Personal Pension  

DWP to deliver teenage pension wake-up call

DWP to deliver teenage pension wake-up call

An optimistic expectation of an £800 a week state pension is one example of why teenagers soon to enter the world of work need a wake-up call about the importance of saving for old age, according to a new information drive from the Department for Work and Pensions.

The ambitious suggestion – equivalent to a salary of nearly £42,000 a year – was one of a number of eyebrow-raising answers given when pensions minister Steve Webb quizzed school pupils about their pensions knowledge.

At the other end of the scale, another youngster thought today’s basic state pension was worth just £9 per week, while the actual figure is £113.10. Seven out of 10 of the teenagers thought the government would provide most of their income when they retired and 8 out of 10 thought they would retire in their mid-60s.

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Research published last week by Partnership found that only 12 per cent of over-45s and around 13 per cent of 66-77 year-olds said they would be able to survive on the new flat-rate state pension.

Under the new system, to be launched in April 2016, pensioners would in time receive around £150 a week or over if they have 35 years of full-rate National Insurance contributions

The government is to develop new and improved resources for teachers, enabling them to plan more inspiring lessons about the importance of pension saving and inform them of how auto-enrolment legislation will affect them from the age of 22.

Mr Webb said that it is essential young people enter the workplace understanding the raft of reforms that have been recently introduced.

“It’s understandable for young people to glaze over when you ask them to think about retirement and pensions. But when you tell a teenager that this is going to affect them from the age of 22, you get quite a different response.

“This isn’t telling kids to think about old age, it’s helping them understand the world of work they’re about to enter.”

The DWP is also to team up with financial education charity the Personal Finance Education Group to produce new teaching materials to help get information about financial planning into the classroom and boost saving for later life.

The aim is to have high quality teaching resources available for schools across the UK later in the year.

Mr Webb said that his visit to a school convinced him that it is possible to talk to young people about long-term issues in a way that interests and engages them.

“But we have to give teachers the tools to do the job.”

The new initiative comes on the back of other efforts to help the UK public better understand pensions and saving. For example, in November the DWP launched PensionTube, a new online hub within the video sharing website YouTube, alongside national advertising campaigns for the new State Pension.