From the blog: Every morning and evening I have to convince my three-year-old to brush her teeth.
I try to make it as fun as possible, but really we both know it’s not a fun task.
Saving is a bit like brushing your teeth: it’s not fun, but you have to do it, and sometimes a little compulsion from a parent can help.
But hopefully the outcome will be that her teeth will withstand the attacks of sugar and acid and my wallet be spared the dentist’s bill.
Saving is a bit like brushing your teeth: it’s not fun, but you have to do it, and sometimes a little compulsion from a cash-conscious parent can help.
Create the habit early
Auto-enrolment, something of a mass pensions hygiene exercise, is certainly teaching people to save.
Membership numbers have ballooned. New figures from the Office for National Statistics show that at 30.4m last year they were the highest ever recorded.
Between 1991 and 2012, active membership was slowly but surely decreasing; this has been reversed by the dramatic rise in pension scheme membership, as 2.5m joined a scheme between 2013 and 2014.
Out of the 2.5m, around 2m are new active members in the private sector.
This marks a significant shift.
Since 2004, the gap between the number of scheme members in the public and private sectors has been growing, with the private sector increasingly lagging behind.
But the 2014 figures show the number of private sector members has jumped to almost the same levels as public sector scheme membership.
And it is only a question of time until pension savers employed in the private sector take the lead, as more employers are set to enroll staff by 2018.
The DC turn is coming
Auto-enrolment has also led to a seismic shift in balance between defined benefit and defined contribution members, with DC members having reached about double the number of DB scheme members.
So is a new golden age of pensions dawning? Not if contribution rates remain where they are now.
The onset of auto-enrolment has meant the average total contribution rate between employer and employee dropped to just 4.7 per cent last year, from 9.1 per cent in 2013.
Will this be enough to shield the aged of the future from poverty?
More toothpaste is needed.
