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A report by the Life Academy, sponsored by Standard Life
Everyone needsa plan
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ForewordDavid Nish,Standard Life Chief Executive
The UK consumer is placed precariously in the eye of a
demographic storm.
It is universally accepted that many consumers continu
for a future which will see them living longer and enjoylatest research shows that only 51% of adults are active
28% choosing not to save.
The generations retiring in the future will also not be a
guaranteed income in the form of a final salary pension
employer, unlike that enjoyed by their parents and gra
It is with this social, behavioural and economic backdro
storm presents us with a once in a generation opportu
parties to work together to address the fundamentals o
and transform our savings culture in the UK.
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The barriers to savings inertia need to be identified andto introduce a 50,000 annual limit for pension saving
provides a solid framework to introduce further measu
treatment of the long-term savings market. NEST and
only create a new generation of savers, but presents us
achieve cultural change in behaviour and attitudes tow
vital if people are to recognise that they need to take r
required amount to provide an adequate income in ret
But to help the consumer do this, we need to develop
customer, not the provider, recognising that a one size
work. We need to ensure we provide simplicity and co
savings and spending stages of the savings cycle. Allie
improving financial education will help to ensure more
provision for the future while benefitting the economy
We need to acknowledge the work of the new Consum
Body, which with the introduction of the annual financ
pivotal role in encouraging families to manage their fin
This report provides a stimulus for policy makers, opini
services industry and any interested parties to continue
debate.
I am delighted that Standard Life is supporting this rep
Life Academy; it acknowledges the scale of the issues a
UK in tackling the savings deficit, while making import
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ContentsBuilding a better society
Creating a savings culture
Consumer perspective
Summary
Creating a financial life plan for each life
We all have a role to playHow can specialist intervention help?
Role of the voluntary sector
Alan Pickering view
Standard Lifes view
Conclusion
Contributors details
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Building a better society
At long last, issues that have been close to the heart of Life Academ
political agenda. Politicians across the spectrum are searching for a
and individually aspirational. This has been meat and drink for Life
people calibrate their life planning and financial planning.
Never before has the political debate been so broad and deep, loo
simultaneously. What is more, the pace of the debate is breathtakin
welcome. All the big ideas are already out there all we need to do
for talking is nearly over. Action is long overdue. If we miss this onc
build a better society, the people will never forgive us. Life Academ
thank Standard Life for giving us the opportunity to bring our mess
It is trite but true a nations greatest asset is its people. We each h
have all the talents. This does not matter so long as we have a surv
everyday life where we are not a specialist. In todays complex and
of financial literacy is an essential component of our personal toolk
Financial literacy can lead to financial inclusion which, in its turn, c
Through this integration in society, we can fulfil our potential and,
around us a better place.
Life Academy believes that financial literacy is an integral part of life
For some, this plan will simply get us through today. For others, ne
decade may form part of that plan. No longer can we expect mom
from school to retirement. Indeed, lifetime learning opportunities a
all our knowledge acquisition into our teenage years. If we do not h
we will not be able to enjoy those lifelong earning opportunities w
have a secure financial future. What is more, such wealth creating o
Alan Pickering
Chairman of BESTrustees and Life Academ
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Everyone needs a plan
Although we think it is important to have the individual as our focu
individuals cannot do it all. There is a role for government, employ
and charities such as Life Academy. What is more, there is no single
anyone within these sectors. Our case studies show that different p
interventions if they are to fulfil their potential and play their part in
place in which to live.
Understandably, there is a debate about the role of government in
believe that government is too big. Whilst this might be true in gen
which the tax payer and government can still do best. A case in po
against absolute poverty in old age. This is affordable so long as po
redefine absolute and old in the light of changing circumstanc
guarantee is through a simple state pension which is set at a level h
the vast majority of our citizens, it will always pay to save. This will
and the financial services industry to restore the savings culture, co
they will not be charged with mis-selling.
Of even more importance, a decent state pension can provide an e
generations and between generations. Pension provision inevitably
transfers. The generations will only tolerate such transfers if they kn
for them as well.
The current debate about welfare reform may become polarised ar
universality. A decent state pension can be both targeted and univ
the old and not the retired. If the state pension remains taxable, th
old age will play their part as tax payers. Achieving our objectives i
off paying tax in old age is much more cost effective and socially in
tested system to top up the benefits of those who are finding it har
Employers have three roles to play. First, they should play their parwhich is blind to age. Second, they should, wherever possible, use
in which we can regularly top up our skills. Some of these skills wil
others will focus on life planning and financial literacy. Third, emplo
environment in which financial products can be tailor-made to mee
of employees. Sometimes these products will be an employee bene
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of us need all of these ducks, some of us may be able to secure the
may have to buy them one at a time. Thus, while pensions are imp
and end all when it comes to saving in general or saving for retirem
always be a need for an employee benefit or financial product who
with an income stream in later life. One of the heartening aspects o
that we are once again adopting a holistic approach to savings. In
too pensions-centric. It is not being disloyal to the concept of pens
place. Again, we need to weigh the needs of people at various poin
at various stages in their life-long journey.
Life Academy is a charity whose day has truly dawned. We look forw
building a better society. Such a society need not be ravaged by th
exclusion. We show in this report how financial inclusion and socia
case studies show this graphically. Our plan for all ages will help ou
and finances in order. Provided that government, employers and th
undertake the interventions that we have highlighted, we can then
with it. Lets go for it, we will never get such a good opportunity a
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Creating a savings cultu
In the time span of just two generations, attitudes to saving for bot
have been transformed. So, too, has the financial landscape in whic
For many years stories about savings and pensions appeared only i
they are rarely off the front pages of popular newspapers, magazin
websites have become part of popular culture. It seems everyone h
persuade older people to continue to work, the young to save mor
debt and re-ignite a savings culture.
How do you find a path through this maze of advice, exhortation acrunch what do consumers feel about their hopes and expectation
Who do people turn to for help when planning their financial futur
To find out, Life Academy has interviewed a cross section of the ge
different stages in life. We talked to Connie and Derek (already enjo
Deborah (representing the baby boom generation); Ben, Laura an
and already with a family respectively); and finally John (currently s
asked each of them to reflect on their attitudes to money, on who money issues and to describe their current financial challenges.
From these experiences, Life Academy CEO Stuart Royston says it is
wealth, for most people the key to financial wellbeing is to have A
for the type of financial actions that need to be considered at each
to old age. In this report Life Academy has developed such A Finan
adapted to suit everyone, irrespective of wealth or background and
take responsibility for their own financial wellbeing and long-term s
But our findings show that in reality individuals need comprehensiv
community in order to create their plan for financial wellbeing. In t
multi-faceted nature of this help. We have talked to representatives
industry specialists, outreach and not-for-profit organisations to ide
individuals with their planning We conclude with the actions that
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Everyone needs a plan
Connie MarshallA traditional ethos of scrimping and saving
generations of her family.
Widow Connie Marshall (85) is proud of
still has an eye for a bargain. Her latest p
trolley, were found on the internet.
Connies story
One of six, Connie left school at 14 and w
factory in Londons East End. She remem
up their family through the worst years o
night they used to put their money into
and my siblings 3d pocket money.
Connie and her late husband (a metal po
they needed to furnish their rental hom
work. On weeks when he was given fewe
because the employer would always take
and we would be left short. We learned t
and made sure we put something into a
did not buy anything until we could affo
shillings under the lino for emergencies.
Connie brought up her own three daugh
way and is pleased her five grandchildren
granddaughter (16) are in professions, fi
How Connie is approaching financi
Connie retired at 60 without a workplace
Consumer perspective
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Derek GreenOld school approach to financial planning
without, and some retirement planning.
Derek Green is a 69-year-old man who p
with money. It is hardly surprising: he sp
and is now treasurer of his local bowling
Dereks story
Derek lives with his wife Irene, aged 68,
Boston, Lincolnshire. They enjoy nothing
barbeques with their three sons, daughte
describes himself as financially comfortab
holiday every year. The savings habit he
when he was young. He started saving
used to visit his parents to collect premiu
Now Derek feels it is important that olde
savings advice to the younger generation
same cautious views as him. He has pass
grandson opened a savings account at 1
How Derek is approaching financia
Dereks income comes from his state pen
pension from his last employment a be
advice when he retired to set up his inve
manages it himself. He continues to save
Union, which he uses as an emergency fu
He has a number of priorities now. The m
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Mike WortFinancial values of saving and intelligent inve
Mike Worts story is a classic tale of a bab
parents, going to university and then enj
pharmaceutical industry.
Mikes story
Mike (60) lives with his wife, a maths lecand a grandchild. Now independently w
of not having to work for financial reaso
challenge and personal satisfaction.
He was brought up with strong financial va
had the means, because money was scarce
He recognises he was lucky to have ridde
wave. He benefited from grant-aided tuit
university, and joined the pharmaceutica
His career has taken him around the wor
Mike views money as a tool to be used
circumstances so everything is covered; a
money to do things with. Mikes risk mo
portfolio comprising property, investmen
How Mike is approaching financial
Mike has put his disposable income into
have joined good workplace pension sch
pensions industry is vitally important, an
encouraged to invest in a pension as you
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Deborah GaudinBeneficiary of the property boom and a life
healthy ethic of saving.
52-year-old Deborah Gaudin is fortunate
brother-in-law who have dealt with the f
her business.
Deborahs story
Raising a son and daughter (now both in
lucky to have had sufficient day-to-day m
husband always having a second job th
childrens clothes and school trips out of
They have not led an extravagant lifestyl
Deborah does not drive. They have only
years of marriage.
Deborah has taken on a wholefoods shop
after 20 years experience running a loca
Money was not discussed during her chi
the pennies. Her late father invested in p
been to the benefit of her mother. At 72
comfortable retirement and owns her ow
How Deborah is approaching finan
Deborahs financial knowledge has come
financial adviser. Her husband has a priva
provision. She saves into an ISA and know
Deborahs biggest investment has been
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Sue GouldStruggling to get by, but acutely aware of
Sue Gould, who is 40, admits that she an
to get by.
Sues story
She is the mother of lively young boys an
lorry driver Brian (48). They live in a thre
village outside Evesham.
The cost of childcare means she only wo
mixing tour-guiding with office work. Bri
has to pay for children from previous ma
Agency (CSA).
The couple rely heavily on Working and cars, buy second-hand where necessary a
comes to budgeting for Christmas, birth
costs across the year. The internet is a bo
credit card is for emergency use only.
How Sue is approaching financial p
Their biggest financial headache is payin
considers a longer working life, the possi
in her home as her long-term security.
Sue plans to begin to save when her chil
husbands commitments to the CSA are
doubts whether childcare costs will really
S fid i h dli
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Laura ChealRetirement planning is a long way off as sh
and important.
Life is about achieving dreams at the mo
Communications Consultant Laura Chea
self-employment and was married in Sep
Lauras story
Laura and her two siblings had a comfort
shared her easy-going approach to mone
looked to property abroad to fund retire
opportunity will not be available for her
same situation as many of her friends and
done in school on financial planning.
Facing the financial uncertainties of self-em
However, since she was 18, London-based
of companies, and this gave her the confi
She has admitted that it has been frighte
the last 10 years she built up tens of thou
debt. I was consistently offered new car
my debt it was easy to exceed my limits.
knowledge or access to advice from olde
the day.
Luckily for Laura, her disposable income
result, she has been able to pay off her d
wedding. Sacrificing some of her day-to-
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Ben KirbyThis recent graduate may be well-qualified
out of touch with managing personal finan
A degree in Economics and an MSc in In
might have taught me how to manage
lot about personal finance, says 24-year
Bens story
Ben shares a flat with friends and works
explores his career options. Since the ba
prioritising career satisfaction and lifestyl
Ben graduated with 12,000 of student
by current standards. He intends to repa
maximises his money through finding dis
well as carefully budgeting; skills he deve
Ben feels he is able to balance his day-to
Ben has taken most advice about financia
family. He also feels that more should ha
banks on the high street and has no cred
concerned, he is wary of the low interest
potential biases attached to high street f
use his internet skills to carry out his own
Ben sees his biggest financial challenge i
20% deposit on his own home, given th
around London.
How Ben is approaching financial p
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JohnA track record of mis-managing money ma
to live a normal life with stable finances.
John is an ex-offender in his 40s and adm
good decisions.
Johns story
When he was younger, John used to save
particular motorbike as a young boy; he
part-time jobs and saved and saved.
However, gambling and alcohol took the
windfall, and on another occasion took o
and spent it without any real means of re
While Johns case was adjourned and he convinced he was going to prison, so he
sentenced to a Community Order, so is n
to apply for benefits.
Now John rarely has enough to live on, h
and has little spare money. Today his deb
fines that have built up over time. If he h
account, he worries that creditors or the
How John is approaching financial
John says he would like to save. He also s
help him do that. Yet he feels its futile. J
to retire.
J h P b i Offi h h l d hi
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Summary
These real-life experiences clearly illustrate how dealing with mone
available has become more complex. They also show how much so
towards savings and taking personal responsibility for long-term fin
The older generation, such as Connie and Derek, passed through li
sophisticated financial products. The need for sophisticated financia
Their financial opportunities were restricted by todays standards, b
lower. They gained their financial competence on the job: with a lifestyle; the need to save before making purchases; and frequently
industrial insurance agent to reinforce good financial disciplines an
payments. Society valued thriftiness. In older age, their retirement
comfort, and they will not be affected by changes that are in the p
Younger generations will experien
older age.
Mike and Deborah epitomise how the baby-boomer generation dif
generation. They do not want to slow down or be less involved in s
keep travelling and working, for example. The old fashioned view o
period is not attractive to them. They will engage in a variety of ret
activities at the same time. As a result, the need for larger funds in
these new expectations. They have been helped in their savings ac
rising property prices no longer guarantees for the younger gene
Some baby boomers are heavily reliant on property to fund both th
leave a legacy for their dependants.
f fi i if f
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Families on lower incomes like Sue have a tougher task to put mon
planning. The modern lifestyle means that it is not as easy as in Co
you have saved. Young families need access to technology for their
essentials rather than luxuries; while day-to-day budgeting skills are
enough savings to produce a meaningful income in the longer term
Some form of state pension must r
essential element for large sectors Individuals such as John, who are marginalised from mainstream fin
specialist help.
The younger generation, like Laura and Ben, has known nothing bu
now attitude; easy credit; ready acceptance of debt; no obvious ex
financial understanding; and short term horizons.
The benefit of long-term savings hpositively demonstrated if this gepersuaded to save.
Connie and Derek both acknowledge that despite their relative har
pensions and a strong savings ethic have given them security in the
All of the respondents express anxiety that in the current climate, e
company pension, there will no longer be such guarantees. Workp
be at risk; even for individuals who have contributed for many year
as rock solid Uncertainty surrounds the state provision too and re
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Everyone needs a plan
Their concerns do not come as a surprise to Life Academy
The charity has been running pre-retirement workshops for 40 yea
tutors with many years experience of running these workshops ask
(mostly) baby boom delegates talk about their own financial conce
dependants.
Tutors reported that they found a lack of confidence in the financia
mistrust and disappointment, delegates talk about the past when b
there to help; they would have the customers interests at heart.
With exceptions, tutors felt that levels of financial literacy among d
levels. Most people, they suggest, are comfortable with basic savin
deposit accounts. However, concepts such as risk are less understo
other investment activities might be used in a positive way to supp
relating to financial products is regarded as inhibiting. Tutors felt th
confusion around the complexity of products available. This sense o
poor publicity in relation to charges and mis-selling. For example, a
defined contribution pension schemes, annuity purchase is an issue
complexity of choice: There can be shock when people realise how
their pension pot. They do not like the fact that annuity rates go up
choice on timing if they need the income. Tutors commented tha
professional financial advice for fear of cost or bias.
This lack of confidence however, also comes though when delegate
their own children and their fears for the future of younger generat
know how young people will ever afford a house or a lifestyle such
about potential inter-generational tension, as more baby boomers
feel it is unfair for the younger generation to foot the bill for the ol
have already given substantial help to fund education, housing or c
do not intend to leave a financial legacy.
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Stuart continues: Individuals have busy lives with competing prior
on leaving school or university; marriage is no longer a guarantee o
and new relationships with extended families are increasing and us
individual and family finances; and work is more uncertain. The on
are living longer and need to factor longevity into our plans.
At the same time, individuals have to get to grips with a financial
changed dramatically: with increased competition, a vast range of
(some relevant and some not for a particular individual), and the w
high in the minds of many consumers.
Life planning and financial planning go hand in hand. A financial
ingredients of life planning. The evidence of the failure to adopt an
balance the benefits of long-term financial planning against the sho
are there for all to see. However, they are also obvious in the failure
adequate income in later life, in order to replace their income from
Half of UK adults are not putting aside any funds into a pension.
Under 30-year-olds see many financial challenges. Starting a pens
priorities; only one in three is putting anything into a pension sche
More surprisingly, 45% of 41-to-60 year olds are not paying into a
employer provides a scheme and makes a contribution, participatio
low. Women are particularly vulnerable to inadequate pension savi
The implications of this lack of financial planning and engagemen
individuals. For many people access to a workplace pension of any
even in a world in which generous final salary pension schemes are
contribution schemes (which require the individual to take respons
individuals remain confident they will live a comfortable retirement
soundly based and accompanied by the necessary planning and ac
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Everyone needs a plan
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Creating a financial life each life stage
How should individuals think about creating their financial life plan
What needs to be considered and what actions are recommended
Essentially each of us needs a plan that mirrors the events that mig
account of changes to our circumstances, reflects changing values
A financial life plan should support a savings strategy that:
starts in childhood (supported by family and friends)
is underpinned by financial literacy taught at school
encourages positive debt management
assumes the necessary protection is taken for life events:
marriage/divorce
children
redundancy
inheritance and estate planning
illness/disability
death
provides other savings for emergency
assumes a workplace pension is taken when offered, but is not
assumes private pension if no workplace scheme is possible
does not rely on property price inflation
assumes access to some guaranteed state provision
assumes a working life into later age
The chart on pages 24 and 25 illustrates how such a plan might lo
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Teens
My needsOther people need to start a long-termsavings fund for me to help me
In the short term: buy toys and gadgets
In the long term: pay for higher education pay for travel help buy a home
What do I need to think about?
I need to have savings accounts opened inmy name
What do I need to do?Grandparents/parents/family members topay into my savings accounts
My family to pay my Child Benefit into theaccount if the money is not needed forday-to-day needs
Parents take tax advice if appropriate
What do I need to know?Parents need to understand savings accountsand simple tax issues
I have some money that will grow, and somewill be for spending, and some to save
Who needs to help me?ParentsFamily
Birth toteens
My needsI need to develop a savings habit for myselfto help me pay for things like: driving test mobile phone hobbies travelling
What do I need to think about?I need to have a simple savings account witheasy access
Take part-time work to help me save
What do I need to do?Be encouraged to save by family and school
Take advice on which products are suitable
Explore the market and open simpleaccounts
What do I need to know?Basic financial planning sources of savings accounts types of savings account role of interest short-, medium- and long-term savings basic budgeting basic taxation sources of information and advice
Who needs to help me?ParentsFamilySchoolFinancial Services Industry
My neeI need tand lon stude fund
self-e hous start
What dTo devemyself
To man
Insure a loss o loss o
illnes relati break
Start or
What dCreate money
Contro
Have a
Consid
Take ou(eg bui
Considand we equit long long
Start a join w start
Take in
What dUsing t
Unders
Undersmanagstudent
Everyone needs a plan
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Middleadulthood
Earlyolder age
My needsI need to be maximising my financialwellbeing to meet:
Family needs: Returning children
Elderly parents Higher educational demands Career changes Redundancy Separation/divorce Moving house
Be a role model for children
What do I need to think about?Regularly review my financial picture
How I would cope with risk:
home loss job loss illness
What plans do I have for the longer term?
How is my financial plan supporting otherplans for my life?
Embed good financial values and habits
What do I need to do?Review mortgage/pay off debts
Have appropriate insurance protectionMaximise pension contributions and otherretirement savings plans
Obtain pension forecast for state entitlement(women especially should review theirpension position)
Top up any NI, pension or long-term savingsdeficiencies if appropriate
Ensure diversity in savings arrangements
Tax efficiency
Estate planning:
make a will power of attorney inheritance plansTake independent advice where appropriate
Open savings accounts for children and helpto educate them
What do I need to know?
My needsI need to be consolidating my financialpicture to manage transition to reduced ornon-working life: establish retirement income have a strategy for short-, medium- and
long-term needs over the retirementyears
legacy
What do I need to think about?Plan how and when I will retire
Discuss retirement expectations withpartners and close family
Establish my retirement options
Consider any working options
Plan for how I will make use of my time inretirement
What do I need to do?Move investments portfolio into less riskyproducts and cash
Review all pension statements
Consider paying down debt
Pay off mortgage or check I have a strategyfor dealing with any money due
On retirement shop around for appropriateannuity and best rates
Consider income drawdown if applicable
Consider advice on tax and investment for
lump sums or any savings: investment strategy-growth versus
income
Using assets to provide an income: consider downsizing consider equity release
What do I need to know?
My nI neeand co ca life
WhaRevie
Revie
Mob
Consof pa pe es
WhaCons m eq
Long
Wha
LongShelt
Mob
Care
WhoFamiGove
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Everyone needs a plan
We all have a role to pl
Individuals financial plans cannot exist in a vacuum. As our case st
stage and personal circumstances, everyone will need access to hel
enlightened financial climate.
All sectors, employers, outreach services, voluntary services and ed
supported by changes from government and the financial services
Employers must help their staff to put aside some wealth for the fu
improve financial literacy. The workplace must also be more toleran
training opportunities for older workers. Human and financial capit
curtailing the opportunity to work simply because of age prevents
into financial capital.
Andrew Cheseldine, Principal, LCP observes that of the 1.5 millio
UK, just under 3,000 are responsible for employing more than 55%
employees.
The future of employee benefit schemes run by these companies w
view of the trend away from generous final salary schemes towards
Large employers may no longer be paternalistic but Cheseldine thi
responsibility to offer schemes that support employees long-term s
natural instinct of most employees will be to concentrate on the m
salary and holiday entitlement. And despite the poor publicity sur
over recent years, he believes the majority of people still view work
of investment for retirement.
Cheseldine acknowledges that tax planning will always be a key mo
from the companys perspective. Nonetheless, he feels the best sch
savings culture, improve financial literacy and benefit both the com
He believes many large players will follow the trend to combine pe
benefit packages. Employers find that combined schemes offer a c
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They must be communicated in a language appropriate to the targ
good-quality, generic advice, including the basics of personal finan
compound interest (in the context of short-term savings and long-
Cheseldine agrees with auto enrolment and feels it should be made
flexible and customised to the workplace then they make themselv
and promote a savings culture.
Dennis Bell and Roz Starck of Logica UK, a global technology a
have first-hand experience of implementing a large employee b
described above.
In 2008, as part of a brand relaunch, which included an increased f
began to consider the long-term viability of its existing pension sch
delivered to employees. Of particular importance was member eng
investment and retirement planning. One of the outcomes was the
Retirement Programme.
Logica believes its vision was leading edge: to create, under the maand engagement model, a single compensation structure encompa
comprehensive flexible benefits (including home purchase), other c
commitment to financial education.
The new programme replaced traditional final salary and money pu
flexible benefits package.
With Logica now able to communicate directly across the whole of
no longer involving third party trustees), Dennis says the company
of their communications and appeal to all staff: We can explain in
companys spending on pensions and other benefits brings value to
believes this is especially appropriate in relation to pensions. Often
elements and options, but dont appreciate what they really mean,
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Everyone needs a planEveryone needs a plan
Logica favours carrots over sticks such as auto enrolment, and belie
younger employees to save into their pensions. Company contribu
make higher contributions themselves. In the longer term, they are
including offering company contributions to savings modules such
also makes a minimum contribution to their pension.
Take-up rates of 80% and high levels of satisfaction ratings from in
success. Recruitment for employee-representative places on the new
committee was over subscribed, with 60 applicants for 4 positions,
other measures of success will be: levels of staff choosing their own
rates rise; and increased use of salary sacrifice into the pension. Crit
success will not be measured just by the numbers, but by whether
people to save.
Many people in the population of course do not have access to the
and financial literacy schemes provided by Logica. They are employ
micro businesses in the UK who employ less than 50 staff. For these
pensions or other benefit packages to their employees is not just a
knowledge and appropriate guidance.
The government has confirmed it will introduce the National Emplo
2012 to help address the needs of employees working for smaller e
offer workplace based savings. Coupled with the introduction of a
employees will be encouraged to start saving.
Alastair McCapra, Director General of The Landscape Institute s
employing a small group of 15 people, mostly aged under 40 years
benefits package which includes a workplace pension, but the pre
organisation is such that the HR function is covered part time by hi
pension have to be outsourced to the pension provider.
Consequently Alastair feels that he lacks both time and access to q
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volatility and legislative change. Speaking from a personal perspect
of many of his own generation who have paid into a pension for o
where it is usual to move between companies frequently for career
portability between schemes means he has built up a series of sma
which has made his own long-term planning more risky.
However, Alastair also suggested, that in the light of this uncertaint
having the offer of bi-annual personal financial planning sessions as
package to be a positive. This would help them create their own fin
Many of Alastairs sentiments are echoed by Shaun Bent of Comm
business start up.
Shaun has invested his redundancy money in setting up his own co
Fuelled by a passion to help ethnic young people combat alcohol a
working on various drug rehabilitation services in the private sector
provide coaching and workshops to local authorities, the prison ser
needs services. However, in the current climate, with intense comp
cuts, the funding plug could be pulled at short notice.
This uncertainty means at a personal level he has had to sacrifice th
workplace pension arrangements. In his business, too, his need to
only offer employment on a contract basis. As a result, Shaun uses
work in the community, and mature work returnees who can use t
But he says, while it is easy to access the advice of accountancy pro
mechanics of running a business, it is much harder to find help witissues of employing people and the implications of providing them
thinks this lack of simplicity on retirement benefits inhibits many sm
people on.
Nonetheless, Shauns vision remains to build a business where he c
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difficulty in handling money. Lack of money, insurmountable debt,
with tax, benefits or housing systems can all play their part. Add to
sometimes a lack of faith in a system that might have failed on pre
make the wrong choice can escalate.
How can specialist intervention h
Between 2006 to 2009, Hertfordshire Probation Trust commissione
Advice Unit within Hertfordshire County Council.
As a result, more than 1,000 offenders were helped. Doug estimate
financial assistance was generated on their behalf through:
Debt management
Supporting offenders in accessing the benefits they are entitled
Financial advice and education
Critically offenders were empowered to take action for themselves.with filling in forms, completing applications and interview techniq
advocacy and making legal challenges, offenders were given a dire
The overall service added skills to those held by the Probation Serv
results. This provision falls outside the main services required for th
continues to explore opportunities to support offenders accessing f
from private and third sector providers.
Role of the voluntary sector
In the current climate, in which debt has become a major issue for
sections of society, the voluntary sector has come to play a leading
Everyone needs a plan
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Much of the time, CAB volunteers are faced with helping clients wh
reached a severe point where their options are more limited. For th
of the charitys strategy in recent years has been to adopt a more p
directly involved in providing financial education. For example, it w
such as working with lone parents looking to return to work, and w
how to save safely for Christmas. But the charity also uses its exper
year, the charity provided financial literacy training to a quarter of
for housing associations, social, care, and youth services. The CAB
skills for dealing with their clients.
However, Teresa acknowledges that the CAB, like all charities, does
national financial capability service. For this reason, the charity is a
established Consumer Financial Education Body (CFEB). Teresa feel
overdue: there is a vital need for a service that catches people early
personal finances, look at all the options available, help them searc
together a financial plan. Such a service, Teresa believes, will make
cannot afford financial advice or need sound money guidance.
Financial literacy is the keystone, says Teresa. In a similar vein, she i
people early in life though financial literacy provision in schools. Th
Financial Education Group in schools has shown it is possible to eng
money issues. Results of recent research would indicate that young
accounts and adopting a saving habit. Younger generations will ha
their own personal financial wellbeing than previous generations an
the effects of their planning. Teresa is hopeful that these young peothose before them.
However much effort the private and voluntary sector put in, it is t
and the financial services industry that underpins success in changi
ability to save and take responsibility for themselves.
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Everyone needs a plan
Government needs to make it easier for people to save for the
with the skills to make well-informed choices about how and wthe barriers between pensions and saving.
Government needs to go further in reforming the state pension
Actions could include: reform the current complex system of sa
a sustained and co-ordinated investment by public and private
financial literacy, and maximising the extent of non regulated a
recommendations) that is available, and setting up a working g
the market for funding longevity can be strengthened.
There have been some welcome developments including the move
confirmation of the new Governments commitment to auto enrolm
advice service through the Consumer Financial Education Body. Wi
still very much in mind, the time is ripe to reverse the trend to com
welfare benefits; to provide the leadership necessary to change the
our citizens; and make fair reforms to encourage savings and work.
And finally Alan Pickering suggests that the financial services industAlan Pickering says the industry needs to:
offer products that are easy to understand and communicated
targeted audience can understand them
provide guidance and information to people about the importa
to this information easy to obtain and understand
communicate effectively the impact of not saving and encourag
priority in their lives
help customers appreciate that some levels and types of debt ato spiral out of control
The exhortations for simple products, greater transparency, and cla
new, but the Life Academy experience is that from the eyes of the c
is too much paperwork that is there to protect the supplier or advis
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There is a unique opportunity for the industry to play its part and be
culture. However, the central issues of trust, support and education f
approach. They need to rise up the agenda and be considered separ
the sales strategy although ultimately they will provide ongoing sal
have a sales and marketing strategy that embraces channels to mark
develop education and support strategies with channels to their cust
partners to assist. One obvious partner is the employer who automat
nice it would be if it was common to see one dimension of competit
advice and trust available to customers that is not motivated by the s
Standard Lifes view
Jonathan Hewitt, Corporate Marketing Director at Standard Lif
faces a significant challenge.
We need to move from a culture of borrowing to one of saving, a
generation, we are living longer. To make it easier for people to sav
equip them with the skills to make well informed choices about how
down some of the barriers that discourage saving.
In our view, the key changes required to deliver this fundamental c
the simplification of our savings and tax system
ensuring the success of auto enrolment, which involves change
interact with private saving
sustained investment in financial education
The first step is a complete overhaul of our complex system of savin
as our insight shows excessive complexity is one of the key reasons
For example, ISAs and pensions operate under entirely separate rul
them both for their long-term financial needs This complexity nee
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Everyone needs a plan
Auto enrolment will see payments - from individuals, their employer
increase to 8% of pay. While 8% is a good starting point, people sho
as only by doing so will they achieve a decent level of income in retir
contributions should gradually be increased to a total of 12% of pay.
made on behalf of everyone, and have a particularly beneficial impac
However, some low earners will still choose not to save within pens
opt out, as has happened in New Zealand under the KiwiSaver sch
of saving through a pension or an ISA would make long-term savin
population who may otherwise prove resistant to auto enrolment. T
the under 35 age group.
Financial education is also crucial. People need to be better equipp
informed choices. This means a sustained and co-ordinated investm
financial literacy at all echelons of society so they are empowered t
decisions over their finances.
The pensions industry has a major role to play in helping people sa
being a key player in providing financial education, the industry ne
helping people meet their retirement needs. Attitudes to retiremen
people do not grow old like they used to. Generation by generatio
over 65s will be healthier with greater ambitions for their future tha
needs to deliver new, flexible solutions which help people approac
complex financial goals.
While more financial education in schools is required, we cant affo
generation, which is why employers also have a big part to play. Pe
employer and, over time, many employers may be willing to provid
and long-term savings options. In addition, as technology develops
commonplace, employers may facilitate access in the workplace to
This will help people decide when and where to save, and how to i
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ConclusionDavid Nish started this report by observing that individuals are in t
demographic storm. The case studies illustrate how, within two ge
planning for the future have totally changed. There has been much
individuals meet the financial challenges of contemporary society b
debt, encouraging a savings culture, and rebalancing short-term coprudence. But survey after survey has shown that consumers have
Now, however, we detect a new political will, a fresh desire for an
acceptance that the issue of savings for older age and pensions nee
increased understanding by individuals of the implications of longe
economic and financial crisis mean things cannot continue as they
generational conflict. These factors all combine to make this the pe
and demographic storm.Pickering summarises: We have challenged the view that there is a
fired from Whitehall or Westminster. Through our case studies we h
bottom up approach to view the world through a diverse group of
The Government must now create the framework and provide lea
change of culture. Men and women must be given the vision, reali
to play their part in designing and implementing their life and finan
financial service industry, and those in the voluntary and educationinterventions must play their part. People in all walks of life and at
and the cornerstone of the help we can provide must be based on
belief in individuals that it will pay to plan and save.
The use of our financial life plan will not only improve individual o
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Everyone needs a plan
David Nish Chief Executive StandaDavid Nish was appointed Chief Executive of Standard Life on 1 Jan
Finance Director since November 2006 when he was appointed to
executive director of Northern Foods plc and a board member of t
David was previously a partner with Price Waterhouse, and subsequ
then Executive Director, Infrastructure Division at ScottishPower plc
Alan Pickering CBE Chairman LifeAlan Pickering is Chairman of BESTrustees and of the financial litera
Chairman of the Plumbing Industry Pension Scheme and serves as
large schemes. He is a non-executive director of The Pensions Reg
member of the Occupational Pensions Board. He is a past Chairma
Pension Funds (NAPF) and the European Federation for Retirement
Government sponsored report A Simpler Way to Better Pensions
a member of the Rules Committee of the British Horseracing Autho
Life AcademyLife Academy is a charity that enables people to learn about manag
through life and retirement planning and also financial education. W
Retirement Planning courses, Financial Literacy education, qualifica
Planning and Partnerships to reach individuals and to develop inno
Contributors details
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Everyone needs a plan
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FFor more information on Standard Life go to:
www.standardlife.co.uk
Standard Life Assurance Limited, registered in Scotland (SC286833), Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH,
authorised and regulated by the Financial Services Authority. 0131 225 2552. Calls may be recorded/monitored. www.standardlife.co.uk
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