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Having just started work as a 21 year old, fresh out of university, I am approaching the topic of pensions from a different perspective than most of the usual commentators.
I have never been formally taught about pensions although I suppose I have picked up a general knowledge that it is ‘something I need for when I am old’. However, for someone of my age it is a very difficult subject to perceive or view as important.
Being part of Punter Southall Aspire has awakened my interest in pensions and made me realise that, currently, people of my age cannot easily engage with our outdated pension system. Therefore, I have decided on some important changes that could make pensions more appealing to my generation.
Integration of Technology – For my generation pensions need to be accessible through an online portal, like online banking. Everything is done online now and to get people of my age to engage with their pensions it must be done via the internet and apps. A pension dashboard where you can map the future of your pension would really help us to set goals.
The word ‘Pension’ itself – Pension is a boring word which arouses little if not any connection with actually saving for the future. It is one of those words that my generation look on with dread like “mortgage” and “interest”.
There is a definite opportunity for pensions to be rebranded into something that sounds relevant and more appealing.
Short term goals – this would really incentivise people of any age involved in saving.
Being able to withdraw a small percentage of your pension tax free after a goal is achieved (perhaps saving over 3% for 5 years consistently?) would provide immediate motivation to start or increase saving.
Long term mapping – Being able to see how much money there will be available at retirement age would help people visualise the end goal of my pension. Small changes to savings now will make a big change to the final pot you will receive. So it makes sense to be able to see what effect small changes will make.
Simplifying decision making – it should be made easier to choose how much risk you want to take with your pension. The ability to allocate certain asset classes would really help engage people in the decision making and, making successful choices would motivate greater engagement.
Auto-escalation – Automatically increasing the percentage contribution as your wage grows should be a completely normal process enabling people to save more without even thinking about it.
Pension’s leaderboard – this could be a company specific pensions leaderboard that is relative to age and could map who is saving the most as a percentage of salary. This turns the saving process into a game and adds an edge of competitiveness into the process.
Am I above or below average - Everyone wants to know if they are doing better or worse than their peers. A yearly report that maps your savings against the average could be an interesting addition; it could be done by age, gender, industry etc. This also adds the notion of competition again.
Written by Jack Mason