The total amount saved by millennials for their retirements fell between 2010 and 2016, despite a marked increase in the proportion saving for old age.
Analysis of Office for National Statistics (ONS) data by Equinity found 35 per cent of individuals aged between 25 and 34 were contributing to a pension between 2010 and 2012, rising to 54 per cent in 2016.
However, despite this 19 percentage point increase, the overall savings of people in this age group fell to £12.2 billion from £12.8 billion. Millennials were the only age group to see a fall in pension wealth over this period.
Meanwhile, 16 to 25-year-olds increased their pension wealth from £0.6 billion to £1.1 billion.
The more widespread, but lower contributions of millennials is attributed to the introduction of auto-enrolment (AE) with relatively low minimum overall contributions, in comparison with the more generous defined contribution schemes that were common in the past.
Chris Connelly, a Director at Equinity, said: “AE has seen a great success in improving the proportion of pension savers, particularly among the younger age group, where participation levels have increased significantly. However, it is crucial that those being auto-enrolled into pension schemes for the first time do not consider it ‘job done’ and disengage from their savings.
“Passively following minimum contribution levels may not build up a pot big enough to secure the desired level of income in retirement.
“Millennials starting off on their pension saving journey should be encouraged to take a more active role in managing their pension savings so that they do not receive a nasty shock near retirement when it is too late to alter their habits.”
Minimum overall AE contributions increased last month from two per cent to five per cent and are set to rise again in April 2019 to eight per cent.