Pensions Age seeking IFAs

ended 24. November 2021

A journalist at Pensions Age is seeking responses from IFAs to the following Qs….

  • In your own experience, what is the extent of pensions understanding among the general public?
  • What is one piece of information you wish everyone know about their pension or the pensions industry?
  • What is the cause of low-levels of financial literacy, and how can this be overcome?
  • Should the pensions industry be concerned about poor financial literacy skills amongst the general public?
  • How damaging can low levels of financial literacy be to the pensions industry?
  • Who should be responsible for promoting financial literacy? Schools, Gov, etc...?

Deadline is tomorrow lunchtime.

5 responses from the Newspage community

In your own experience, what is the extent of pensions understanding among the general public? The general public have a lack of understanding and trust in pensions. This has been fuelled by various financial scandals over the years and constant changes to pensions. What is one piece of information you wish everyone know about their pension or the pensions industry? The tax benefits associated with pensions are extremely attractive no matter what level of earnings you have. They simply cannot be beaten by any other conventional investment. What is the cause of low-levels of financial literacy, and how can this be overcome? Education at all levels through schools, employers, from the government and through the financial services industry. Should the pensions industry be concerned about poor financial literacy skills amongst the general public? Yes, poor financial literacy leads to poor decision making, which damages the interests of clients and the industry. How damaging can low levels of financial literacy be to the pensions industry? Who should be responsible for promoting financial literacy? Schools, Gov, etc...? Low levels of financial literacy have had their hand in various pension scandals over the past few years. The most recent example has been relating to British Steel. Promoting financial literacy should be a joint effort, schools, the government, the FCA and the pensions industry all have their part to play.
Whilst our clients generally have a good understanding of pensions, pensions are overly complex. Hence it's hard for members of the general public to fully understand them. Financial matters receive very little attention at school. So it's not surprising that we have low levels of financial literacy. I think the government could tackle this in two ways. Firstly, trying to make financial matters less complex. Pensions are far too complicated and mostly this is down to the tax rules. Gordon Brown's supposed Pension's Simplification seems to have been long forgotten. Secondly, financial education needs to be given greater priority. However, I acknowledge that schools are already under pressure to deliver other things. Perhaps the one thing that would help most people is to understand how long they might live. Even people who are very financially literate tend to underestimate their life expectancy.
- Most people have a basic understanding that pensions are there to provide you with an income in retirement. Very few understand the technicalities of pensions, however that is not surprising considering how complex they are, and how much time we as advisers need to spend to keep on top of all the legislation. - Pensions are great for you! Sometimes the bad headlines scare people off, but they are a great financial planning tool. - It would be fantastic to see "finance" taught in schools. Everyone needs to know how to budget but not everyone is going to need to know what year the Battle of Hastings was. - I think the pensions industry sometimes relies on poor financial literacy skills to confuse people and try and sell them complicated products. It does not need to be complex or confusing and the more people understand what they are investing in and how it benefits them, the more likely they will be to invest for their own future.
The general public's understanding of pensions is still worryingly low. Engagement is probably the first and most important step. In an age of increasing longevity and low interest rates, funding the cost of retirement is an inconvenient truth. People need to get their heads out of the sand and start taking pension saving seriously.
"In your own experience, what is the extent of pensions understanding among the general public?" Understanding of pensions and the rules surrounding them is generally limited amongst the general public. This is understandable given the complexity of the legislation. "What is one piece of information you wish everyone know about their pension or the pensions industry?" Understanding of the potential tax benefits. "What is the cause of low-levels of financial literacy, and how can this be overcome?" Lack of education (starting with personal finance education in schools) coupled with the perception that it is a dry and dull topic. "Should the pensions industry be concerned about poor financial literacy skills amongst the general public?" Definitely, we all want to strive for better client outcomes. "How damaging can low levels of financial literacy be to the pensions industry?" I think lack of understanding can't lead to poor decision making and a lack of trust in general. "Who should be responsible for promoting financial literacy? Schools, Gov, etc...?" Everyone, but it should be appropriate education. So for someone starting out on their investing journey, discussing retirement, which might be 30 years away, probably isn't going to be that engaging. Similarly, just focusing on pensions etc when discussing retirement with someone in their mid-50s, rather than discussing the bigger picture; "what does an ideal retirement lifestyle look like to you and how much might it cost" is unlikely to be of interest to many.