Wise up to the needs of our fu­ture re­tirees

The Jewish Chronicle - - FEATURES - BY DAVE CARSTAIRS

GONE ARE the days when em­ploy­ees sim­ply had to pay reg­u­lar con­tri­bu­tions into a de­fined­ben­e­fit pen­sion to have a rea­son­able idea of how much they would live on in re­tire­ment. Now, in a de­fined-con­tri­bu­tion-dom­i­nated world, with no de­fault re­tire­ment age and few guar­an­tees on the amount of money an em­ployee can ex­pect at the end of their work­ing life, greater fi­nan­cial awareness and education are more im­por­tant than ever.

There are two sides to fi­nan­cial education, both of which are es­sen­tial if em­ploy­ees are to un­der­stand their pen­sions and, equally im­por­tantly, man­age their own money more broadly. The first as­pect is bet­ter public awareness of per­sonal fi­nance plan­ning; the sec­ond is the role that the pen­sions in­dus­try specif­i­cally can play.

Gen­eral awareness needs to start early. We are start­ing to see moves to in­tro­duce education about per­sonal fi­nances into school and this must be­gin at an early age. How­ever, al­though im­prov­ing education in schools is a good start­ing point, there is still a vac­uum of un­der­stand­ing about sav­ings and debt man­age­ment that needs to be bridged once in­di­vid­u­als en­ter the work­place.

Auto-en­rol­ment has helped close that vac­uum and en­abled peo­ple to man­age their funds and fi­nances. It has also pro­vided op­por­tu­ni­ties for the fi­nan­cial ser­vices in­dus­try to of­fer ad­di­tional sup­port in the work­place.

I be­lieve our in­dus­try has a moral obli­ga­tion to help em­ploy­ees and con­sumers be­come bet­ter ed­u­cated about the need for sav­ing. While pen­sion providers may fo­cus on in­for­ma­tion re­lated to their own prod­ucts, if that in­for­ma­tion is de­liv­ered in an ac­ces­si­ble and ap­pro­pri­ate for­mat for the au­di­ence, it will still be of value. Clearly the im­pend­ing in­tro­duc­tion of the Pen­sions Dash­board (a plat­form that lets savers see all their pen­sion pots in one place) should also as­sist.

The in­tro­duc­tion of pen­sion free­dom means fi­nan­cial awareness is vi­tal as peo­ple ap­proach re­tire­ment. Per­sonal con­tact is by far the best way to help mem­bers un­der­stand their op­tions and en­sure they get what they want and need from re­tire­ment prod­ucts. Mem­bers will also need to make choices con­cern­ing whether or not to take tax-free lump sums at re­tire­ment and as­sess whether such lump sums rep­re­sent best value. Anec­do­tal ev­i­dence has shown that as many as 50 per cent of em­ploy­ees ac­tu­ally now want some­thing dif­fer­ent from the tra­di­tional ap­proach of an an­nu­ity.

What­ever the means of de­liv­ery, where does the bound­ary lie be­tween com­mu­ni­ca­tions and education? They are both part of the same thing. Com­mu­ni­ca­tion is about de­liv­er­ing the right in­for­ma­tion to the right peo­ple in a form they can use. Good com­mu­ni­ca­tion can help cre­ate self-ed­u­ca­tors, pro­vided those com­mu­ni­ca­tions are as clear and straight­for­ward as pos­si­ble and are suf­fi­cient to help peo­ple make ed­u­cated judge­ments.

Dave Carstairs is busi­ness devel­op­ment di­rec­tor at Cartwright, 01483 860201, cartwright.co.uk

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