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, a new study has found.

Research from independent price comparison site, NerdWallet, indicated that almost a third (31%) of young people aged between 18 and 24 years old would rather invest in cryptocurrency than save into a traditional workplace or personal pension.

This comes despite the advantages of pensions such as pension tax relief and employer contributions, and the extremely high risks often associated with investing in cryptocurrency. 

NerdWallet’s findings, based on a poll of 2,000 UK adults, also suggested that 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. NerdWallet said this indicated a lack of understanding of the risks associated with both, and the different levels of consumer protection.

The research also looked at where retirement planning ranks among other financial priorities, with one in three (34%) young people saying 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, NerdWallet added that is “unsurprising” that 82% of 18 to 24 year olds have not yet worked out how much they would need to save for a comfortable retirement.

Furthermore, just 21% of the 18 to 24 year olds surveyed said they understand the risks of the funds they invest in, and NerdWallet warned that this knowledge gap could mean people choose investments like cryptocurrency without understanding the potential risks associated with these types of investments.

NerdWallet senior pensions expert, Richard Eagling, commented: “The younger generation seem to be rewriting 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 to 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.”

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