As it is revealed that 13 million people face a drop in living standards when they retire, schools, employers, the government and financial advisers, are being urged to work together to tackle Britain’s savings crisis.
The calls from Nigel Green, the founder and chief executive of the deVere Group, the global independent financial advisory organisation, come after the Department for Work and Pensions (DWP) published its report on pension incomes last week – in which it has emerged that 13 million will face a drop in living standards when they leave work.
Mr Green says: “It is alarming but sadly not surprising that a staggering 13 million Britons, or a third of the workforce, will be unlikely to be able to live a comparable lifestyle in retirement. Britain has lost its appetite to save and this is the depressing, yet predictable, result of that.
“Everyone needs to understand that unless they save adequately during their working lives, when they reach retirement age they might have to considerably downgrade their lifestyle or continue working much longer than they had expected and hoped, due to a lack of funds.
“The savings culture needs to be revived and the savings ‘head in the sand’ mentality needs to be reversed. It’s imperative that we all become more financially self-reliant through savings because we’re living longer, meaning the money we accumulate has to go further; the State is, in the future, unlikely to be in a position to support older people as it has done for previous generations; and because of the growing deficits in company pension schemes.”
With this in mind, Mr Green is urging schools, employers, the government and the finance industry to work together.
He comments: “To properly tackle the savings crisis – an issue of national importance – we need to take a multi-faceted, ‘joined-up thinking’ approach. It is in everyone’s interests that our ageing population is in the black.
“Secondary schools should move to offer basic financial planning advice, including how to save and the associated benefits of saving. Quite rightly, we offer career advice, but there is little education offered regarding how to plan for what happens after the world of work, which nowadays is likely to amount to a third of our lives.
“Similarly, professional financial planning in the workplace would be very beneficial, especially to those workers on the cusp of retirement and who might need to readjust their strategy for the next phase of their lives. The incentives to employers who offer financial planning should be increased, currently very little tax relief is offered.
“The government should actively and widely promote the idea of saving through multi-media campaigns. Although this will cost time and money, the cost of having a greater proportion of the population being more financially dependent on the State will be significantly higher. In addition, the government must seek to provide more certainty for the UK’s pensions landscape.
“The financial advisory sector also has a role to play in revitalising the UK’s savings culture by rebuilding the public’s confidence in the wider financial industry. Once trust is fully restored, more people are likely to actively seek professional financial advice, which will considerably increase their chances of being financially secure in retirement.”