There is a stark generation gap when it comes to financial education, but it is those in younger age groups who say they have missed out, according to new research.
Despite initiatives in recent years to boost financial education in schools, the under 35s were twice as likely to say this topic had not been covered, than those aged 65 plus. In total 28 per cent of under 35s said they were not taught about basic finances, such as pensions and savings at school compared to 15 per cent of the over 65s.
The survey, conducted by pension provider Cushon found three fifths of respondents believe older generations were better educated about personal finance. Perhaps not surprisingly more than half (58 per cent) think that this older generation had much better pension options than are available now.
Three-quarters of those aged 65+ think younger generations need much more support to plan for their financial future, and people think Government (76 per cent) and employers (74 per cent) should be doing more to increase people’s knowledge of pensions, while schools (79 per cent) and parents (81 per cent) all need to play a role in better educating people about finances in general.
This may be critical to driving higher levels of pension savings. A total of 71 per cent of the under 35s surveyed said they would save more into their pension if they understood it better.
The lack of education amongst younger generations is evidenced further with worrying misconceptions about pensions and savings uncovered among Gen Z. Three in 10 (30 per cent) under 25s wrongly believe all over 18s are automatically enrolled into a pension by their employer, while the same proportion think they don’t need to start thinking about a pension until they are over 40 — with a third (33%) think they can wait until after 50.
Meanwhile almost a third (32%) think that the minimum automatic enrolment amount is enough for comfortable retirement and 38 per cent agree the state pension is enough to live on.[2]
Cushon CEO Ben Pollard says: “We believe everyone deserves a secure financial future, but many are underserved by the market. Unfortunately, the way pensions are set up makes it extremely difficult for people to know whether they are saving enough, and there are clear misconceptions around pensions, particularly among younger audiences.”
New research has today unveiled a stark generation gap in financial education, identifying low levels of understanding around pensions and savings among the young.
The research, undertaken by the world’s first net zero pension provider Cushon, found that those aged 65+ were much more likely to have received education around pensions and savings than younger generations. Under 35s were twice as likely as those aged 65+ to have not been taught about pensions or savings at school or university (28% vs 15%), and while only 14% of older people said their parents didn’t teach them either, this increases to one in five (19%) under 35s.[1]
Former Pensions Minister, Baroness Ros Altmann,who now sits on Cushon’s advisory board, says: “This research indicates younger people tend to believe they have been disadvantaged by lack of education at school or home about savings and pensions.
“There is also concern from older generations that younger ones will not have good pensions in the future. Certainly, the traditional final salary pension offered older generations a generous retirement income deal, but there is still a great opportunity to encourage the younger generations to engage with and understand the benefits of pension provision for their later life. Using clearer language, simpler technology and broader financial education in the workplace are all clearly needed in order to improve pensions for the future.”