Unemployed youths could miss out on £27,000 in retirement due to pandemic
Young people who have lost their job during the pandemic will miss out on thousands of pounds in retirement through their inability to find work.
A study released by Interactive Investor revealed that the pandemic is putting at risk the retirement outcomes of a generation as the impact of youth unemployment could be felt for decades.
As official statistics show that the number of 16 to 24-year olds in employment fell by 174,000 between July and September to a record low of 3.5m, the interactive investor figures show a 21-year old who is out of work for four years until age 25 could miss out on £27,000 on their eventual pot as a result.
Having to wait for two years to find permanent work will result in a pension nearly £14,000 lower at age 68.
Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Young people out of work don’t just face financial difficulty now, they could face deferred pain in the future in retirement, as a result of potentially years of missed pension contributions.
“While the impact of coronavirus on retirement plans is unlikely to be top of the priority list for this group right now, it’s something for them to be aware of and plan to make up for when they do find work.
“Despite being young, this group does have ideas of what they want from life when they are older. It would be a sad long term consequence of the pandemic if their hopes for retirement as well as their short term goals, are dashed.”
O’Connor advised youths that when they do find a job, they should make up on pension contributions to help build these reserves back up.