Starting with the least contentious, the government should run a sustained, high-profile information campaign aimed at changing perceptions of pensions. Look at the success of the anti-smoking campaign. Public perceptions can be changed.
We should also supercharge the financial capability programme. Teaching our children about personal finance should be done very carefully. But in principle, what reasonable objection can anyone have to informing children about money.
Staff members of one well-known challenger bank are known to run modules on money in local schools and I understand they are tremendously well received. Information about finance should also be taken to those in further education (as part of all apprenticeships and vocational programmes) and to adults via every available medium.
A few tens of millions of pounds is nowhere near enough to fund the scale of sustained educational effort we need. We should spend hundreds of millions on financial capability. It would repay us in billions – and to add a little melodrama, it might even save society as we know it. The threat of the ‘demographic time bomb’ is not overstated.
Towards the other end of the continuum of contention, we need to transform the pension proposition. It needs to be made much more attractive.
Imagine this: your financial adviser comes to see you about an investment proposition. Here is the core of his presentation: “I have a new long-term investment product. You can invest either a lump sum or regular premiums. In order to incentivise you to take up my proposition, I will rebate a proportion of my fee, which will be added to the amount invested. (Yes, I am going to give you back some of your own money). However, as I am concerned you will not keep the investment for the agreed term and/or you will spend the proceeds unwisely when you do get access to them, I want you to give me overall control of the investment. I get to set the rules and have the freedom to alter them. And should my management of my own financial services practice result in me not achieving the P&L I desire, I may raid your investment.”
This (which we might call, The Lifetime Allowance presentation) is symptomatic of an outlook that is plainly not going to get the job done. We have to change – and radically.
For the benefit of all, the chancellor George Osborne must arrange it so taxation incentivises saving for life not for retirement. The latter will soon be an obsolete concept anyway. With each passing decade, more and more of us will not ‘retire’. We will merely alter the pattern and perhaps the nature of our economic activity.
