Recent graduates will now be taking their first steps into the world of work and deciding how to spend their inaugural pay check.
Paying off student loans as quickly as possible might seem like graduates’ number one financial priority, and the average level of student debt topped £50,000 in 2017 according to the Institute for Fiscal Studies. Employees start to make loan repayments once they earn more than £25,000, paying back 9% of their debt on earnings above that figure.
However, research from insurance provider Royal London has found that making student debt payments a priority over pensions could be storing up trouble for the future. Opting out of a workplace pension to make additional loan payments could mean today’s graduates have a pension pot at retirement that is £75,000 lower than someone who saves into a pension right from the start.
What does it mean for business?
Employers have a once-in-a-lifetime opportunity to help first-jobbers really get to grips with their money and to set them up with good financial habits that can last a lifetime. That includes helping them to see the value of a workplace pension and take advantage of the employer contributions plus tax relief that are a part of that. Brunsdon is a specialist in providing workplace financial education and guidance, and we can help your new recruits understand your pension scheme. Please talk to your Brunsdon Financial Adviser for more information.
Please note that this article does not constitute specific advice. Brunsdon is not responsible for the content of third party web sites.