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14 June 2024
Strengthening the intergenerational contract

Last month we asked over 2000 people what they would do with a hypothetical windfall of £10,000 and we found some interesting results.*

  • Less than 1 in 10 aged 18-49 said they would save a portion for retirement
  • 73% of 18-24 year olds and 50% of 25-49 year olds would put it into savings
  • 18 to 24 year olds are 3 times more likely to invest part of it into stocks and shares

It’s part of new research we’ve published with the International Longevity Centre, providing a snap-shot on the experience of different age groups and their attitudes towards saving. You can read a summary of the findings here and the full report here.

Clive BoltonClive Bolton, CEO of M&G Life, said:

“Understanding how each generation is preparing for retirement will enable us to strengthen the intergenerational contract. The contract is a longstanding principle guiding our welfare system that everyone who pays in, whatever their age, and at whatever stage in life, feels confident they will benefit.”

Our research shows there is a strong savings habit, particularly amongst younger generations. However, we know there are underlying factors that will shape the future savings environment:

  • We have an ageing population who are living longer, but not necessarily healthier lives
  • Low inflation and sustained growth are no longer as certain as they previously appeared
  • And we know there is a clear a need to create the right conditions and incentives for people to see the benefits of saving and investing earlier, which also benefits the real economy and wider society

Pensions policy and private sector innovation will therefore need to respond to these changes. To do this, Clive Bolton, offers three thoughts in terms of how we need develop our thinking:

1. Championing the intergenerational contract as an important principle is crucial

We need better recognition that working age people who pay in to support today’s pensioners is a downpayment on the future support they will receive. Pensions and investments is an important part of this principle and we need to communicate this clearly.

2. We should refine intergenerational accounting to demonstrate how the interests of each generation are being protected

Whether it is nursery support for working parents or later life healthcare, a simple explanation will help to evidence the rich tapestry of the contract and why it matters.

3. The intergenerational contract requires dynamic support

As the baby boomer influence fades a natural re-set will occur and we need younger ages to influence how the contract should evolve as we enter this new cycle.

Clive adds: “I look forward to working with the ILC on producing another report later this year, outlining how we should think about this important topic and what decisions we could take to changing expectations.”

*Source: A YouGov survey of 2,054 adults conducted between 15 and 16 May 2024, commissioned by the ILC and M&G.

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M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority.

M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.

M&G plc は、イングランド及びウェールズで設立・登録。本社登録地は10 Fenchurch Avenue, London EC3M 5AG。登録番号11444019。M&G plcは持ち株会社で、その子会社の一部はPRA(健全性監督機構)及びFCA(金融行為規制機構) に認可され、それらの規制対象となっています。

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Prudential plc

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M&G plc, incorporated and registered in England and Wales. Registered office: 10 Fenchurch Avenue, London EC3M 5AG. Registered number 11444019. M&G plc is a holding company, some of whose subsidiaries are authorised and regulated, as applicable, by the Prudential Regulation Authority and the Financial Conduct Authority.

M&G plc is a company incorporated and with its principal place of business in England, and its affiliated companies constitute a leading savings and investments business. M&G plc is the direct parent company of The Prudential Assurance Company Limited. The Prudential Assurance Company Limited is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in England and Wales.