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IFAs must breach savings barriers

Party confer-ence season is always a strange time. While much of the country is debating opposition leader-ship or child benefit payments, many of those at conference are engrossed in discussions over the Government’s agenda and current thinking in their sectors, trying to identify key themes and ideas.

This year was no different. There was an overriding focus on the issue of pensions, with numerous fringe meetings addressing the policy issues. Clearly, with John Hutton’s review of public sector pensions and Steve Webb’s imminent review of auto-enrolment, there is already a stream of consciousness. But what impressed me is the wide-rang-ing desire to achieve a more fundamental reform of the atti-tudes towards pensions in the UK.

Amid the impact of the abolition of the default retire-ment age and com-pulsory annuitisation at 75, plus the review of Nest and auto-enrolment, the overriding message is that “pensions” ultimately means “savings” and what we need to do is to rebuild a saving culture. This issue is close to the Asso-ciation of Independent Financial Advisers’ heart. Our white paper, Saving Britain, published earlier this year, outlines the behavioural nudges which can be used to overcome people’s irrational barriers to saving.

To create this savings culture, there is common consensus among the various stakeholders and politicians at all conferences that there are a number of key actions which needed to be taken, many of which echoed our own recommendations in the white paper.

The need for better education at school, whether as a formal part of the curric-ulum or through savings clubs for instance, is para-mount. We can learn much from the approach taken with the environ-ment and recycling, where success has been achieved through the indoc-trination of parents by their children.

Other emerging themes were around the “normalisation” of savings culturally. Saving should be easy, such as Aifa’s ideas on “save-back”, to help people save when using debit cards. There should also be a public campaign similar to the five-a-day fruit and vegetable campaign. Barriers, from means-testing to inflexibility, must be addressed.

The roles of regulation and advice are a crucial part of the debate too. I noted the diligent efforts of an MM hack pushing Treasury financial secretary Mark Hoban on the critical issue of the CPMA’s objectives. Rightly, there were calls for increased access to trusted and impartial advice to help people make the right decisions about savings and start them on their way.

IFAs have a pivotal role to play, as they are the architects for rebuilding a savings culture. That was our central message for conference season.

Andrew Strange is a director at Aifa

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