Industry experts have stressed the need to “urgently” improve financial understanding to ensure savers are making the right decisions for their future, as Pensions Age launches its special focus shining a spotlight on financial literacy struggles.

Throughout 2024, Pensions Age will be taking a closer look at concerns around the lack of financial literacy and understanding, delving deep into the many issues and challenges the industry faces in tackling this issue.

Financial literacy has become a matter of increasing urgency following recent changes in the pensions landscape, particularly the shift from paternalistic defined benefit (DB) to defined contribution (DC) savings.

And this issue could be set to become even more pressing, as the government is currently consulting on potentially seismic changes to introduce a ‘pot for life’, which could require savers to make complex decisions about their pension savings.

Yet, speaking in the first of Pensions Age’s year-long special focus on the subject, LCP head of financial wellbeing, Heidi Allan, warned that “we can struggle to see the value of things that don’t impact us today. This is one of the challenges with future finances such as pensions”.

“For many people, the word ‘pension’ is surrounded by complexity and apprehension as to what that might look like, as well as mystery around when and how that life stage may occur. It’s hard for people to engage with something that is deemed complicated and is somewhat taken care of on their behalf with the introduction of auto-enrolment,” she said.

Adding to this, Pension Insurance Corporation (PIC) chief people officer, Dara McCann, argued that “changing the way we talk about pensions and increasing financial literacy about pensions is critical. We need a huge effort to lift financial literacy, starting at school and higher education, through to the workplace”.

Over the rest of the year, the Pensions Age team will therefore look at the key issues stemming from the low levels of financial literacy in the UK, the behavioural psychology lying underneath this, and how a lack of financial education could be leaving some vulnerable to attacks from scammers.

But solutions, as well as awareness, are needed, with the campaign looking to highlight the vital role of the industry in developing greater financial understanding, by sharing the best practice examples from around the pensions industry and abroad.

Readers can try their hand at the Financial Literacy Benchmark quiz in the first article in the year-long special focus from Pensions Age editor, Laura Blows, featuring insight from LCP, PIC, Royal London, Wealth at Work, Mantle Services, Octopus Money and more… read more here.

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