Pensions
By Mike Freer, of BWCI
A READER says that they are desperately trying to persuade their adult children to get pensions and have had little success to date. Saying that there must be many others in a similar position, they ask whether auto-enrolment is 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, higher mortgage or rent costs and, most commonly, very little interest.
The pensions industry has also struggled to shake off its fusty image and complex rules.
If someone’s employer does not offer a pension scheme, then it can often 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.
As a result of this, in some jurisdictions, auto-enrolment has been seen as the answer. 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’s will go live on 1 July this year. Jersey was considering its options, but the new government have postponed this review.
Of course, it is not just the young who are expected to benefit from having a pension, 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 they can’t wait for auto-enrolment (which may be a few years away), it would be worth checking whether their employer has a scheme they can join. If it’s a pan-island employer, it’s probably already getting one organised now to cover its Guernsey obligations.
