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Pensions
By Mike Freer, of BWCI
ONE reader has written about the difficulty of persuading their adult children to get pensions and saying that there must be many others in a similar position. They asked whether auto-enrolment was the only answer.
It has always been difficult to get the young interested in pensions. Typically, they have other priorities, less available income, especially at the moment with the cost-of-living crisis, and most commonly very little interest. The pensions industry has also struggled to shake off its fusty image and complex rules. If your employer does not offer a pension scheme, then it can seem daunting to go it alone. The costs are likely to be higher, too.
It is difficult to see any of these factors changing any time soon. A shame, too, since the early contributions are expected to get the most investment growth.
Therefore, in some jurisdictions, auto-enrolment has ridden to the rescue. This obliges almost all employers to offer workplace pensions. Employees are automatically included; they have to make an effort if they want to opt out. Singapore has had auto-enrolment for decades, the UK since 2012 and Guernsey is on the brink (only held back by Covid-19 issues). Jersey is currently considering its options.
Of course, it is not just the young who are expected to benefit, but society as a whole. And this is why it is not just individuals making contributions, but also their employers and the States, to make meaningful savings for retirement.
If people can’t wait for auto-enrolment, it would be worth checking to see whether their employer has a scheme they can join. If it’s a pan-island employer, it is probably already getting one organised now, to cover its Guernsey obligations.
