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Pension tips for teenagers

An expectation of an £800 a week pension is an example of why today’s teenagers need a wake-up call about the significance of saving for old age.

The ambitious suggestion – equivalent to a salary of nearly £42,000 a year – was one of the many eyebrow-raising answers given when Steve Webb, present Pensions Minister, quizzed school pupils about their pensions knowledge.

At the other extreme, another youngster thought today’s basic State Pension was worth just £9 per week(maybe his grand parent made him believe so). The actual figure is £113.10. 7 out of 10 of the pupils asked thought the government would provide most of their retirement income and 8 out of 10 thought they would retire in their mid 60’s.

The government is looking to develop new and improved resources for teachers, enabling them to plan more inspiring lessons about the importance of saving – and crucially, how new automatic enrolment law will affect them from the age of 22.

Pensions Minister Steve Webb said:

“We are in the process of delivering some of the most radical reforms to our pensions system for decades but, if these reforms are going to succeed in building the fairer society we want, it is essential young people enter the workplace understanding them.”

“It’s understandable for young people to glaze over when you ask them to think about retirement and pensions. But when you tell a teenager that this is going to affect them from the age of 22, you get quite a different response. This isn’t telling kids to think about old age, it’s helping them understand the world of work they’re about to enter.”

The DWP is to team up with financial education charity, the Personal Finance Education Group, to produce new teaching resources to help get knowledge about financial planning into the classroom and boost savings for later life.

The target is to have high quality teaching materials available for schools across the UK later in the year.

With automatic enrolment due to see millions of workers put into a workplace pension scheme arranged for by their employer, the government believes it is essential young people enter employment understanding the importance of saving and the draw backs of opting out.

In his research, Steve Webb spent a day at a secondary school – St Albans Girls’ School in Hertfordshire – discussing with pupils from year 9 up to sixth form, as well as teachers, about their attitudes towards financial education.

During his visit to the Ofsted outstanding-rated school, he questioned some of the year 9 pupils to test their knowledge. As well as getting some surprising answers, he realised that none of the pupils surveyed knew whether or not their parents saved into a pension and none of them could ever recall having had a conversation about pensions before.

Steve Webb added:

“This is clearly an outstanding school with impressive, engaged and politically aware pupils, and my visit convinced me that it is possible to talk to young people about these long-term issues in a way that interests and engages them. But we have to give teachers the tools to do the job.”

Under auto enrolment, young adults are leading the way in saving, with workers in their 20s the least likely age group to opt out. Ministers want to ensure this remains the case and believe providing the right support to school teachers will help achieve that.

The new initiative comes on the back of other attempts to help the UK public better understand pensions and saving. For example, DWP recently launched PensionTube, a new online channel on YouTube, bringing together content from the government and trusted independent sources that will in time cover the whole spectrum of pension-related problems.

The Department for work and pensoins  has also launched major advertising campaigns. The Your State Pension, Your Future adverts seek to raise awareness of changes to the State Pension which will create a clearer and fairer foundation for people to build their own retirement saving pot.

And the long-running “We’re all in” adverts, raising awareness of workplace pensions automatic enrolment, continue to run successfully as the policy is fully rolled out to all employers from now to 2018.

Ontime is leading the way with auto enrolment of workplace pensions, to discuss your requirements with a dedicated business manager call us today on: 0113 8267260

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