Teenage Take over #5
- July 1, 2023
- Written by Luke Quinn
- 10 months ago
- No Comments
It's the 5th teenage take over
We think it’s fair to say we still don’t know loads about pensions, but we’re learning all the time (and probably know more than the average teenager!). It’s also fair to say the more we learn about pensions the more questions we have. A few that we have discussed a lot are; what happens to your pension if you leave or move work? If your pension is invested what will happen if it crashes? And do we as the savers have any influence on where our pension goes?
Let's take a closer look…
In our short time of being involved in this it’s pretty obvious many people don’t fully get the gist of pensions. And whilst that means they don’t understand all the things that they probably should, it’s probably not that big of deal… until they move from job to job, climb the career ladder and start to lose tracks of the pensions they have built up and they then get littered all over the place. We read up about this and all these pension pots have somehow resulted in a whopping 2.8 million lost pension pots amounting to over 26 billion lost pounds.
This is absolutely ridiculous as there are only 67 million people in the UK so that means that there is £400 of lost money per person in the UK (including new born babies and children who don’t even have a pension). It’s even more crazy when you consider how many people can’t afford to pay for basic things right now.
Why are there lost pensions?
We would argue that this is a direct result of poor financial education. As we mentioned in our first blog, pensions aren’t taught in school or college. If they’re not made part of our knowledge bank how do we know how important they are; that we have one or what we should do with it? In our opinion we think that the lack of financial education is an outrage and this is not only education about pensions! We don’t get taught about anything to do with money or finances. Let’s take tax for example, everyone has to pay tax, according to the gov.co.uk website 12 million people are expected to complete a self-assessment each year. How do you even know where to start if you aren’t taught?
More about financial education
We just can’t move on from this! So we have to study things like art and music as mandatory subjects until the end of year 9. We’re not saying these aren’t nice subjects, but after school how many of us will use art or music education as part of our everyday life? Money and finance is one of the few things that we will all 100% need to know about when we leave school. But it’s simply not taught. If you choose Business Studies as a GCSE option you start to learn about the economy in year 10, but business is not a mandatory subject and you don’t learn about your taxes or pensions. And the ultimate consequence is surely more than just lost pension pots, there’s also missing out on decades of compound growth and ending up without enough money in retirement.
But why isn’t financial education mandatory?
A quick bit from me (Luke) in my English speaking exam I had to prepare and deliver a speech. Mine was on pensions and a lack of education in them (and no, this blog isn’t a rip off of that – promise!). One of the questions I was asked at the end of my speech was “Why do you think the government doesn’t insist on teaching us about pensions in schools?”. At the time, and still today, I’m stumped by this question. So I think we are going to cover it in a future blog?
If your pension is invested what will happen if it crashes?
This is a question we’ve pondered and we don’t think we want to answer it, because the people reading this all understand how investments work – right!? What we’ve been discussing is why investments are represented as negative by the media? Headlines always talk about how bad or risky investments are, how much money people have lost or how badly companies are performing, obviously returns will go up and down with investments – so why do we only ever hear about the short term down? We think this is confusing! If investments are made to seem too risky people will take the headline as gospel and never even try. Then what happens when they realise their pension is being invested?
Goodbye for this month…
Anyway the time has come to say goodbye! This was a pretty busy month for us as we’ve both had exams so we didn’t do what we thought we would with the blog. Instead we’ve written this about a couple of questions that we’ve been thinking and chatting through. We’ve discovered how so many people move around from job to job causing losses of over 26 billion pounds! We think this is probably a bigger risk than investing! But that’s all for this month’s blog, we still feel as though we’re far from up to scratch with all this pension stuff but way further ahead than all of our mates. As always, please, please drop us a comment or feedback so we can improve.