October 24: Modern Young Finance – weekly round-up

1. Millions of young workers face retirement hardship due to low saving and potential end of state pension guarantees

This is Money; Oct 22, Adam Uren

More than half of young workers are facing the prospect of lousy retirement incomes unless they significantly increase their pension contributions, according to an influential think-tank.

The minimum pension contributions of eight per cent under automatic enrolment rules will fail to provide an adequate income for 51 per cent of average earners even if they start their pension saving at 22, the Pensions Policy Institute has claimed today.

2.  Prince Charles calls for pensions industry ‘fit for 21st Century’

The Telegraph; Oct 16, Dan Hyde

Speaking to a conference for pension funds last week, the Prince of Wales said he feared today’s young people would be “consigned to an exceptionally miserable future” if the industry failed to adjust to an ageing population and the effect on the environment.

Although the Prince appeared to be referring to the type of investments made by pension funds, his call to action followed former government adviser Ros Altmann who also suggested last week that pensions were “fit for the past, not for purpose”.

3.  ‘Increase financial education in our schools’: AMs to debate new Bill

Wales Online; Oct 16, Graham Henry

A law which intends to improve financial education in schools in a bid to tackle the scourge of payday lending was debated for the first time by Welsh Assembly Members last week.

The Financial Literacy Bill proposed by Plaid Cymru AM Bethan Jenkins would see education authorities teach financial education as part of the school curriculum, and includes duties placed on some statutory bodies to promote financial literacy and introduce protections against “unscrupulous financial practices”. It could also make sure councils were making debt advice available for those that need it.

4. Project to tackle young tenants’ debt problems

24dash.com (Birmingham); Oct 18, Max Salsbury

Over 6,000 young social housing tenants in Birmingham are to be targeted by a project designed to prevent them from spiralling into debt.

Run by Ashram Housing Association in partnership with Birmingham City Council, St Basils, Birmingham’s Social Housing Partnership, Groundwork West Midlands and others, ‘Pay Ahead, Stay Ahead’ is aimed at 16-24 year olds.

It is hoped the scheme will teach the young tenants how to manage their finances with confidence, including how to save and budget before they hit crisis point.

It will also offer work placements and volunteering opportunities in a bid to help some of the 15,000 young unemployed people in Birmingham back into work.

5. You Need A College Degree To Get A Job (And Crushing Debt To Get A Degree)

The Huffington Post; Oct 22, Mark Gongloff

Unless you are independently wealthy, you are increasingly likely to need to take on a crushing mountain of student-loan debt in order to get that college degree, says Mark Gongloff. The amount of student debt outstanding in the U.S. has quintupled in the past decade, rising from less than $250 billion to about $1 trillion, according to the New York Federal Reserve. And student-loan default rates have surged to two-decade highs, as even employed college graduates struggle under the debt burden.

6. Six feet under as a retirement plan?

CNBC; Oct 22, Eric Rosenbaum

Young people don’t save enough. Older people have to work longer. Public pension benefits are always on the verge of being slashed, and Social Security’s future is anyone’s guess. No one trusts the stock market, but keeping assets in a savings account generates the same return as keeping them under a mattress.

The retirement picture is alarming at best, says Eric Rosenbaum. And now it has come to this: In its annual retirement study of middle-income Americans (income of $25,000 to $100,000), Wells Fargo asked participants if they expect to work until they die.

7.  Why are females not saving enough for retirement?

Daily Record; Oct 23, Clare Johnston

New research has shown that over a third of women admit to not having a pension plan and those who do put away less than men.

New research from Scottish Widows reveals 37 per cent of women do not have a pension plan, compared with 27 per cent of men.

The Women and Pensions report, compiled from a survey spanning school-leavers to those aged 60-plus, also revealed women generally save less than men, putting away £182 a month on average compared with £260.

8.  Young Money: Auto-enrolment and how it works

Every Investor; Oct 22, Sophie Robson

Young people are facing unique pressures in saving for a pension. Final salary pension schemes are all but dead, life expectancies are increasing, and there is much confusion about pensions.

Fortunately auto-enrolment should go some (but certainly not all) the way towards improving these issues, especially for young people who are more likely to be left to their own devices compared to older generations when it comes to building up wealth.

9. Young people gloomy about job prospects

Chartered Management Institute; Oct 17, Tim Chambers

One in four young people are gloomy about their job prospects, according to new research.

A study published by totaljobs.com revealed that 40 per cent of people are not confident about theircareer progression over the next six months, while one in four young jobseekers do not think they will find a job in the next year.

However, there is also some evidence that this could be partly down to many young people not putting enough time into their applications.

Fifty-eight per cent of 16 to 24-year-olds spend two hours or less on job applications, whilst the national average is 2.5 hours per application.

Over two thirds (68 per cent) of 16 to 24-year-olds said they applied for jobs for which they were overqualified.

10. Exodus of young people a challenge for banks – report

Irish Independent; Oct 23, Donal O’Donovan

Irish banks are benefiting from a recovery in property and better access to the markets but face major challenges, including the loss of potential new customers because of emigration, according to a new report.

Deutsche Bank highlights the 21% decline in the number of people here aged 15 to 29 since the peak.

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