A survey by pension specialists Portafina reveals that 83% of Brits do not understand what a pension is and only a third know how much they’re paying into their pension pot.
With auto-enrolment pensions set to rise from 2% to 3%, it’s important for Brits to understand what this means and why knowing what your pension is and how it works is essential. Although your pension payment is present on your payslip, 83% of Brits do not know what their pension is.
A study conducted by pension specialists Portafina discovered that this pension confusion is could be down to two key factors:
- It’s too far away to prioritise
- Not enough being done in the education system
Extensive research across the education system, asking parents and the British public whether more should be done to help educate children on financing and pension responsibilities.
A look into the education system: is enough being done?
The debate to include more finance and money-related subjects in classrooms is ongoing but from the evidence discovered, it’s clear that more needs to be done to make children aware of their financial responsibilities in the future.
56% of the 1,500 people surveyed agreed that schools should be educating children on money management and the basics of pensions and 32% agreed that learning this at school would have significant financial benefits to their children’s futures. It’s clear that more needs to be done to help children understand basic financing to help them become more independent and responsible regarding their finances.
Additionally, 80% agreed that schools should be focusing more on educating children on the importance of pensions and how to manage their money to save responsibly and avoid the threat of debt.
Parents want to see change in the education system
From the evidence covered previously, it’s clear that more of an emphasis needs to be placed on educating children on the importance of financing their futures. However, what do parents believe?
Portafina covered this as well, asking 1,500 parents a series of questions on the importance of financial education.
Here are the five top results:
- A total of 91% of parents strongly believed that a stronger emphasis should be placed on money-based education, this includes budgeting and saving methods.
- Second-highest was debt management education (65%) which was closely followed by banking and investment information (62%).
- Pensions were seen as the third most important factor, with 41% of parents agreeing more should be done to educate children on pensions.
- Lastly, a mere 3% of parents claimed nothing is wrong with the education system and no focus on money-management should be introduced.
“Schools are making great strides, but more could still be done”
Portafina MD, Jamie Smith-Thompson believes that although schools are making great strides with regards to bettering children’s education, more could still be done to educate students on pensions and finances:
“It’s worrying that so many people still don’t understand what the pension is […] Part of the pension knowledge problem does point towards a lack of education from a young age […]”.
“Over half (54%) of 18-24-year olds felt that a lack of education at school has stopped them from taking their pension seriously […] Although I do appreciate some of the barriers teachers and schools experience with providing lessons on this subject matter, it is something the government needs to address”.
Is the education system solely to blame?
While the stats do suggest education is largely to blame for Brits’ lack of pension knowledge, a total of 46% of participants did state “It’s (pensions) too far away to prioritise” the reason the- and therefore isn’t an immediate concern.
In fact, education doesn’t top reasons for a lack of pension prowess, as you can see below:
- It’s too far away to prioritise (46%)
- Lack of education at school (41%)
- It’s too confusing (32%)
- Don’t know who to ask (22%)
- Too scary to think about (15%)
Former pensions minister, Sir Steve Webb agrees more should be done to raise pension awareness
With the auto-enrolment percentage set to increase, former pensions minister, Sir Steve Webb believes now is the time to educate Brits on their pensions:
Either way, more needs to be done to ensure people understand their pensions
“Saving for your long-term future can only be a good thing, and the earlier we [children and young adults] get into these habits, the better”, claims Smith-Thompson.
While education could be doing more to educate children on money-management, data suggests that people are sweeping their pension responsibilities under the carpet until the last minute.
Statistics are taken from a survey of 2,002 employed UK adults in February 2019 and you can learn more by talking to pension specialists, Portafina.