It is often said that confidence comes with age. However, as we know, confidence and knowledge do not necessarily go hand in hand. There’s nothing to say that this increasing self-assurance as we get older can’t sometimes be a little misplaced – and this applies as much to financial matters as anything else. For those responsible for employee wellbeing, this is an important point to remember. We must of course look after our younger workers, but beware those more mature members of staff that don’t ask for help!
I read a fascinating study towards the end of last year about the financial aspects of our lives*. At first glance it was another pile of potentially overwhelming statistics. However, as you read more, a fantastic age-based narrative presented itself. Some revealing, but maybe not that surprising, figures about young peoples’ financial confidence and pensions were reported:
What does this tell us? Young people aren’t confident or knowledgeable enough to go out and get their own pension. This is why both auto-enrolment and financial education are essential. What it also tells us, is that at least they know what they don’t know!
The study also provided some further positive feedback on auto-enrolment and the increasing proportion of UK adults who are now regularly saving into a pension. Over 60% of 25-54 years olds now have a private pension.
These statistics are all very celebratory and positive. However, other figures within the report provide further evidence that we have a long road in front of us to achieve adequate pension saving in the UK. Within the 35-44 year olds age group:
One might have hoped that people in their late 30s and early 40s would begin to take some financial responsibility for themselves, but it is clearly not always the case, or for some a possibility. As the age group increases again, there’s further evidence of a significant lack of financial awareness, despite the fact that financial confidence reaches its highest point within 45-54 year olds:
In some of the older age groups there are some astonishing statistics:
One of the saddest figures related to the over 50s without any private pension provision at all. When asked why they didn’t have a pension, 32% said they thought it was too late to start… Where have we gone wrong with our education and communication strategies, for so many people to think it’s too late to start a pension? Yes, the ideal target is to pay in for 40 years, but any start is a good start!
The overwhelming message within many of these statistics is that there’s a lack of pensions knowledge and engagement across all the age groups. Financial confidence across the board is lacking, and generally speaking, fear equals inertia. In the world of pensions particularly, there’s nothing worse than doing nothing.
However, I do see a positive pattern emerging. As we’ve seen, auto-enrolment is working, and I believe young people are at least more aware of what they don’t know. They are more likely to ask you for help, and will be much more receptive to any financial education you provide. Those who believe they are on the right track, but are making poor decisions or simply lack awareness, might be in state of blissful ignorance now, but won’t be as happy when they retire!
*Understanding the financial lives of UK adults: Findings from the FCA’s Financial Lives Survey 2017.
By Patrick Tooley
Consulting & Wellbeing Director, Lorica
This article was first published with REBA on 25 January 2018