Engagement with pensions is an issue that everyone should be able to agree on.
Greater involvement from young people is vital for their financial future, especially since the freedom and choice reforms in 2015. As individuals now have more responsibility for their pensions than ever, the education and engagement of the younger generation has never been more important.
A recent study from Hargreaves Lansdown showed that young workers were willing to engage with their pensions, if it was conveniently accessible through technology. Ninety per cent of under-20s surveyed logged in online to view their workplace pensions.
Despite this, young people are still disinterested in pensions. The Association of British Insurers found that more millennials value owning a cat or dog (23 per cent) than having a comfortable pension (20 per cent). It is this kind of statistic that must be a concern, as young people do not seem to realise the importance of a healthy pension.
The government dithering over the pensions dashboard has not helped the situation. It would be key in helping young workers take a greater interest in their pension scheme as it provides a convenient and accessible platform for all of their pensions. Especially since auto-enrolment has come into force, the need for engagement and understanding has never been higher. Individuals are living longer and having a greater number of jobs than ever before, and multiple schemes will be arduous to keep track of without a dashboard or similar platform.
Although young people will engage through technology, it will be wasted without education on managing and planning pensions. The rise of defined contribution schemes increased the need for learning due to their complexity for markets in comparison to defined benefit schemes. Control over different investment options and strategies can be daunting for those uneducated in pension finances and a lack of knowledge can leave savers vulnerable to those willing to take advantage of them, including scammers.
The government delaying the introduction of a cold-calling ban will also have a negative impact on those inexperienced in pensions. Scam victims in 2017 lost on average £91,000 of their pension savings to scammers and the government has set up ‘Project Bloom’ to try and tackle the problem. However, one would think that if they were serious about addressing the issue, they would not have delayed the cold-calling ban or the pensions dashboard.
Brexit is the excuse to why legislation is being delayed, but it seems unfair to pension savers that their finances should take a backseat while the government sorts out the mess it created. Especially now, when education and engagement are more important than ever for young savers.