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80% of young Brits think they needed better school education on pensions, Portafina claims

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A Portafina survey of over 2,000 employed people has found that 80% of 18-24 year olds feel they were not taught enough about pensions and financial skills at school, and that a better knowledge would have improved their financial position in the present day.

Over 50% of these also felt that the lack of education on the matter prevented them from taking their pension seriously.

Portafina managing director Jamie Smith-Thompson said: “It’s worrying that so many people still don’t understand what a pension is.”

“Part of the pension problem does point towards a lack of education from a young age.”

A pension is a fund into which people make payments during the years that they work, with these payments being withdrawn periodically when they retire, in order to support their everyday life.

Many workplaces all over the country are switching to auto-enrolment, which means that their workers have to be automatically enrolled on the company pension scheme, with the employer also making a payment into the pension pots of their employees.

As of last year, all eligible workers should have been enrolled on their workplace pension scheme.

It is possible to opt out of a workplace pension scheme, but an employer is required to automatically re-enrol an employee at a later date, usually set at three years after the person had originally opted out or when contributions were stopped.

A public lack of understanding on pensions, auto-enrolment and accessing finances has left questions as to whether or not most British people will notice as auto-enrolment pension schemes start to rise.

There are also questions as to whether people will know how much money is being paid into their pensions, or how they will access their funds when they are needed.

When asked by Portafina what they would have liked to learn, 84% of young people said they would have liked to know more about mortgages, interest rates, banking and national insurance, 56% wanted to know more about general money management and 32% thought they would have benefitted from being taught about pensions at school.

Overall, the survey conducted by the pensions specialist firm found that 83% of British people do not understand what their pension is, with only a third of that number knowing how much is going into their pension pot.

Such figures and information may suggest why, out of a survey conducted on more than 1,500 parents, 91% of them wanted their children to learn more about money management and saving, 65% wanted them to know how to pay bills and manage debt, 62% wanted them to learn about banking and general investment and 41% wanted their children to learn about pensions and how they will benefit them in the future.

Only 3% of parents surveyed claimed that their children did not need to learn about financial skills at school.

Mr Smith-Thompson said that a person saving for their long-term future can only be a good thing, so the earlier children and young adults get into the habit of learning about their finances, the better.

According to Portafina, the lack of education on pensions has even extended to state pensions, as many people do not know what a state pension is, or where they can access them.

Sir Steve Webb, a former pensions minister and the current director of policy at Royal London, said that more needs to be done in order to raise awareness of the option to defer the state pension.

The state pension is part of the pension arrangements planned by the government, in which a regular payment is made to all those of and over state pension age.

State pension age is currently set at 65 for women and 68 for men, though this is due to increase over the years because of an aging population.

Usually, at least 10 qualifying years on a National Insurance record is needed for a person to be eligible for a state pension, though these years do not have to be in a row.

A person does not have to stop working when they reach the age at which they can receive their state pension, but they will no longer have to pay National Insurance.

Upon being asked why they do not take their pension seriously while they are still young, 46% of people felt that it was too far away to prioritise, 41% said there was a lack of education on it at school, 32% found it too confusing, 22% did not know who to ask and 15% thought it was too scary to think about.

Mr Smith-Thompson said: “Although I do appreciate some of the barriers teachers and schools experience with providing lessons on this subject matter, it is something the government needs to address.”

These statistics are taken from a February 2019 survey of 2,002 employed UK adults.

 

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