I am not greatly involved in giving financial education to 40 and 50 year olds. I have not participated in or helped in the design of the mid-life MOT but I have just lived through these two decades of my life and have some thoughts on things I know now, which I wish I’d known then.
One of those things is that my financial well-being, wealth and work are increasingly tied up with those of my family and especially my parents
So this agenda for a mid-life MOT is only half the story, it’s not all about me – it’s about my parents too!
This blog is written as one of a series before a meeting I’m hosting with the DWP for the CEOs of life companies and master trusts , next week. I’m arguing here for a greater focus on providing support , not just to those in later age, but to their children, who often have to take responsibility for their parent’s affairs when still at work.
My parent’s story
My parents have (or in my Dad’s case had) a limited understanding of pensions and of state benefits. My father died a few years ago and my mother is struggling now to maintain a large property on a much smaller income.
Like many professionals, my father kept working into his eighties and my mother had little knowledge of the income he provided her until it was gone (though she had perfect knowledge of the outgoings which she managed).
Since my father’s death, she has had to deal with his occupational pension scheme (who failed to pay her a pension for a few months due to an administrative error) and she’s been busy checking she’s got the right state pension using the LCP entitlement calculator.
Incidentally, the DWP yesterday put up a website where she can directly check if her husband got the right amount of state pension, the link is here.
Importantly, she now understands the pension credit system, which – because of her reduced state pension entitlement (she paid minimum stamp if any at all) means she not only gets a state top up but help with her fuel bills, TV licence and council tax. She’s also getting a lot more help with care, due to her increasing infirmity.
But I worry how well equipped many adult children are. I bet a lot of them will be saying at 60, “if only I’d known…I could have helped”.
I wish I knew what I know now
Of course my Mum, 90 in a few days, has not turned into a benefits-whizz on her own. She’s got the support of her four children who look after her. But we’ve been learning on the hoof, not through any organised program, and much of the information we have given our Mum came too late to save her from getting into financial trouble.
Which brings me back to what financial education could and perhaps should be doing for those in their forties and fifties.
Because as well as the income support from the state, there is the issue of long-term care, the need for which can happen at any time but typically takes center stage in the later stages of retirement. Knowing the ins and outs of the care system – which unlike pension credit , takes into account non-pension savings and housing wealth, is even more complex.
Learning about care and the complex relationship between the state support and personal or familial responsibility is a tough business – especially if you are losing your cognitive capacity. It is the children, typically those between 40 and 65, who have to shoulder the burden of organising the finances.
It strikes me that it is a great deal easier for people like me to do this , than most sections of society – who have not worked a lifetime in personal finance. This is what financial education programs can and should do. The mid life MOT could profitably focus on helping children help their parents.
Where the private sector can help
I think there is a strong case for the private sector to turn its skills at communication, towards providing self-help courses , using YouTube and other streaming services, that can be made available through the workplace as part of the “mid-life MOT”.
A strong commercial case, as it ties customers to you , building relationships that should profit the provider through increased retention of the client.
And a strong argument in terms of brand and reputation, as leaders in this kind of work tend to enjoy much better relations with Government and its regulators.
And then there’s the question of duty- whether fiduciary duty to members of a trust, or the consumer duty owing to policy holders or the cover all of “treating customers fairly”.
The mid-life MOT could help us help our parents – especially now!
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