Blog: PAD 2023 - Making the most of the momentum

Pension Awareness Week is been back for its 10th year this week, and the campaign has thrown the spotlight onto pensions at a key time, as national headlines debated the future of the state pension triple lock, whilst the bill to extend auto-enrolment has also been working its way through parliament.

Industry experts have been quick to take advantage of this momentum, clarifying some of the technical points, whilst also looking to raise awareness around broader pensions issues, and the need for more savers to put more into their workplace and personal pensions.

And the team at Pensions Age has been looking to start a broader conversation too, as I was given the chance to try and encourage other young people to become as passionate as I am about my pension as part of BBC Radio 4’s latest Moneybox episode, alongside Hargreaves Lansdown head of retirement analysis, Helen Morrissey.

With queries on pensions from savers as young as 14, an overwhelming takeaway from the session was that whilst it is never too late to start building up your retirement savings and educate yourself, it is also seemingly never too early to take an interest in pensions either.

And it is clear that the young people are supportive of plans to get them saving earlier, as research from Now Pensions revealed that the majority (89 per cent) of young adults want pensions to be made a bigger part of the national curriculum, while 86 per cent support reducing the age of automatic enrolment to 18.

Industry experts have since stressed the need for the government to finally get these changes through, with research from Scottish Widows revealing that, removing the lower age limit would see the average 18-year-old worker boosting their pension pot by £5,000 by the time they retire.

Starting pension savings from the first pound earned, meanwhile, would mean the youngest workers in lower-earning groups could boost their pension pot by 150 per cent.

For a median private pension income of £13,400, this boost could increase this income to £20,100 a year for a single individual.

It could also help to deliver better retirement outcomes for disproportionately disadvantaged groups such as women, disabled people, and members of ethnic minority groups.

In addition to policy changes, Cochran stressed the need for providers to become a trusted voice for young people early on and speak to them via channels they use, such as TikTok.

And efforts are well underway, as the Pensions Awareness Week campaign included a number of online events, covering topics such as the state pension and mortgages, and talks by providers and industry specialists, such as LCP partner and former Pensions Minister, Steve Webb, and experts from the Money and Pensions Service.

Celebrating its 10th anniversary this year, the campaign has evolved from a nationwide double-decker tour travelling up and down the UK, to a digital destination for savers looking to gain a better understanding of their pension savings.

But these efforts are still needed, as misunderstandings continue to plague the topic of pensions.

Research from Royal London, for instance, revealed that one in four 18–24-year-olds with a workplace pension think that their pension contributions end up in a bank account, with less than a third (28 per cent) of young adults knowing that pension contributions are invested by their pension provider.

According to the survey, across all age groups, almost one in ten (8 per cent) think their pension money goes straight into a bank account.

More than a fifth (22 per cent of people didn’t know what happened to their pension contributions once they were made, as whilst two fifths (40 per cent) thought that pension contributions were invested in funds chosen by their pension provider, 15 per cent said it is invested in funds either they have actively chosen or that are selected by their financial adviser.

The survey also showed that over half of respondents with a workplace pension were unsure whether they were saving enough to have the means to live comfortably in their retirement, with 37 per cent saying they felt they should be saving more, and 22 per cent admitting they don’t know if they’re saving enough.

Research from People’s Partnership also revealed that nearly one in six (16 per cent) of savers admit that they have never reviewed their pensions, research from People’s Partnership has revealed.

The cost-of-living crisis has also heightened these challenges, as research from Raisin UK found that just 22.46 per cent of savers view saving for retirement as a financial priority over the next 12 months.

This was even worse for younger savers, as only 8 per cent of 18-24-year-olds prioritised saving for retirement compared to 10.82 per cent of 25-34-year-olds, and 18.78 per cent of 35-44-year-olds.

"Shockingly", only about one in four (26 per cent) adults aged 45-54 and 31.46 per cent of over 55s are prioritising saving for retirement, despite how close this group are to retirement age.

In contrast, 46.23 per cent of those 55+ said that the largest financial priority over the next 12 months is meeting basic living expenses. This is followed by 39.15 per cent saving for emergencies, followed by retirement.

But the industry is continuing to push on, with a number of initiatives, such as dashboards, on the horizon, and a raft of reforms expected in the near future following on from the Mansion House consultations.

And with the second year of the Pay Your Pension Attention campaign set to be launched next week and National Pension Tracing Day next month, it is clear that the industry is upping its efforts to engage savers and take advantage of the momentum around issues such as the state pension.

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