Your pension fund is likely one of the largest assets you own and a vital pillar of your retirement plan, providing long-term growth to help you realise the retirement of your dreams.

Yet, a large number of young people are missing this understanding and are becoming more disillusioned with the prospect of retirement as a whole.

According to Pensions Age, around one in eight young adults feel that engaging with their pension is pointless, believing they will never be able to retire. 47% of those aged 17 to 27 are not engaged with their pension at all.

For these individuals, choosing to disregard a pension now could have serious ramifications later, when they recognise a shortfall too late.

Instead, you can help your loved ones take charge of their financial future.

Learn how financial literacy lessons and nest eggs can help your loved ones grasp the true long-term value of their pension and encourage them to take their long-term saving more seriously.

3 ways to help you improve your loved ones’ pension literacy

Financial subject matter can often seem dry for younger people, who might struggle to visualise the tangible benefits of long-term savings.

Outside of the classroom, there are easy steps you can take to help improve their financial literacy.

1. Use relatable analogies

Analogies can help you explain the benefits of pensions in a language younger generations better understand. This can help them digest and process the information more easily.

For example, you can help your children or grandchildren better grasp the principle of compound interest using the snowball analogy – a snowball rolled down a hill tacks on more mass as it rolls, forming a much larger ball by the time it reaches the bottom.

The more relatable the analogy, the more likely your loved one will absorb the information. If your child has a green thumb, you could explain compound interest instead as a seed that gradually grows into a blossoming apple tree for them to enjoy later.

2. Show them the maths

Sitting down with your loved ones and walking them through the financial benefits of a pension can help them come to a more complete understanding of complex processes.

You might opt for pen-and-paper calculations, drawing numbers and graphs to explain how long-term pension investments change over time.

Likewise, there are a variety of online calculators you can use to help you demonstrate investment growth:

• Aviva
• HSBC
• Financial Times

Not only will this method help you ensure that your loved ones understand the value of pensions, but its personal approach might also strengthen your bond and turn personal finance into a more enjoyable experience.

3. Have an open, honest conversation

Sometimes, the reason your loved one might be avoiding their pension is that they feel anxious about their personal finances or the future.

When this is the case, the more you push, the less likely your loved ones will respond constructively.

The best way of helping them overcome their anxiety is by having an honest conversation about their thoughts and feelings, identifying where this anxiety is rooted, and helping them take steps to overcome it.

This can help them become more receptive to your help and take a more active interest in preserving their financial future.

Set them up with a retirement nest egg

Alongside improving their overall pension literacy, you might want to help set your children up with a financial nest egg they can use to help kickstart their retirement fund.

There are several ways to do this, and which suits you best depends on your own circumstances and goals. A financial planner can help you make the best, most well-informed decision.

Junior pension

You can open a junior self-invested personal pension, or Junior SIPP, on your child’s behalf. This allows you to deposit £2,880 tax-free cash each tax year (for a total of £3,600 once tax relief is applied).

They could then take ownership of this wealth once they turn 18 and use it as a foundation to start contributing to their own personal pension.

To put this into perspective, Which? found that contributing the maximum amount into a Junior SIPP from birth until the age of 18 could grow your child a pot worth £420,000 by the time they reach age 60.

JISA

A Junior ISA (or JISA) is another effective tax wrapper in which you can grow tax-efficient wealth for your child.

JISAs are free from Income Tax, Capital Gains Tax (CGT), and Dividend Tax. You can contribute £9,000 a year into a Cash JISA or Stocks and Shares JISA. Only a parent or guardian can legally open a JISA in their child’s name, but grandparents can still contribute.

Your child can take control of this wealth when they turn 18, and the JISA converts into an adult ISA. 

Premium Bonds

Rather than investing wealth in a pension or ISA, you might opt for a Premium Bond instead.

A Premium Bond is a type of savings product. Each month, those with wealth in a Premium Bond are entered into a prize draw with the chance to win up to £1 million. Every £1 invested is one bond. The more bonds you have, the more chance you have of winning.

The prize fund rate is 3.8% as of August 2026. Even if you don’t win the jackpot, you could win a smaller prize.

Get in touch

Learn more about how you can help your younger loved ones build a thriving pension fund by getting in touch with The Pension Planner today.

Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate NS&I products.