardship. Even though saving for retirement is not much fun, the message is therefore that having to rely on dwindling state benefits in retirement is even less so. To avoid ending up in this situation, adviser Hargreaves Lansdown recommends saving a proportion of your salary equal to half your age at the time of starting a pension. In other words, if you are 30 when you start a pension, you should put in 15% throughout your working life. If you start at 24, saving 12% of your salary a year should produce a similar return.
Many older couples rely on the pension income of one person - often the man. Should that person die first, the other person can therefore be left in a difficult position financially.
One way to prevent financial hardship for the surviving person is to take out a joint life annuity that will continue to pay out up to 67% of the original payments to the surviving partner should one of them die.

The disadvantage of this approach, however, is that the rate you receive will be lower. Again, the Pensions Advisory Service on 0845 601 2923 is a useful first port of call if you are unsure what to do.

Around 427,000 households in the over-70 age groups are either three months behind with a debt repayment or subject to some form of debt action such as insolvency, according to the Consumer Credit Counselling Service (CCCS).

Its figures also show that those aged 60 or older who came to the CCCS for help last year owed an average of £22,330. Whether you are retired or not, the best way to tackle debt problems is head on.

Free counselling services from the likes of CCCS and Citizens Advice can help with budgeting and dealing with creditors.

Importantly, they can also conduct a welfare benefits check to make sure you are receiving the pension credit, housing and council tax benefits, attendance and disability living allowances you are entitled to.

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The average UK pensioner household faces a £111,400 tax bill in retirement as increasing longevity means pensioners are living on average up to 19 years past the age of 65, according to figures from MetLife. And every year in retirement adds an extra £5,864 in direct and indirect taxes based on current tax rates to the costs for the average pensioner household. You can be forced to go bankrupt if you fail to pay your taxes, so it is vital to factor these costs into your retirement planning.It is also important to check that you are receiving all the benefits and tax breaks you are entitled to if you want to make the most of your retirement cash.

The cost of a room in a care home in many parts of the country is now over £30,000 a year, according to figures from Prestige Nursing and Care. So even if the prime minister announces a cap on care costs - last year the economist Andrew Dilnot called for a new system of funding which would mean that no one would pay more than £35,000 for lifetime care - families will still face huge accommodation costs. Ways to cut this cost include opting for home care rather than a care home. Jonathan Bruce, managing director of Prestige Nursing and Care, said: "For older people who may need care in the shorter term, home care is an option which allows people to maintain their independence for longer while living in their own home and should be included in the cap." However, the only other answer is to save more while you can.
Older Britons are often targeted by unscrupulous criminals - especially if they have a bit of money put away. For example, many over 50s were victims of the so-called courier scam that tricked into keying their pin numbers into their phones and handing their cards to "couriers" who visited their homes. It parted consumers from £1.5 million in under two years. Detective Chief Inspector Paul Barnard, head of the bank sponsored dedicated cheque and plastic crime unit (DCPCU), said: "Many of us feel confident that we can spot fraudsters, but this type of crime can be sophisticated and could happen to anyone." The same is true of boiler room scams that target wealthier Britons with money to invest, offering "once-in-a-lifetime" opportunities to snap up shares at bargain prices. Tactics to watch out for include cold calling, putting you under pressure to pay up or lose the opportunity for good, and claiming to have insider information that they are prepared to share with you.
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