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Inside EDGE – Anne McMeehan

Even MPs at Westminster not renowned for their grasp of financial services

(sadly, still the majority) have come to appreciate that one of the biggest

issues confronting the Government is how to succeed in getting the message

across to every man and woman in the country that they need to save for

their retirement. Future Governments, no matter their political hue, face

the same potential nightmare of insufficient funds to provide pensions for

a bigger and longer living elderly population.

The FSA is well aware of its responsibilities in this area as two of its

key duties involve promoting public understanding and protecting the

consumer. Another of its objectives is to maintain confidence in the

financial system. Not an easily achievable harmony, with public fears

having escalated in the face of pension misselling, lack of tranparency in

life policies and now accusations of high charging by some investment funds.

The main problem is that any investment information is likely to look

daunting, even to the initiated. No matter the simplicity of the language

used, the volume of detail that needs to be included in product literature

adds to the deemed complexity and is considered off-putting.

When something in the region of half of all adults have little if any

savings, radical action is called for.

Saving seems to have little to do with income level as many pensioners on

very modest incomes still manage to put aside some money. Similarly, there

are those who choose not to or who happen not to save who are nevertheless

high earners and from distinctly advantaged socio-economic groups.

Of course, there are obstacles to saving and investment, lack of funds

being the most obvious. However, there are many people for whom saving is

simply below other items on their current list of priorities. All too many

still believe that it need have only a low or no place on their agenda.

Last week, a report from the actuarial profession urged businesses to give

employees access to financial advice to help them prepare for retirement.

Of course, this would mean that businesses, too, would have to be prepared

to ensure that the potential for bad advice was minimised but, equally, it

could be a valuable additional employee benefit that could help to reduce

staff turnover and the associated costs.

But I would go further than the call made by the actuaries. Something I

would add to the wish list for employees would be for employers to supply

to their staff six-monthly statements and reports on their company pension


While I admit this would have spurious relevance to those still fortunate

enough to be in defined-benefit schemes, for those in the growing group of

people in defined-contribution schemes there would be real added value.

Not only would this promote a greater awareness of what goes on within

their pension fund in general but their pension account would take on

greater significance in their overall personal financial planning.

There is a good point about learning in the workplace. The better the

value and the costs of the company pension and its potential benefits are

explained, the more likely people are to become aware of the need to make

personal provision.

Perhaps peer group pressure from those better versed in what psychologists

call the merits of deferred gratification will have some positive effects

before whichever Government in the future has to bite the bullet of making

pension saving compulsory.

Anne McMeehan is director of communications at Autif


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