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Press release

The small nudges that could make young people £142,000 better off in retirement

23rd Sep 2020

Nearly two million younger people could have an extra £7,000 a year in retirement income, simply through a series of small behavioural nudges, according to a new Scottish Widows study.

Getting young people to picture their ‘future self’ and introducing simpler pension labels to link contribution levels and retirement income, were just two small changes that were shown to boost future retirement savings by up to £142,450 amongst those under the age of 30.

Scottish Widows recently teamed up with the Behavioural Insights Team (BIT), one of the world’s leading behavioural science organisations, to understand what motivates younger people to save more, particularly at a time when their immediate economic outlook looks bleak.

The study included psychological testing by BIT with around 3,000 22-29-year-olds across the UK to learn more about their attitudes, confidence and expectations around their future finances.

Experiment key findings

The experiment tested different approaches in an attempt to identify what small ‘nudges’ would make the biggest difference to those who had pointed to a lack of awareness of pensions and information on how to change their contributions. The study showed:

  1. Labelling makes a difference: By including tangible explanations such as ‘a 12% contribution would keep you above the poverty line’ and ‘a 15% contribution would allow for a comfortable retirement’, twice as many young people would recommend almost doubling pension contributions from the default minimum of 8% to 15%.
  2. Reframing investments over savings When participants were asked how much to ‘invest’ in their pension as opposed to how much they should ‘save’ – the amount they recommend someone puts aside shot up by a third (34%).
  3. Prompts drive engagement: Once young people start actively thinking about their future, they’ll care more about their retirement prospects. After answering a set of questions about where they see themselves in the future, the number of participants who want to raise their pension contributions increased by 11%, equivalent to 800,000 young people saving more.

Pete Glancy, Head of Policy at Scottish Widows, said: “Young people are faced with a unique set of challenges when it comes to saving for retirement. One of these is perception. They can often think of their ‘future self’ as a different person and so may prefer holding on to their income for more immediate priorities, like a first home deposit, rather than saving for someone they perceive as a stranger. That’s why we previously created an ‘Age Me’ app, so people could look their older, future self in the eye.

“We’re now exploring behavioural science and nudge theory, which we know can play an important role in helping people to save for their future. Combined with more systemic reforms to the pensions landscape – such as the removal of the minimum earning threshold – this experiment shows that small interventions could be instrumental in making big changes to the way young people save for retirement.

“We’re looking at how this study can be used to help get more people saving, and we are sharing the results with the industry, stakeholders and charities because real progress can only be made if we work with others to tackle this complex challenge.”

Persistent problems of pessimism and disengagement

Research carried out alongside the experiments found young people were relatively pessimistic about their retirement. Nearly 90% stated they were either not at all confident, a little confident, or moderately confident they were doing enough for their retirement.

Most people wanted to retire by 64 at the latest (63%) but expected it to be much later. In fact, over one in five (21.9%) expect to either retire after 70, or never actually stop working.

The main barriers to saving were having no spare money after paying their bills, the need to save for a major expense such as a house deposit or paying off debts. However, beyond these ‘financial constraints’ the two most common answers were simply they hadn’t thought about retirement or savings (21%), and didn’t know how to increase their contributions (15%).

Before Covid-19 hit, nearly half (49%) of 22-29-year-olds were not saving adequately for retirement meaning they face working for far longer than they expect to, or retiring with only enough money to cover the basics. This situation has only intensified with mass unemployment looming and more than a quarter (26%) of 18-24-years-olds having already lost their job or been furloughed. Sectors and jobs that young people disproportionately work in, such as hospitality and retail, part-time and zero hours, have also been the most affected.


For further information please contact Scottish Widows media team:

About the research

Behavioural Insights Team research

BIT conducted a short experiment with 2,822 22-29-year olds, focused on increasing engagement with pensions. Each participant saw one of four vignettes about “Alex”, a 25-year-old with average income and default contributions, and their responses to how Alex should change her savings was recorded:

  • One was a control group
  • The second saw framing about ‘investing’ vs ‘saving’
  • The third saw labelled amounts (as described in the press release)
  • The fourth were primed to think about the future


  • £142,450 calculated using the online MAS pension calculator. Based on a 22 year old earning the UK average salary, £30,420 (ONS), increasing combined employer and employee contributions from the default 8% to 15%.
    • 8% contributions = £162,799 saved into a pension by 68, or £17k income p.a., including State Pension.
    • 15% contributions = £305,249 saved into a pension by 68, or £24k income p.a., including State Pension.

Retirement Report research

  • Adequate Savings Index based on research carried out online by YouGov across a total of 5,757 adults aged 18+. Data is weighted to be representative of the GB population. Fieldwork was carried out 26th March – 11th April 2020.

About Scottish Widows

Created in 1815, as the Scottish Widows Fund and Life Insurance Society, the business’s purpose was to prevent the widows, sisters and other female relatives of fund-holders plunging into poverty on the loss of the male breadwinner during the Napoleonic wars – an ambitious undertaking. Now, more than 200 years later, the insurance provider continues to do so, helping millions of Britons plan for their financial futures and protect their families.

The content of this news release is intended for information only and should not be relied upon for making investment decisions. Whilst every effort is made to ensure the content of this news release is accurate at the time of publication, Scottish Widows Ltd disclaims liability for any losses, disputes or claims which may arise as a result of the use of this information.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan will depend on a number of factors, including the value of your plan when you decide to take your benefits, which isn’t guaranteed and can go down as well as up.