Advisers say greater financial education is best way to close retirement gapOver two thirds of advisers believe financial education is the most important way to encourage people to save more for retirement. When asked in a VitalityInvest poll of 200 UK financial advisers to select the top three areas they felt were most important, 67% said financial education, 41% said better access to financial advice and 37% said financial incentives such as rewards for saving earlier. Only 13% felt lower pension fees were one of the top three issues that could encourage clients to save.
VitalityInvest consumer research also recently found almost three quarters (74%) of UK adults had never made any contribution to their pension beyond auto enrolment or did not have a pension or retirement savings plan**. This shows there is an urgent need for a solution to this major challenge.
When asked ‘If more financial education was provided to the public to better prepare them to save for retirement, which of the following do you think would be most beneficial?’ personal finance lessons in schools proved to be the most popular solution with advisers at 59%, followed by workplace education at 18% and a Government campaign at 11%. Only 6% felt more educational tools for clients from providers would be most beneficial.
Justin Taurog, Deputy CEO of VitalityInvest, said: “We have designed VitalityInvest with a number of features to help incentivise people to save sooner, save more and save for longer, to take greater care of their long-term health and to manage their income more sustainably in retirement. Our approach draws on the experience of our parent company, Discovery, in South Africa. After introducing an investment boost, similar to the Investment Booster offered on VitalityInvest products in the UK, Discovery saw an increase in the average terms to retirement (people investing for longer) and an increase in lump sum investments (people investing more). In addition, we see that as people engage more in looking after their health, their rates of retention increase, suggesting that people respond to incentives by staying invested for longer.”