That is certainly the thinking of a lot of people who want us to be more engaged with our pensions.
For years we have looked at these two markets – with the success of the 401k market in the US and superannuation schemes in Australia – which created systems where workers are actually interested in their retirement savings.
I will bet most people in the UK do not know how to log in to their workplace pensions, let alone find out how they are performing.
The Aussie system may have some faults, but savers up and down the country know and understand what is going on in the superannuation scheme – the giant pot of cash that pays all work-based pensions.
At the other end of the scale is the 401k, essentially a defined contribution scheme, but one that workers are individually responsible for – which is very American.
The Aussie system may have some faults, but savers up and down the country know and understand what is going onThe 401k works in the same way as the UK pension – essentially of delayed taxation until retirement. So, all salary deductions are made before tax is applied.
The obvious problem with comparing to the 401k market is that the tax reliefs are limited to almost half that we have in the UK.
But talk to most professional Americans and they know what is going in and what is happening inside their 401k plan.
Maybe it is a cultural thing, stemming from the land of opportunity, where everyone can make their own way. This is the country that eschews the notion that most people want support from the government.
And that is why 401k plans become a source of household pride and why so many are engaged with what is happening in mutual funds and the stock market. Just look at the difference in reporting of finance in the US, where CNBC and Bloomberg show round the clock coverage of markets.
If we could only have a little bit of this, then our retirement planning problems would be solved.
Sadly, wealth is so often seen as something embarrassing in the UK, not a virtue.
Of course, engagement comes when you realise how much you have.
You will not meet a more engaged group of savers than those with final-salary schemes, who understand every last little detail of how their scheme works and what they are going to get.
And that is the problem, particularly on auto-enrolment, the sums for most younger savers are so small, that even if they can be bothered to see what they have got, it seems a trivial amount to be engaged with.
The shift can only come from employers. It is up to them to offer support from financial advisers and investment companies to get staff talk about their retirements. Only then will we all become a little more American.
Dividend cuts
While the prime minister was resigning, British Steel was collapsing and shareholders were voicing their concerns about executive pay, there was something much more concerning happening for investors – a series of dividend cuts.
Vodafone, Royal Mail, Marks and Spencer – big names whose dividends older savers in particular have relied on. They each have their own particular problems, which are largely structural. But look elsewhere in the FTSE and there will be more to come, as growth and profits get squeezed.
I know, I know, if you look at valuations then the UK looks cheap, but whenever I speak to a chief executive they are all doom and gloom about drops in overseas investments and contraction of sectors, from carp-making to retail.
Meanwhile, the Investment Association (whose robust campaigning has been to its credit recently), is now calling for greater transparency on dividend distribution by boards.
We are a nation of income-seekers, and dividends are our lifeblood. Cuts to dividends can be painful, but at the same time we need to ensure healthy companies. This means ones that are ploughing the appropriate amount into investments and not just splurging dividends to shareholders.
Crippling expenses
In possibly one of the most ‘financial advisery’ things I have ever heard: I saw one last week who had sat down with his two millennial children to set out exactly what he earned, what he had saved, what the house was worth, and, most pertinently, what they could expect to get from him.
His short message was: do not expect much at all. It is certainly one method of making young people get the message about saving and its importance.
But his children had one giant advantage over others: both did not have the crippling debt of a university education or rent from private landlords to pay.
That is the real reason why our millennials will be so slow to take up the savings shackles, and until we get the mess sorted it will cripple the finances of a generation.
James Coney is money editor of The Sunday Times
