A new campaign to get young people thinking about their financial futures has been launched by fintech Cushon. I’ll be joining former pensions minister and all-round consumer champion Baroness Ros Altmann on an upcoming webinar, hosted by Cushon, to talk about its research white paper on the issues.
The most shocking finding of the research? Among 18 to 24 year olds, one in three don’t know why they would need a pension at all, while similar proportions believed they could afford to wait until they were 40 or 50 to start thinking about it. Almost half are under the sad delusion that as long as they are auto-enrolled into a pension at work with the minimum contribution
rate of 8% of their salary, they don’t need to save any more during their working lives. The reality is of course more sobering – extra savings are crucial to avoid financial hardship in later life. This message will all the more difficult to deliver in an era of record tax rises for the working population to fund health and social care, and an understandable feeling right now that it’s not viable or appropriate to ask young people to put yet more money into their later life fund.
Cushon agrees with my longstanding position that we need to be more imaginative and constructive in the mission to foster engagement with pensions. It’s been all stick, no carrot up to this point – that’s got to change. Cushon’s message is all about the positives – that young people are turned off by the pension’s industry’s stern messages about a scary far-off future, and need to know that saving can be a feelgood mission. Over half of under-35s agreed they would be “more likely to put money into a pension if I knew my money was being invested in a way that was good for the planet”.
The white paper says:
“Currently, UK pension members contribute an average of 23 tonnes of CO2 emissions through the businesses their pensions invest in – and this has to stop. Pension providers need to create products focused on sustainability and environmental protection and to get young members to consider where their money is saved and what it is financing. Doing so can encourage people to take pride in their pensions and think of them as a vehicle for environmental and societal change – not just as somewhere to put their savings until retirement.”
It calls on employers to step up, and check where their workplace pension provider is on the “journey to net zero”. Many pension companies are now unveiling timelines for aligning their investments with the net zero objective, but Cushon says these timelines can be shortened through pressure from employers, employees, and government.
Then there is the communication problem. The research suggests that simplifying pensions would have the biggest impact on women and young people – nearly six in ten women, and under-35s, said they would save more if they had a better understanding of their pension. You can read the whitepaper here:
