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Earning? Time to start saving ...

Young people must look to their pensions, says Peter Clifton
Are people in their twenties expected to be older than their years? With the excitement of notching up new achievements every year - the first job, buying a flat, travel - and the sheer fun of being young, stretched and successful, who wants to bother with saving for the future?

Many older people, brought up to believe that a working life stretches to 60 or even 65 years of age, accept that trying to push a 25-year-old into thinking about pensions is pointless and perhaps unnecessary. If so, they are making a mistake.

Unlike previous generations, today's young people are unlikely to work till late in life. Government figures show that the numbers of retired and unemployed over the age of 55 are growing relentlessly. You have less than a 50-50 chance of not being in work after that age. After 60, the odds are heavily stacked against you .

Yet, figures complied by Equitable Life show that a man aged 60 has a remaining life expectancy of 21 years. A woman of 60 will, on average, live for 26 years more. In effect, 30 years' work will have to support almost 30 years in retirement.

This could mean leisure of a quality that your parents can only dream of - provided you start saving early enough. Most people don't: figures published in Insurance Trends, an industry magazine, suggest that only half of the UK male population below the age of 26 saves anything towards a pension.

Stephen Gamble, an independent financial adviser, says: "My experience is that most people don't do anything about pensions until they reach 40. They think that they will then have 25 years to save ... If they leave it to 40 it is far too late - the savings required to retire on half of what they earn now are out of all proportion to their earnings."

Waking up in a sweat at 40 is too late, but even a nightmare at 30 is too tardy a warning. The workers who enjoy a pension offered by their employer are becoming fewer. There is the cold world of the smaller employer with no occupational pension, and, beyond that, a growing new labour market for contract work and self-employment. In this hard soil, pensions just don't grow automatically.

Roland, a 28-year-old contract worker in television, has a personal pension. He knows that few people in his line of business are still working after 50. He should be saving 10 per cent of his income, but does not.

Stephen Gamble says: "Roland is allowed to put 17.5 per cent of his earnings towards his pension at that age, rising on a sliding scale to 40 per cent at age 61. Clearly, because of his shorter working life expectancy, Roland should be putting the maximum towards his pension to stand any chance of having a decent sum at retirement. Every year's delay will prove expensive. It's as stark and simple as that."

Employment trends suggest that, to survive in tomorrow's tougher financial climate, young people should add 10 years to their ages - when planning for retirement, that is.

A common excuse for doing nothing is that pensions, like life itself, are a gamble. But, unlike gamblers, everyone who invests in a pension gets a payout. And in the highly unlikely event that you don't make it across the line, someone else will benefit from your pension.

Here are some steps to take:

l If you have the chance of joining an occupational pension you should jump at it: company or public sector pensions usually include a significant contribution from your employer. Some pay guaranteed benefits at retirement, linked to your final salary. Others invest your money, allowing you to build up a pension "pot" with which to buy a retirement income when you stop work. Talk to your company secretary or pensions office to find out whether there is a scheme you can join.

l If you are in your twenties, phone the Association of British Insurers on 0171 600 3333 for its information pack on pensions. IFA Promotion (0117 971 1177) offers independent pension planning information, and details of advisers near you.

l If you are in your early thirties, you need to be even more active. Follow the same advice as for the under 30, but be aware that you will need to save even more from your income.

l It's important to plan now. Every extra pound will make the last 30 to 40 years of your life infinitely more pleasantn