It’s natural for us to crave money but we are not natural money saving experts. Debate has raged on this blog and on the Pension Play Pen group pages as to whether Pensions Wise is doomed along with the financial education agenda.
For those with an eye to the “most vulnerable” as our masters refer to the poor, the idea of a pension dashboard is ludicrous, the difference between a good and bad week may come down to whether there is a pound coin left on Sunday to feed into the meter. Universal credit (formally introduced today) presents a budgeting nightmare to those for whom week by week cashflow management is “financial planning”.
Not surprising that there is such national outrage at the failure of our tax authorities and our leading commercial bank to prevent or investigate the theft from the Treasury of millions of tax payers pounds that could and should have been shared through society. We live in a tolerant country, if we didn’t, then rocks would have been thrown.
With these sharp divisions between the richest and the poorest, we forget those in the middle who want to become money saving experts , have been offered pension freedoms but are frustrated by the state of change.
I am one of those people, but I’m in the fortunate position of having access to technology and people to apply that technology to educate and empower people to manage their finances more effectively.
One person who I hope I can build a relationship with over the next few years in Mark Hoban who, having been a Treasury Minister, is resigning from parliament to pursue a private career. If you think this man is just out to cash in on former glories you a) haven’t met him and b) haven’t read his pamphlet “RetirementSaverService” (RSS) published by Reform last month.
Mark’s vision is of a second line of support (Pensions Wise being the first) that can be offered to ordinary people who want to know what they’ve got when they get in their 50s and 60s and what they can do with it. There are two key elements to this support
- Creating a single view of someone’s pension savings, state pensions and other assets, and
- Developing a digital guidance service.
The biggest barrier to doing this, in his opinion is regulatory. In this he and I are one. I’m encouraged that the FCA are addressing this issue, particularly encouraged that they have established “Project Innovate” which (among other things) aims
to identify areas where our regulatory framework needs to adapt to enable further innovation in the interests of consumers.
I intend to use this support from the Regulator as my firm increases digital guidance not just to employers (choosing workplace pensions) but to those wanting to help their staff take financial decisions in the workplace.
Increasingly, employers are seeing the place of work as one where people can focus on managing their money. Employers recognise that employees are more productive when they are solvent and even more productive when they are working towards clear financial goals. Providing people with financial guidance in the workplace is something that many employers want to do.
This is how Government and Financial Services organisations can work together to make the most of the new freedoms. The freedoms are nothing if we don’t know how to or are prevented from using them.
For many people, the idea of viewing their money on a pensions dashboard and “narrowing” choices by means of digital guidance will be exciting, to many it won’t.
At those who can’t or won’t manage their own retirement incomes, we should not be pointing fingers. Most people would rather do other things;- it is only human nature after all. For many people, packaged solutions such as annuities (and CDC) which deliver greater certainty (albeit with less flexibility) are the obvious alternatives.
So just as we need to build the dashboards and digital guidance services, we also need to build new ways to drawdown our retirement savings. This is why we have a defined ambition program which picks up the slack.