01 November 2017

Solving the millennial pension saving problem: it's not all about pensions

7 min read

Helen Morrissey, Personal Finance Specialist
Helen Morrissey

Corporate PR Specialist – Long Term Savings


New research from Royal London, Pensions Through the Ages - The Millennial Mosaic, shows that tackling the affordability of housing and the lack of secure employment are as important as   changes to pension policy when it comes to overcoming barriers to pension saving among the young.

The survey of over 1500 millennials reveals an array of attitudes to savings. The findings show the diversity of 25 – 35 year olds and the challenges and financial issues they face linked to their life stage and living arrangements i.e. Homeowners; Renters or Living with Parents.

Royal London has identified five distinct groups of millennials based on their age and lifestyle:

  1. No Other Option (NOOs) – millennials living at home with their parents into their thirties because they cannot afford to live independently; nearly half (49%) said that their income held them back from paying more into their pension.
  2. Sacrifice to Save – younger millennials who are choosing to live at home so that every spare pound can go towards a house; they are most concerned with maintaining their lifestyle (38%) and not being able to afford a property (36%).
  3. Restless Renters – millennials who live independently but struggle with household bills and have little spare cash to put towards a deposit; 2 in 5 (40%) say that they are kept awake at night worrying about paying the bills and over a third (36%) say that paying debts are key concerns keeping them awake at night. They have little or no spare cash for pension saving and over a quarter (26%) have no savings at all.
  4. ‘Measured Homeowners’ - older millennials in a financially strong position, on the housing ladder and able to save some money; over two thirds (68%) have a pension.
  5. ‘Just About Managing’ - younger millennial homeowners who find that their finances are more squeezed than ‘Measured Homeowners’: almost 3 in 5 (59%) have a pension.

Rebecca Dix, 34 year old, Lab Manager from Swansea, comments on why her pension is not a top savings priority:

It’s really hard to prioritise pension saving when you are paying for other things. I feel like my pension should be a big priority, I can’t currently but it’s definitely becoming more of a priority.

It’s financially tough for millennials currently to save, as the breakdown of their pension savings highlights. The amounts they say they have saved are low and the average pension contribution is less than 5% of their income, (an average of 4.6%). This is well below the level of pension contribution Royal London recommends of 12-15% of income, to help achieve a reasonable income amount in retirement.

Breakdown of millennial pension savings by living arrangement:

  Homeowners Renters Living with Parents
Average income £32,000 £18,500 £16,500
Average number of pensions 1.4 1.2 1.3
Personal monthly pension contribution 5% 4.10% 4.30%
Average pension pot £19,062 £6,666 £5,913
Pension pot expected at retirement £319k £208k £234k

Steve Webb, Director of Policy at Royal London commenting on The Millennial Mosaic research findings said:

This research shows that it is a mistake to lump ‘millennials’ together as if they were a single group with common concerns. Older millennials who have bought a house and started saving for a pension are in a totally different situation to young renters who lie awake worrying about the bills and have little spare cash for long-term savings. Other older millennials can find that a lack of job prospects and access to affordable housing leaves them little option but to live at home much longer than they might wish. We need to listen to what younger people are actually saying and not assume they all have the same priorities.

Steve continued:

There is much speculation that the chancellor’s upcoming Budget will introduce tax cuts for the millions of workers in their 20s and 30s. If there’s public money to be had then affordable housing and employment opportunities could actually be a better solution. Improving the retirement provision of younger people is not just about pensions. It is also about making sure they can get on the housing ladder and have access to secure employment. Until these issues are addressed it will always be a challenge to get younger people engaged in planning for later life.”

Meanwhile, to help millennials build their pension savings, Royal London suggests they do their SUMS:


Tim Bresnan, Vice-Captain of Yorkshire County Cricket Club , two-time Ashes winning all-rounder and an older ‘Measured Homeowner’ who helped with The Millennial Mosaic research key tip for millennials on pension savings is:

The best advice I can give to other millennials regardless of their age or career, is the younger you start saving into your pension the better.

Millennials interested in finding out more about pension planning should speak to an impartial financial adviser if possible and also look at details available on the Royal London website or their employer’s website on workplace pensions. Plus checkout online tools that could help with their pension planning, for example our pension calculator.

A copy of the Pensions Through the Ages – The Millennial Mosaic report will be available on our website.

- ENDS -

For further information please contact:

Helen Morrissey, Corporate PR Specialist – Long Term Savings

Notes to editor:

  • The Royal London Pensions Through the Ages: The Millennial Mosaic report is based an independent on-line research conducted by Harris Interactive UK Ltd, of 1500 millennials aged 25-34, conducted between 21st and 29th June 2017.   Individuals were recruited from the research as case studies detailed in this report and interviews with these and other case studies are available on request.


  1. ‘Death of Retirement’, Royal London policy paper 2, 2016 - https://www.royallondon.com/Documents/PDFs/2016/Royal%20London%20Policy%20Paper%202%20-%20The%20Death%20of%20Retirement.pdf Previous research by Royal London has shown that those who contributed only the statutory minimum contributions under automatic enrolment could face working well into their 70s or beyond if they want the sort of pension enjoyed by previous generations.
  2. ‘Pensions Through the Ages - The Millennial Mosaic’ research, Royal London 2017 – found that 32% of millennials aged 25-34 said that paying the bills month to month keeps them awake at night, 28% said that paying off debt would keep them awake at night and 24% said that not being able to afford a property keeps them awake at night.
  3. YouGov survey and data from property website Zoopla has found that millennials face a 59-year wait to save up enough money to put down the deposit for a home, 2017 http://www.cybg.com/media-relations/news/2017/generation-rent-faces-59-year-struggle-to-save-for-a-deposit

To ensure the continued success of automatic enrolment which has already seen an 80% increase in millennials save for their future retirement, Royal London has made a number of recommendations, further details available at: https://www.royallondon.com/about/media/news/2017/september/auto-enrolment-five-years-on-royal-londons-five-point-action-plan/

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.