One of Britain’s leading economists has scrutinised the way pensions work and fails to understand the rules because they are far too complicated.
Andy Haldane, chief economist at the Bank of England has revealed he believes pensions are too difficult for financial advisers to explain to consumers.
He also not enough people under finance which puts their money and the economy in general at risk.
Haldane admitted financial matters were just too hard to understand for most people while speaking at a think tank dinner.
His unguarded comments disclosed he believes financial advisers often have ‘no clue’ about pensions, which leads to a ‘desperately poor’ situation for consumers trying to sort out their money.
Pensions make no sense to me
“I would class myself as moderately financially literate. Yet I confess I cannot make the remotest sense of pensions,’ he said.
“Conversations with countless experts and independent financial advisers have confirmed for me only one thing – that they have no clue either. That is a desperately poor basis for sound financial planning.”
He predicts matters will only get worse as the government introduces more reforms to make individuals responsible for saving enough money for their retirement.
“During the past two decades, the responsibility for retirement savings has shifted from final salary company pensions to individual saving,” he said.
“This needs easy to manage and understand financial products for consumers if they are to take control of their own money.”
Industry agrees finance is too complicated
Haldane explained he knew the government was aware of the problem and was working to deliver more information about pensions, savings and general money management.
Haldane is one of the UK’s leading financial experts and advises the Bank of England on monetary policy.
His remarks follow on industry studies that agree with his stance.
Pension industry trade body the Association of British Insurers (ABI) claims too much jargon adds to the general lack of financial understanding among consumers.
As a result, the ABI is trying to introduce an industry-wide plain English guide for advisers and consumers, starting with pension freedoms.
Regulator the Financial Conduct Authority, which supervises how advisers sell pensions, is also involved in overhauling how financial information is delivered to consumers.
