Plans to ‘transform the country’s financial wellbeing in a decade’ announced
The numbers aren’t pretty. As the nation’s indebtedness peaks this month, and January’s payday is still weeks away, nine million people are now regularly relying on credit to pay for food or essential bills.
Around 11.5 million have less than £100 in emergency savings.
More than 5.3 million children aren’t getting a meaningful financial education, despite it being compulsory in schools and 22 million adults say they can’t plan for the financial demands of retirement because they don’t know enough about it.
More than half of Britons say their weekly disposable income is “less than £0”, according to research by price comparison site FairMoney.com. In fact, 10.5 million Britons are in their worst financial position yet.
The problems are complex and deeply ingrained, and we know that poor financial wellbeing has knock-on effects for our mental health, physical health and relationships.
So today the government-backed Money and Pensions Service (MaPS) announced a massive drive to achieve no less than “transforming the country’s financial wellbeing in a decade”.
The plan – the UK Strategy for Financial Wellbeing – sets out how it will improve millions of lives across the UK by setting goals to be achieved across five areas – financial education, saving, credit, debt advice and retirement.
How to change a life
Financial wellbeing is about feeling secure and in control. It is knowing that you can pay the bills today, can deal with the unexpected tomorrow and are on track for a healthy financial future.
So by 2030, MaPS wants two million more children to have a meaningful financial education, two million more squeezed and struggling working people to save regularly and, you guessed it, two million fewer people using credit to cover food or other essentials.
The plan also includes getting five million more people to understand their pension options and needs and securing better debt advice for two million additional borrowers. Currently only a third of those who need debt advice use it.
The strategy will also examine the factors that make people particularly susceptible to financial detriment, such as mental health conditions and gender.
A decade to make a difference
“The importance of financial wellbeing is underappreciated,” warns Sir Hector Sants, chair of MaPS, which launched last year.
“It is not only about financial capability but also feeling secure, in control, confident and empowered in relation to money. It is central to personal wellbeing and thus to living a contented life,” he says.
“The UK Strategy for Financial Wellbeing will only be successful for individuals if it is supported by the right products, regulation, services and corporate culture. Achieving the strategy will thus require the support and, in many cases, action by both the private and the public sector.”
Securing support from the right kind of corporate culture will be a big ask though, particularly as the regulation financial firms have to abide by can restrict their ability to suitably help and guide people. Experts are calling for MaPS to begin working with the Financial Conduct Authority immediately to have any chance of achieving its aims.
Others call for equally swift discussions with employers.
“Many people are living life on a financial cliff edge with debt and loans, coupled with the burden of financial obligations and commitments, impacting their ability to control their finances and respond to financial unpredictability,” says Steven Cameron, pensions director at Aegon, whose own research found that a third of Britons feel their finances control their life.
“As a government-sponsored organisation, MaPS is well positioned to lead the development of a UK strategy, in collaboration with all other financial services stakeholders. When it comes to financial wellbeing, people need different support at different times, be it information from providers, guidance from MaPS or full financial advice. We need to develop multi-directional signposting so customers get what they need, when they need it, from the best source.
“Employers also have an interest in playing their role to boost the financial wellbeing of their employees with knock on benefits for productivity,” he added. UK workers take four million days a year due to financial problems.
Gregg McClymont, director of policy at not-for-profit auto-enrolment pension scheme The People’s Pension, and a former shadow pension minister, added: “We welcome the proactive steps the Money and Pension Service is taking in order to help improve the financial resilience of so many who have been left forgotten for so long.
“We look forward to learning the details about how two million more financially squeezed people will be helped to save. The best way to help the lower paid save for their retirement is to reduce the earnings threshold for auto-enrolment from £10,000 a year to £6,136 – a move that would allow 1.2 million more workers access to a pension.
“Low-paid workers would also be helped if pensions contributions count from the first pound earned under auto-enrolment.”
You can read the original article here: https://www.independent.co.uk/money/spend-save/transform-countrys-financial-wellbeing-decade-debt-education-savings-pensions-a9293946.html
