Peter Jackson column

Jan 12 2006 By Peter Jackson, The Journal

My pension will provide for me very well in my old age - just as long as I don't buy anything.

OK, so it's an old joke, but it does pretty well describe the situation of too many people in this country, with a pensions crisis that means we are woefully unprovided for in our twilight years.

One Government report has revealed that more than 12 million people aged 25 or over are failing to save enough to ensure a comfortable retirement.

The problem is not that people are too poor to put money into pension funds, but that they don't fully grasp the importance, or urgency, of doing so.

The sad fact is that we are ill-educated in financial matters.

More than a year ago, a survey found that eight out of ten people did not know what annual percentage rate, APR, meant and 40% did not understand products such as mortgages and Individual Savings Accounts.

Incidentally, it shows how deep the problem is if 40% apparently believe they understand mortgages and ISAs without understanding APR.

And, to add to the pensions crisis, we have a looming student debt crisis.

One survey has found that students expected to pay off their loans by the age of 28, whereas 31 is a more likely age for them to be debt-free.

But then, why should students be more realistic than the rest of us? With consumer debt topping £1 trillion last year, nobody seems to be exercising financial prudence.

It is therefore encouraging that schools will be able to teach personal finance to 14 to 16 year olds from September this year.

The Institute of Financial Services, a financial education charity which has done some fine work in spotlighting levels of national financial ignorance, has launched two new certificates in personal finance.

The certificates - at foundation and intermediate level - will cover issues such as loans, currencies and car insurance.

It is high time. Half a century ago the average working man or woman would not have had a mortgage, a car, insurance or a bank account and would have been paid weekly, in cash.

The world has moved on and young people have to be educated for it.

And when my son has done his certificates, he can explain it all to me.