The Department for Education’s proposal will see secondary schools teaching students a range of financial matters linked to everyday budgeting and long-term financial planning.
AJ Bell, the company behind the Sippdeal platform, argues that any new financial syllabus must include pension planning, and highlight to young people the need to start saving early when it comes to providing for their retirement.
Billy Mackay, AJ Bell Marketing Director, said: “To achieve an income equivalent to the national minimum wage in retirement you need to build a pension pot of £130,000. You can achieve that by saving £100 a month for 40 years. If you leave it too late and start from nothing 20 years later you’ll need to put away not twice as much a month, but nearer three and a half times as much. If we teach young people these important facts at school they are more likely to take savings seriously. It’s an essential tool for life.”
Mackay added: “The Government has an opportunity here – retirement planning must not be overlooked.”
Sippdeal client Dr Richard Hargreaves, who already saves into SIPPs for his three sons aged 22, 13 and 7, welcomes the move.
“I think it’s madness to launch young people out into the world without the tools to make properly informed decisions, so I think it’s a hugely positive step.”
“My strategy all along has been to give each of my sons a nest egg,” explains Dr Hargreaves, “something that’s there for them in retirement no matter what happens between now and then.
“In my opinion pensions are only going to get more difficult, so giving children a helping hand to get money saved for later life will be hugely beneficial.”
* The examples quoted are based on Sippdeal SIPP product charges, 0.5% annual investment charge and 5% p.a. investment growth, Pension contributions quoted are gross (£100 results in cost to individual of between £50 and £80 depending on tax rate).