ORGANISATION
YOUTH PARTNERSHIP
Including young people in retirement
Saskia van Berloo
Project Manager at the International Office of the European Youth Parliament
Saskia van Berloo, Project Manager at the EYP reflects her experience and the collective views of the next generation of European leaders.
Thanks to the ongoing cooperation the European Youth Parliament (EYP) has with Insurance Europe, I have learned a lot about insurance, and pensions specifically. I am happy to share some ideas in this article, which would not have been possible a year ago – before my exposure to the topic.
Given that pensions and investment accrue over time, the age at which you start saving is a crucial factor in how big your pension will be. However, young people often do not care for pensions, it seems like a problem for later, and it feels as if it’s outside of their power anyway.
This has a huge impact on the industry, where active participation and thus awareness of citizens is essential, such as in personal pension products. In addition, entire pension systems are heading towards their limits, which will be weighing the heaviest on the very people that may not yet know how their national retirement system works.
As the people who think about pensions every day, every week, it is (y)our responsibility to get young people on board.
Financial literacy
One of the main issues affecting young people in their preparation for retirement is the lack of financial literacy. This is also present in other groups, such as women and people in lower economic brackets, who are at a higher risk of not garnering an adequate pension.1,2
Young people are especially vulnerable to the risks inherently present in investment. In adolescence, there is a stronger impulse to take risks and with lower financial literacy, young people are at a real risk of falling for scams, investing more than they can ‘afford to lose,’ and investing in risky investments – such as cryptocurrency – with a lack of regulation and a large appeal cultivated through social media. Young people need to invest to supplement state and workplace pensions, but they also face higher risks – making education a crucial part of addressing this issue.
In countries with starkly different ideas on finance and spending, as often seen in the EU context, improved financial literacy is key not only to better individual preparation for retirement, but also to greater cooperation on financial issues. Given its multifaceted benefits, financial literacy could be a strong starting point for further EU cooperation with the insurance industry.
Updated working practices: the new traditional work
The difference for young people of this generation is how they are building up their pension in their work. Where employees used to go to a company and stay there for decades, in the current day and age job-hopping has become the norm. In addition, work today is more often flexible, freelance, and is not always contained within one country (therefore one pension system), thus making it less easy to build up pensions than those in more ‘traditional’ stable jobs. This creates risks for today's workers, as they may receive smaller pension contributions from different countries, and miss out on pension benefits that should have accumulated from their freelance or other work.
Future-proofing insurance
The aspects mentioned above regarding how young people are included (or rather excluded) from pensions are not findings of a recent research, nor do they reflect the opinion of a single person. Instead, they represent the collective views of a loose group of around 25 young people, who spent over 10 days working on the topic of pensions.
It is one step to think of young people of today and tomorrow when developing retirement policy, and another to invite them to think with. We invite you to take this step.
By reading the ideas of the young EYPers, allow yourself to be inspired by ambitious ideas of what the future could look like – Suitable, Sustainable, Secure: Good Pensions for All in Europe.
References:
1. Financial independence and gender equality in the EU, RAND Europe, 2023.
2. Financial literacy and financial well-being: Evidence from the US, Cambridge University Press, 2023. Authors: Annamaria Lusardi, Andrea Hasler and Paul Yakoboski.
Insurance Europe and EYP Partnership
In May 2024, Insurance Europe and the European Youth Parliament (EYP) launched a partnership to develop an open and transparent dialogue between young people and the insurance industry. This collaboration kicked off with a series of activities in Thessaloniki, aimed at developing a position on pensions in Europe during the EYP’s International sessions in Thessaloniki in 2024 and The Hague in 2025.
The partnership involved various activities, including events and discussions to raise awareness and knowledge about insurance among young people.