6 February 2012
- 95 per cent of workers under the age of 35 do not save for their retirement
- A third of young people are saving for a deposit on a home instead
- 31 per cent of young workers put money aside in case they lose their job
Young people are failing to save for their retirement, according to research by Nationwide*.
The figures, published by Britain's biggest building society, suggests 95 per cent of younger workers aged between 18 and 34 do not put cash aside for their old age.1
Instead, they use any spare cash to save for more immediate concerns, such as saving for a deposit to allow them to move home or take their first steps onto the property ladder. A total of 34 per cent of young people in this age bracket save for this reason.
The survey of 1,316 Britons also found 31 per cent of young people save money in case of a change in circumstances, such as losing their job. A further 16 per cent save with the aim of paying off their debts.
Richard Marriott, Nationwide's Head of Savings, said: "Encouraging young people to adopt a savings habit early on is vital. Just putting aside a small amount on a regular basis can make a huge difference.
"We are encouraging people to start saving when they are young through a competitive range of savings account options, including our Smart Junior ISA, launched on November 1."
Nationwide urges those saving for their children to consider five key factors
- Start saving as soon as you can to ensure the biggest possible nest egg for your children
- Invest as much as possible, but don't commit to more than you can afford
- Try to save on a monthly basis as just a few pounds a month can build up over time
- 4) Keep an eye on tax efficient savings and investments
- Consider seeking professional advice, particularly if you are planning to open a pension or set up a trust
Nationwide offers the Smart Junior ISA, paying an overall rate of 3 per cent AER tax-free (variable) – including an introductory fixed bonus of 0.9 per cent until October 31, 2013. The rate is paid on balances of more than £1. This Junior cash ISA is available to children residing in the UK under the age of 16 who have never been issued with a Child Trust Fund voucher. No withdrawals are allowed prior to the child's 18th birthday and then only the child can access the money. The minimum opening balance is £1 and the maximum balance for the tax year 2011/12 is £3,600. In line with HMRC regulations, any children who have been issued with a Child Trust Fund (CTF) voucher will not be eligible for a Junior ISA.
It is part of the Society's commitment to encourage savings among both children and their parents, which also includes two branch-based children's savings accounts – the 90 Day Smart Saver and Smart Bond.
Notes to editors:
*Survey carried out by Jigsaw Research. 1,316 adults in Great Britain aged between 18 and 75 years old were interviewed between 18/08/2011 and 23/08/2011.
1 This excludes money saved in a pension scheme. However, the number of people aged 18 to 35 who do not save via a pension scheme is more than 80 per cent, according to Mintel March 2011 statistics.
Nationwide Education - a resource for parents, teachers and students developed by Nationwide – has filmed an entertaining short video explaining to young people how to start saving. The video can be found here and journalists and bloggers are free to embed the video directly onto their website.
SMART JUNIOR ISA
||AER tax-free variable rate (including bonus)
||AER tax-free variable rate (excluding bonus)
||0.90% introductory fixed bonus until 31 October 2013
||Smart Junior ISA
||In branch, by post or online
||No withdrawals allowed before the child's 18th birthday and then only the child can access the money
||Unlimited, up to annual Junior ISA allowance of £3,600 for the tax year 2011/12
|Min. opening balance
|Min. operating balance
||Subject to annual Junior ISA allowance
||The account must be opened by a parent or legal guardian over the age of 16 on behalf of a child under the age of 16 years.
|Number of accounts
||The child is the account holder and can only hold one cash Smart Junior ISA at any one time.
||Interest is calculated and credited to the account annually on 31 October
AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest were paid and compounded once each year. Tax-free is the contractual rate of interest payable where interest is exempt from income tax.
New applications only. Products may be withdrawn without notice.
About Nationwide Building Society
Nationwide is the world's largest building society as well as one of the largest
providers and a top-three provider of
mortgages in the UK. It is also a major provider of
Nationwide has around 15 million members.
Since the credit crunch began in 2007, Nationwide has remained profitable against a very difficult economic environment. In the half year ending September 2011 Nationwide made a strong underlying profit of £172 million – up 17% from the previous year. Its strong financial performance and prudent business model means that Nationwide is included in Global Finance magazine's Top 50 Safest Banks in the World.
Nationwide has around 700 branches and customers can manage their finances in branch, on the telephone, internet and post. The Society has around 16,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.