2010 Everyone Needs a Plan

8/2/2019 2010 Everyone Needs a Plan

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A report by the Life Academy, sponsored by Standard Life

Everyone needsa plan


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Everyone needs a 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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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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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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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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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



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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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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



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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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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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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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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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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

MM0248 10 201 0 S ta nd ar d Li fe

2010 Everyone Needs a Plan

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