More than a third of younger employees would prefer to save into a LISA than a pension, even if they had to give up a potentially valuable contribution from their employer, researchers at Capita found.
New findings, released today in Capita’s annual Employee Insight Report, have revealed 34% of employees aged between 16 and 34 said they would rather use an ISA to save for retirement than a pension. Just 15% of young people disagreed.
The study surveyed more than 3,000 workers.
Some 60% of employees felt their bosses should provide them with access to financial education to help with retirement planning.
Some 60% of 16 to 34 year olds believe LISAs will have a positive impact, with just 8% disagreeing. A significant 32% said they didn’t know, suggesting more information and advice is needed.
While 38% of 16 to 34 year olds said that if they could access their pension more flexibly (for example to buy first house) they would be willing to give up the pension contribution that their employer pays, 42% said they would not.
Findings in this year’s research also revealed that trust in the pensions industry is steadily increasing.
Some 39% of employees said they did not trust the pensions industry, with just 16% disagreeing.
This was an improvement on results for 2014 and 2015 where 47% and 43% respectively said they didn’t trust the pensions industry.
Just over half (51%) of employees did not know what income they would need in the first five years of retirement and 59% did not know how much they would need for the last five years.
Some 45% of employees believe everyone should have to join a private pension, regardless of earnings. Just 18% disagreed.
Anish Rav, head of DC proposition & strategy at Capita Employee Benefits, said: “The annual Employee Insight Report has again provided a valuable insight into today’s workforce and their views on pensions and retirement.
“It’s easy to see how LISA could become popular, but it’s crucial that younger employees properly evaluate just what they will be giving up if they do decide to stop saving into their pension to redirect into a LISA.
“While the research reveals growing trust in the pensions industry, it is also clear employers need to be doing as much as possible to explain and communicate the options their employees have at their disposal.”