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Mike Freer, of BWCI, takes a look at a long-standing problem and outlines some of the solutions available
A READER has been in touch to say that they cannot persuade their adult children to get pensions. Recognising that many other parents must be in the same 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” – and, most commonly, very little interest.
The pensions industry has also struggled to shake off its fusty image and complex rules. If their employer does not offer a pension scheme, then it can seem daunting for them 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 typically get the most investment growth.
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 introduced its scheme in July 2024, (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 they can’t wait for auto-enrolment, it would be worth checking whether their employer has a scheme they can join.
If they work for a pan-island employer, it’s probably already got one organised now, to cover its Guernsey obligations. The other alternative is a personal retirement savings plan available from providers such as BWCI.
