New fintech startup Chest, a cash rewards-to-pension app, is inviting young people to join its 1200-strong community lining up to be amongst the first to open a Chest pension when it launches this Autumn.
Using the Chest app, Gen Z and millennial consumers will be able to use cashback from everyday spending — including from Amazon to Sainsbury’s, Starbucks and Tesco — along with additional automated savings, into money that is deposited into their Chest pension.
Pensions have never fully aligned with the way that the young, digitally savvy and mobile first generations live and manage money. Chest is one of the first fintech challengers to shake pensions up for younger generations.
Under 45s admit to feeling pension panic
Pressured by the high cost of living, 2 in 5 (39%) Gen Z and millennials who are not already retired are unable to put money into their retirement savings because they cannot afford it or have shorter-term savings priorities such as buying a house, starting a family or getting married.
This compares to 34% of Generation X (people aged 44–60 years) who admit they can’t afford to put money aside. More than one in three (35%) also feel uncertain, anxious or worried about their retirement savings (while 29% feel confident and 23% hopeful).
These are key findings from consumer research conducted among a nationally representative sample of 2,200 UK adults aged between 18 and 55+ years for Chest.
Rewards and loyalty habits
At the same time the under 45-year-olds are regular users of loyalty, rewards and incentives schemes. Nearly three-quarters (72%) of Gen Z and millennials use or earn cashback from reward and loyalty schemes on a monthly basis or say they will switch to brands that offer good deals or incentives.
This is compared to 66% of Generation X and 70% of all respondents. On average, 67% of Gen Z and millennials are saving between £6 and £40 monthly by using cashback, discounts, coupons and reward loyalty points (63% for all age groups).
According to Chest, a 27-year-old saving £30 per month (£1 a day) from reward and loyalty schemes into a pension could earn an extra £100,000 in retirement.
Founders’ comments
Ali Adam, the 34-year-old co-founder of Chest, said:
“Despite being anxious about our financial future, battling the high cost of living means that we have nothing spare to put into a pension even when we earn above average salaries. There is a recession of trust towards pension companies, particularly for younger consumers. It’s not surprising that we are disengaged from saving for retirement. We built Chest to make saving easier by using money that we’re already earning from daily spending such as the weekly shop or buying a coffee.”
Jason Murphy, co-founder (also aged 34 years) adds:
“Young people, like many others struggling to keep pace with the high cost of living, are prioritising more immediate life costs and short-term savings. The long-term consequences will be hugely detrimental, impacting the retirement plans of millions of people and putting yet more burden on future Governments. We’re excited to be the first British startup to shake up the pension industry with an innovative new way for young people to save for retirement.”
Chest’s vision
Chest believes it can become one of the largest personal pension providers in the UK (and in other countries in which it operates), improving the quality of life for millions of people in retirement.
Backed by initial funding from angel investors and supported by the Baltic Ventures and FinTech Wales accelerator programmes, future fundraising is planned to establish and grow the Chest user base.
Other research highlights
- Pensions need to do more to engage younger consumers: When asked what would make them feel more confident about having enough money for retirement, 43% of Gen Z and millennials claimed they wanted to know how much they will need to live comfortably, while 28% want regular updates about whether they are on track for retirement. Nearly a third (28%) want more financial information and guidance on pensions (compared to 20% of all adults).
- The ‘We want to have fun’ generation: More than two thirds (70%) of Gen Z and millennials are more likely to use brands and products that entertain them compared to just over half (52%) of all respondents. Chest users will be able to check in on how they’re doing (against their peers) as easily as accessing their credit score.
- Generation social: 1 in 3 Gen Z and millennials are turning to social media and the influencers on these platforms for financial advice.
- Misplaced optimism: When it comes to retirement, one in three Gen Z and millennials (29%) are confident about their retirement savings and one in five (20%) believe their workplace pension is going to be sufficient for retirement compared to 15% of all adults. Such optimism is surprising given that too many working age adults (45%) are saving nothing at all into a pension, with young and self-employed people among those particularly at risk.
74% of the population won’t be able to afford their current lifestyle in retirement according to the Government’s Pensions Commission, recently revived to examine why tomorrow’s pensioners are on track to be poorer than today’s.
