Cryptocurrency a bigger draw than pensions for around a third of young adults

4 Nov, 2021

A significant proportion of young people are prepared to turn away from traditional pensions to invest in cryptocurrency, stocks and shares ISAs or other investments instead, reveals a new poll of 2,000 UK adults.

The new study for independent price comparison site NerdWallet reveals that almost a third (31%) of young people aged between 18 to 24 years old would rather invest in cryptocurrency than save into a traditional workplace or personal pension.  This is despite the extreme risks often associated with investing in cryptocurrency, made clear in a recent scam at the expense of unsuspecting investors.

Interestingly, while there appears to be a strong appetite among young adults to invest in cryptocurrency, over a quarter of young adults (26%) said that they are reluctant to save into a pension because of the risks involved. This is despite the cryptocurrency industry being vulnerable to scams, often using social media influencers that target a younger audience. When it comes to pensions themselves, only 21% of 18- to 24-year-olds surveyed said they understand the risks of the funds in which they invest which suggests that there is limited awareness of the risks involved in both.

The workplace pension is much less popular with this generation, with over a third of young people thinking that it is more important to invest in stocks and shares ISAs (36%) or cash ISAs (35%) than to contribute to a pension or sort out their finances for retirement. This contrasts with 7% of 45–54-year-olds that favoured stocks and share ISAs and 14% that favoured cash ISAs or savings accounts. A further 28% of the study’s 18-24 respondents have already chosen to opt out of their workplace pension to save money in other ways – while 23% have decreased their pension contributions over the last 18 months.

The research also looked at where retirement planning ranked among other financial priorities, with one in three (34%) young people saying that it would be more important for them to pay off a mortgage early than to start saving into a pension. With pension planning seemingly not a priority for many young adults it is perhaps unsurprising that 82% of 18–24-year-olds have not yet worked out how much they would need to save for a comfortable retirement.

With cryptocurrency investment becoming increasingly interesting for young people, and retirement less prioritised, this could suggest that young people are more interested in instant gratification and quick wins over long-term investment when it comes to personal finance, regardless of the risk. 34% simply said that they would rather spend the money they have today than think about saving for tomorrow, while 30% said that they do not believe that they could afford to make regular pension contributions due to a lack of disposable income.

Meanwhile, 29% also said that they do not plan on starting a workplace or personal pension as they think that the state pension will be enough to support them in retirement, while 24% said that they have put off sorting out a pension because they do not understand how it works.

Richard Eagling, Senior Pensions Expert at NerdWallet, commented: “The younger generation seem to be re-writing the retirement rulebook, with cryptocurrency a bigger draw than pensions for almost a third of young adults. Our survey shows that many youngsters are in danger of overlooking the unique advantages that pensions offer, in pursuit of the thrill of higher risk and potentially higher reward investments such as cryptocurrency. At the same time, a significant number of 18–24-year-olds are not engaging with retirement planning at all, or prioritising other financial goals. It is vital that young adults not only take steps to save for their retirement as early as possible, but also understand which products are most likely to give them the best chance of a comfortable retirement.”