The Money and Pensions Service (Maps) has said it will be “the catalyst for a financial wellbeing movement”, as it unveiled a 10-year UK strategy to help people be equipped to plan and enjoy their retirement.
The UK Strategy for Financial Wellbeing has prioritised five areas including:
- Financial foundations – making sure children and young people will get a meaningful financial education, so as adults they are able to make the most of their money and pensions. Currently, 4.8 million children and young people receive a meaningful education, Maps wants to make that 6.8 million by 2030;
- Nation of savers – Maps wants people to get in the habit of saving, building cash reserves to help with short-term emergencies and have a clearer future focus. Some 57% of UK adults save regularly, which equates to 14.7 million. Maps wants to make two million more working-age “struggling” and “squeezed” people save regularly;
- Future focus – Currently, only 45% of UK adults understand enough to plan for later life, which equates to 23.6 million. Maps wants to increase this by five milllion by 2023;
- Credit counts – Maps wants to make sure fewer people use credit for food and bills; and
- Better debt advice – the service wants to boost the number of people who access the debt advice they need.
These five pillars have been prioritised from a longer list of 21 and Maps will update priority areas, if necessary, in a review in 2023.
Catalyst for change
Caroline Siarkiewicz, acting chief executive of Maps, said: “Financial wellbeing underpins personal health and happiness, but it doesn’t happen by chance.
“We’re launching a strategy for entire lifetimes, aiming to expand financial education for children, while ensuring everyone is equipped to plan and enjoy their retirement.
“The Money and Pension Service will be the catalyst for a financial wellbeing movement, transforming how people engage with their money and pensions.
“We have a decade to make a difference and we cannot achieve change alone, so we will be connecting companies, charities and other organisations, which share our vision, to make this happen.”
Future focus
Maps wants to see more people connecting with their pension and become confident in their choices.
It also wants to remove barriers which prevent people from making decisions and taking action, as well as creating a cultural and attitude change towards long-term savings.
The service’s proposals for future focus:
- Increase the number of people accessing their long-term savings – this includes implementing recommendations from the Financial Conduct Authority’s Retirement Outcomes Review and using schemes such as the ‘stronger nudge’ trials, which looks at scenarios for pension savers to anticipate their changing needs; and
- Improve engagement with long-term savings – through the development of the proposed Maps pensions dashboard. It will also look at the possibility of mid-life MOTs – a simplified annual statement so people can understand what they have and what they might need to retire. It also wants to improve consistency of language across the sector to help demystify pensions saving and retirement options.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “There’s a particular challenge with Maps’ pillar of ‘Future Focus’, which concerns saving and investing for the long term.
“They need responsible financial firms to help deliver their strategy, however the current regulatory framework doesn’t allow firms to give people the guidance and help they need, if they are to achieve good financial outcomes.
“We’d like to see Maps work with the FCA and financial services firms to agree how best to give people the help they need, to turn this strategic vision into reality.”
Financial education
Maps wants to see more teachers have more confidence, skills and knowledge to teach financial education.
It wants parents to improve conversations with their children, and make sure communities help children, in more vulnerable circumstances (eg in care), get a meaningful financial education.
The service proposes a collaboration on financial education between UK Finance and Maps, bringing together financial services firms to develop “shared priorities that secure high-quality learning about money for all children and young people”.
Also, it wants to further develop its existing work on three “pathfinder” projects that increase the scale of financial education.
“We welcome their pillar of financial foundation, focused on young people, which will help lay the groundwork for a more financially literate and resilient society in the long-term,” McPhail added.
“Individuals can be helped through behavioural nudges and good financial frameworks, but we also need to work towards a future where people are empowered to manage their own savings and investments with confidence.”
Nation of savers
The service wants to make personal finance websites, apps and other systems more user-friendly and to “change the national conversation, so saving is seen as valuable and attractive”.
Maps proposes there should be an increase in the scale and take-up of payroll saving schemes.
“If employees opt to have their savings deducted from payroll at source, it is easy for them to get the habit,” the report said.
“Although payroll deducted savings are available, take-up is low. We would like to explore proposals to bring this offer to hundreds of thousands more employees within two years.”
Also, it wants to plan an “impactful” social campaign.
Workplace interaction
Steven Cameron, pensions director at Aegon, said: “We encourage Maps to include the workplace in its strategy.
“Employers also have an interest in playing their role to boost the financial wellbeing of their employees with knock on benefits for productivity.
“Employers can be doing more to support their staff with their finances. This includes offering better and more frequent financial education in the workplace, improving understanding about managing money and contributing more to employee pensions.
“With the right tools, including support from Maps and advisers, people can plan their financial future with confidence, paving the way for increased financial wellbeing.”
Cross-cutting lenses
Maps will also look at “cross-cutting lenses”, which includes examining financial wellbeing issues around vulnerability and inclusion, gender and mental health.
Sian Fisher, chair of Insuring Women’s Futures and chief executive of the Chartered Insurance Institute, said: “I am pleased the Money and Pensions Service’s UK-wide strategy to transform the country’s financial wellbeing in a decade will examine the impact gender has on financial resilience.
“As chair of the Insuring Women’s Futures initiative, I know some of the issues needing to be addressed to improve female financial resilience are deep-rooted.
“As chief executive of the CII, I will work with Maps on how to empower women to come together to talk about their financial life, make the right decisions and take action that will improve their financial future.”
How will the strategy be delivered?
In a few months’ time, Maps will run an activation period, during which, it will co-create delivery plans with “stakeholders” to drive the outcomes.
Keith Richards, chief executive of the Personal Finance Society, said: “We fully support the Money and Pensions Service’s aim to transform the nation’s financial wellbeing in a decade.
“The Personal Finance Society will continue to engage with the Money and Pension Service on how one of our pro-bono programmes, ‘My Personal Finance Skills’ can assist the guidance body in their goal of ensuring more young people receive a meaningful financial education.”
