I rarely listen to financial services professionals talk about people in my own age group unless, of course, I ask them questions in interviews that steer them in that direction.
But even then, it’s often “We should do this,” not “We do this.”
That sentiment really came to life this month when he attended a Labor and Pensions Committee meeting where Guy Opperman said pension pushes should start as early as the 20s.
It sounded great I thought. So many of my friends don’t have access to a pension through their workplace and they don’t know what a self-invested private pension is.
But as Opperman delved into more detail, it was clear that the state was still focused on “wide-scale pilots” of pension boosters for people in their 45s and 50s. His department started these pilot projects back in 2018.
The 1920s, which he so brazenly referred to at first, suddenly seemed incredibly far removed from reality. If it took four years for the state to test pension boosters for half of all 40-year-olds in the UK, my calculations are that 20-year-olds will not get any state attention until – at the earliest – 2038.
If the Department for Works and Pensions introduced a pension boost for 20-year-olds as quickly as its boss backed out his resignation this month, the government could be just as likely to help thousands of people save millions over decades as it is to help one individual would, save £35,000 annual salary increase in 24 hours.
With a single push notification on how much you would have to live on with the statutory pension alone per month, you can easily convey the importance of financial planning.
If my flatmate, a freelancer with no personal or professional pension, knew that when she retired she would have to live on just £185.15 a week and only a state pension, she would be appalled.
Showing people how difficult their lives could be if they don’t start saving now is the best way to encourage younger generations to start planning their finances early.
It would also make them think twice about renting for the rest of their lives, as I and many of my colleagues see the future against a backdrop of frankly unfathomable prices.
When people in their 20s understand that they can no longer afford to pay rent by the time they are 60, they will have a much greater incentive to save for a deposit and pay off their mortgage before they retire.
Even for those in their 20s who have an occupational pension, most don’t realize how much is in it, how much they pay in, and where it sits. Assuming they even know they have one, of course – a lot of my friends don’t.
The introduction of auto-enrollment — while great in many ways — has encouraged many companies to abolish their designated pension advisors, resulting in pensions becoming incredibly opaque in the workplace.