Chancellor’s pension ‘Pot for Life’ scheme needs improved financial literacy to work, says RSM UK

Reports today suggest chancellor Jeremy Hunt is preparing to announce a new pensions ‘Pot for Life’ scheme in his Autumn Statement. This would mean workers, rather than employers, choose which pension pot they pay into, and employees carry the scheme with them if they change employers. 

RSM UK’s head of pensions, Ian Bell, said: ‘Putting the onus on the individual worker, rather than the workplace, to select an appropriate pension fund raises concerns for two reasons. Firstly, financial literacy around pensions is currently low among many UK workers. There is also much apathy generally around the importance of pensions until workers get close to retirement age, by which time it is often too late to improve the situation. The current system, where workplaces undertake due diligence and the selection of an appropriate fund on behalf of employees protects them. Expecting employees to select the best fund to give them a comfortable later life will be something many will not be equipped to do, and seems likely to result in poor outcomes and poverty for many future retirees. We’d therefore urge the government to prioritise improving financial literacy and education around pensions if this is the direction the Chancellor wants to go in.’