MIKE COADY

Growth Expert | Business Excellence | People Transformation
Mike Coady was appointed Chief Executive Officer of swissglobal in 2018, a position to which he brings a strong financial background and experience across a variety of roles. Mike is a skilled business strategy and growth leader, coach and motivator. He is a people’s person known for his ability to inspire teams towards excellence. He mentors his people and departments to transform their passion into outstanding results and long-lasting relationships with their clients.
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Saving for pensions should be obligatory, says think tank

Mike CoadyFinancial News Saving for pensions should be obligatory, says think tank

Saving for pensions should be obligatory, says think tank

The Policy Exchange, a leading think tank, has proposed a scheme that would make it compulsory for people to put aside money for their retirement.

The ‘Help to Save’ scheme would in effect remove the ability to ‘opt out’ of the government’s auto-enrolment pension scheme, meaning everyone would be forced to save for their ‘golden years’.  The organisation has stated that it has presented its proposals because up to 11 million people in the UK could be facing poverty in old age, if no action is taken.

To my mind, the thinking behind this proposal is positive and aims to fight back at the ‘bury your head in the sand’ mentality.  After all, life expectancy is increasing all the time and it’s absolutely crucial to start retirement saving as soon as possible, in order to maintain a comparable lifestyle later in life.

However, I believe in reality, the idea is seriously flawed.  A system that trusts that every individual to save a sufficient amount each month towards their pension pot is, in my opinion, a naïve approach if the aim really is to help as many people as possible secure financial freedom in retirement.

More financial education needed

Where I think the real problems lie is, firstly, a lack of financial literacy amongst the wider population.  In my opinion, teaching children from a young age in schools the importance of financial planning, being financially savvy later in life and not getting into debt, would be the ideal way to counteract the serious lack of financial education as we move forward.  Recent findings released by the StepChange debt charity have revealed a 44 per cent increase in the number of people getting into debt over the past 12 months.  StepChange Debt Charity chief executive Mike O’Connor said of the findings: “Turning to high cost credit to pay everyday bills results in a downward spiral into further and further debt, with potentially catastrophic results.”

Problems with RDR

Secondly, since the introduction of the Retail Distribution Review (RDR) in December 2012, there has been a ‘black hole’ left in the financial advisory market.  This set of rules with regards to financial advice was implemented to increase transparency and reduce the risk of mis-selling within our industry.  The strict regulations of RDR has led to a fall in the number of financial advisers in the UK, with many high street banks and advisory companies pulling out of the market, which in turn leaves individuals with less choice of IFAs when seeking the expertise they need to make informed choices.

The number of IFAs is now less than 20,000 in the UK, according to latest figures.

Saving is crucial

When it comes to saving for the future, I think it should be given the same importance as National Insurance contributions or taxes.  If people don’t take proactive responsibility when it comes to funding their retirements, they’ll likely be forced to live a much less-affluent lifestyle when they reach 65 than they had perhaps anticipated.  On the same note, if individuals decide to ‘go it alone’ when it comes to their finances, the risks they take will typically be greater, they could perhaps encounter some avoidable costly mistakes, and they may not reach their financial goals before they hit retirement age.

Importance of seeking professional advice

In short, there really is no better alternative to receiving sound professional financial advice if individuals are serious about securing their financial freedom.  An experienced wealth management professional will encourage clients to start saving for retirement and implement a workable, sound strategy to achieve their long-term financial goals.

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Mike Coady
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