Lincoln University is entering uncharted territory as it launches a series of workshops for its students on all things money, advocating the need for planning and saving.
The UK’s households and non-profit institutions savings ratio has dropped below 5 per cent, figures from the Office for National Statistics show. In the third quarter of last year, people saved just 4.4 per cent of their income, down from 5.1 per cent a year earlier and 11.9 per cent in 2010.
While a working paper from the University of Westminster found that the likelihood of saving for retirement is not dependent on financial education, continuous changes to tax rules and the new pension freedoms suggest financial literacy could become more important for tomorrow’s retirees.
Closing the education gap
Lincoln University is tapping into the need for financial literacy and ran the first of a series of financial education sessions last term for its first-year students. It is planning to hold a total of nine workshops over three years, one in each term.
The initiative came about after the university’s student union saw a need for financial education and proposed basing the sessions on fairytales to engage students.
Source: Lincoln University SU
Natasha Halsall, Lincoln University’s pensions manager, said: “It’s been designed by the students in the SU just to try and hopefully engage them, so it’s coming from them to them, with our backing.”
She said students need to be aware of pensions because they will be auto-enrolled either during their studies if they work part-time or later on.
The university introduced financial education for staff three to four years ago, and Halsall said that as with the staff sessions, the student workshops are expected to be “a slow burn”.
“When they go into interviews they’ll be able to ask pertinent questions about the employee package, they’ll know what their tax is,” she said.
The workshops are free and will develop with the students’ needs, starting out with how to handle a student loan and ending with explanations of employer benefits including pensions, said Jonathan Watts-Lay, director at financial education provider Wealth at Work, which delivers the initiative.
“We cover [at a] really high level what [pensions] are, how they work, the compulsory element, auto-enrolment, also getting them to understand that different employers will give different contributions,” he said.
Watts-Lay added that while financial education has now been introduced to the school curriculum, those already at university were not able to profit from that.
Social media and technology
David Piltz, head of trustee services at Buck Consultants at Xerox, said it is important to choose engagement tools appropriate for young people when explaining financial matters to Generation Y, “to try and engage them in ways they understand, and particularly [make] use of technology, social media, gamification.
We need to educate people so that they can understand these things that are going to come and get them before they receive them
David Piltz, Buck Consultants at Xerox
“The typical announcement to members in the written form, or the letter to people – even if it’s nicely constructed and coloured – it’s just, ‘Oh gosh it’s pensions, it’s on my too-hard-to-do pile’,” he said.
“We need to educate people so that they can understand these things that are going to come and get them before they receive them.”
This was echoed by Tom Pilcher, analyst at consultancy Redington, who said young people should be told about the impact that poor pension saving habits can have on their lifestyles in later life.
“Pensions can sound drab and boring. The best way around that is it’s going to really impact your future and it’s going to impact what you’re able to do in later life. I think it’s… trying to say, ‘Look if you start to save now it’s really going to reap rewards in the future’.”
