SEB survey: young people’s choices may not serve to ensure them the old age they have envisioned
OREANDA-NEWS. September 20, 2016. In order to secure their retirement age, young people regard saving in the future and continuing to work as long as possible to be equally important when it comes to saving in the second and third pension pillars. At the same time, 15 per cent of people aged 18–25 are not planning to do anything to secure their old age.
“While it is legally required for young people to join the second pension pillar and funds will be added when starting employment or a paid internship, then retirement age is seen as being far in the future and decisions related to securing one’s retirement age are postponed, often failing to account for the fact that decisions made today can have very far-reaching consequences. For instance, if an informed selection of the second pension pillar fund is not made, the state selects the fund at random from among the available conservative funds, which may not be the best solution in accordance with actual expectations. SEB’s analysis shows that close to 15 per cent of young people allow their pension fund to be randomly assigned by the state, and most of them will later file an application to switch the pension fund,” told Aivar Lepp?nen, Head of SEB Retail Banking and Technology Area.
The survey also revealed that Estonian-speaking and Russian-speaking young people have different attitudes towards securing their respective futures. Estonian-speaking young people are less serious when it comes to preparing for their pension, with one in five not doing anything to secure their coming old age. Nearly one-tenth of Russian-speaking young people also share this opinion.
Every second person aged 18–25 plans to spend their retirement age practising their hobbies and about as many would like to travel a lot in this period of their life. According to Lepp?nen, there is a great divide between the way young people envision their retirement age and how they are preparing for it, which indicates the need for raising awareness. Greater attention should also be paid to young people’s need for saving for pension and long-term savings, both at the national level and at the level of banks providing pension services. One opportunity to obtain the necessary information and knowledge to make an informed pension savings decision is to come to a personal consultation at the bank.
*The data used is based on a survey carried out by SEB in 2016, among 681 young people between the ages of 18–25.