Minister gives pensions warning to 'live fast, die poor' generation

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Indy Politics

Big-spenders in their twenties and thirties risk becoming the "live fast, die poor" generation unless they start saving immediately for their retirement, the Government has warned.

Research shows that only one person in four aged between 20 and 29 pays into a private savings fund, compared with one in three just five years ago.

James Purnell, the minister for pension reform, said the average retirement period had doubled, from 10 to 20 years, since 1950.

But today's young adults showed no sign of facing up to the resulting economic realities, he told a conference hosted by the Blairite think-tank, the Institute for Public Policy Research.

"Twenty and thirtysomethings can expect to live longer than before," he said. "But if many don't change their pattern of saving, they risk becoming the 'live fast, die poor' generation. That's because people are acting as if they expect to be able to fund a longer retirement, with less and less saving."

Mr Purnell said the Government's overhaul of the pensions system would make it easier and more financially rewarding for young people to save for retirement. Its reforms include the creation in 2012 of a national pensions saving scheme, or personal accounts, into which workers without a better occupational scheme will be automatically enrolled.

Mr Purnell said somebody who saved £10 per week from the age of 22, with constant lifetime annual earnings of £19,000, could expect to retire at 68 with a pension fund worth £69,000 in today's terms.

But if they put off saving until they were 30, their pension fund would fall to £55,000. If they delayed until 40, it would fall to £38,000.