Young people are too busy paying off debt, trying to get on the property ladder or just enjoying life to worry about pension schemes.

The Association of British Insurers (ABI) said less than half of those under 30 currently saved into a pension.

This compared with 62 per cent of people born in the Fifties who had a pension when they were in their 20s and 73 per cent of those born in the Sixties.

The group blamed the low take-up on the "enormous competing financial pressures" young people faced - such as paying off debt and saving to get on to the property ladder.

It said young people found it difficult to think several decades ahead to retirement age so immediate concerns took priority, such as setting up home or just enjoying life.

At the same time, savings goals also tended to be short-term, such as saving for a wedding or a holiday.

Few young people claimed to be natural savers, with many spending everything they earned each month, putting off pension saving until the future when they assumed they would be more settled and earning higher salaries.

But the ABI warned that putting off starting a pension from the age of 25 until they were 30 would increase the monthly savings someone needed to make to reach their retirement income goal by about 30 per cent.

It said young people also tended to systematically underestimate the amount they needed to save to have a reasonable retirement income.

Joanne Segars, head of pensions and savings at the ABI, said: "It is understandable that, with all the financial pressure young people face today, they find it difficult to plan decades ahead.

"But this does not mean that the Government, savings industry and employers must simply give them up as a lost cause - it's entirely the opposite.

"The Government must highlight incentives such as tax relief, the savings industry must go to greater lengths to explain pensions and employers must encourage employees to save."

She said young people were more likely to belong to a company pension scheme if their employer made a contribution to it and had actively encouraged them to join.

The research was based on discussion groups held with 104 people aged between 18 and 30 during February.

Wednesday April 28, 2004