Large numbers of young people face poverty in retirement unless big changes are made to pensions law and young people wake up to their pensions plight, the TUC has warned today.

Government figures show that less than half of those under 30 are currently saving for a pension, yet 62% of those born in the 1950s and 73% of those born in the 1960s started a pension before they were 30.

Yet as people now live longer people should be starting to save earlier, and putting by more each year, if they are to retire at a reasonable age with an adequate pension. Someone who starts to save £100 a month at age 20 can look forward to a total pension of just over £142 a week if they retire at 65 on best industry estimates, but if they wait until they are 35 then it falls to £71 (not including state pension), the TUC said.

Young people are failing to contribute to pensions for a number of reasons – the most important has been the retreat of employers from contributing to a decent occupational pension, says the TUC.

Pensions scandals and mis-selling have made young people suspicious of pensions companies, and young people find pensions complex and difficult. Too much choice of private provision puts people off saving according to opinion research, said the TUC.

General Secretary Brendan Barber said: "Young people have started a slow pensions timebomb. Unless they take out pensions a generation faces poverty in old age, dependent on the generosity of whatever government is in power. We used to think that slowly but surely we were all getting more prosperous. That’s not likely to be true in retirement unless these trends change.

"The key change that needs to be made is to compel employers to make a proper contribution to pensions. All the evidence shows that employees understand occupational schemes and will join a work based pension scheme, where they find making their own arrangements expensive and confusing."

The TUC's 'Pay Up For Pensions March and Rally' will take place on Saturday, June 19, in London.

(gmcg)