Grandiose? Maybe. Portentous? Probably (my apologies, too much Christmas fare already). But heartfelt? Absolutely.
Although you may not agree with me (do you ever?), I think we are in danger of slowly losing the savings habit in this country.
The demise of the defined benefit pension scheme, constant pensions meddling by out-of-touch politicians, austerity, economic uncertainty and the Brexit factor have all chipped away at our willingness to save for tomorrow.
Spend today and spend again tomorrow. No surprise then that the savings ratio, so the Office for National Statistics tells us, is plunging faster than water cascading down Niagara Falls.
Of course, it is not all one-way traffic. Pension auto-enrolment is a 'success' – or, to be more precise, has been heralded a success.
Spend today and spend again tomorrow. No surprise then that the savings ratio is plunging faster than water cascading down Niagara FallsPrimarily by those same politicians who have undermined our pensions with a panoply of tax and rule changes that now make pensions as mind-bending as solving a Rubik’s cube. Do politicians understand the word ‘simplicity’? I think not.
Yes, it is fantastic that auto-enrolment has got 8m workers saving into a workplace pension for the first time – or saving more than they were previously. Yet the amounts being saved – often 5 per cent of a slice of their earnings – are not going to guarantee them a blissful retirement. Far from it.
And of course, one must not forget the role that Isas have played in helping build wealth – although like pensions I fear they are beginning to suffer from over-complication. More variations than types of chocolate in a Christmas tin of Quality Street.
Different rules for different versions. All rather confusing and ultimately all rather off-putting.
Yet the fact remains that for all the ‘good’ of auto-enrolment and tax-friendly Isas, we are not squirrelling cash away in sufficient quantity.
As a nation we need to save more. For our own good and society’s good.
Surely we want our growing army of oldies (a term I use lovingly) to be prosperous, rather than living in poverty? To be taxpayers, contributing and enriching, rather than being a burden.
So how do we encourage people to forego some of the joys of today (the new 65 inch widescreen TV) and save a little more and a little bit more responsibly?
The starting point has to be more financial education. Although it is this is now embodied within the national curriculum, most children leaving school or adults graduating from university do not possess the money management skills necessary to get their heads round key financial issues – money matters, such as the importance of saving (however little to begin with), whether to pension auto-enrol or opt out, the value of shopping around for products (from bank accounts to insurance), the dangers of credit cards and how to keep a credit file free of black marks.
I was heartened to have a chat recently with Simon Fraser, chairman of Foreign & Colonial Investment Trust.
As part of its 150th anniversary celebrations, the trust has just launched a competition among students at City of Glasgow College.
The aim is to get them thinking about key money issues by answering one of three questions: why do we need to save, how do we prepare ourselves financially for the future and if you could buy one thing now to save for the future, what would it be?
Yes, it only represents a scratch on the surface but F&C’s initiative is both well intentioned and welcome.
Its aim is to get youngsters to think about the value of saving for the future. More financial companies should be following suit and spending time, and a slither of their profits, doing their bit to raise financial educational standards – to ensure people are engaging with the financial world.
Apart from more financial education, we need to impress upon people the value of taking an ongoing interest in their long-term savings. It is brilliant that online tools are now readily available that enable people to get a better idea of what kind of income their long-term savings are going to deliver in retirement.
One of the more innovative – and in some ways frightening – long-term savings tools has just been put together by financial juggernaut Fidelity.
It has designed the ‘power of seven’ savings goals in recognition of the fact that someone who retires at 68 needs to have saved the equivalent of seven times their annual household income in order to maintain their lifestyle into retirement.
To reach this magical power of seven figure, Fidelity says a saver has to squirrel away 13 per cent of their annual income for 43 years.
By the time they hit age 30, they should have built a pension pot worth at least their annual household income. At age 40, the aim is two times annual income, rising to four times at age 50 and six times by age 60.
I have shown this ‘power of seven’ to scores of friends in recent days. Not one has responded negatively. At the very least, it has got each and every one of them thinking again about their financial plans.
Have a great Christmas and enjoy the New Year. Save, save and save again.
Jeff Prestridge is personal finance editor of the Mail on Sunday
