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18 Sep 2020
by Maggie Williams

REBA's Inside Track: To avoid jam tomorrow, we need jars today

You know you’re getting old when you use a phrase you think is an everyday expression and no-one understands what you mean.

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“We don’t want to risk jam tomorrow,” I said at a recent meeting, to be met with blank stares all round.  What I meant (and, yes, should have said…) was “Let’s avoid promising people something that they won’t actually get.” 

(In case you’re wondering, the saying’s from Alice Through the Looking Glass – suffice to say, it’s a promise for the future that’s never fulfilled.)  

Before I consign it to the file marked ‘Don’t use these phrases ever again’ – and because I can twist anything round to pensions – I think ‘jam tomorrow’ still has some legs when it comes to financial wellbeing.

Pensions Awareness Day took place this week, which aims to help employees better understand their retirement savings. It’s a great initiative that gives some much-needed support to individuals across the country.  I’d love to see a ‘Pensions Awareness Day Plus’, that makes even closer links between pensions and other forms of savings and money management.

Does talking about pensions in isolation risk making them the ‘jam tomorrow’ of financial wellbeing? Well, maybe. Ultimately the money we have to spend in retirement is a product of how we manage our wider savings (including pensions) and manage debt during our whole adult lives.

The next few years will prove incredibly challenging financially for many of the UK’s workforce. At a time when huge numbers of employees are facing pay cuts or job losses and struggling to make ends meet every day, it would be a brave employer that suggested to staff that they increase their pension contributions.

That doesn’t mean long-term financial wellbeing should be simply shelved in the face of more pressing day-to-day financial issues. The best chance of helping employees become financially secure for the long-term is to help them to become so in the short term.   

Employees, especially younger workers, who have been hard hit by the events of the last year are likely to need help with budgeting, debt management and building (or re-building) a financial safety net.

Salary advance schemes, affordable borrowing and more accessible forms of workplace savings might all figure on the list of employee benefits that will genuinely help with those day-to-day challenges.

But everything in financial wellbeing is interlinked, and what happens today will affect employees’ money management long into the future. Good financial habits last a lifetime, so building skills such as budgeting at any time of life will stand employees in good stead for the long term. Salary advances or workplace loans need responsible management and financial education wrapped around them, to ensure that helping employees in the short-term doesn’t drive a longer-term financial problem.  

Accessible savings, such as ISAs, or ‘sidecar savings’ alongside pension schemes, are another means of helping employees build up funds today that they can draw on in an emergency. There’s also evidence from trials in both the US and the UK that short and long-term savings can happily co-exist, rather than being an either-or choice. Having accessible short-term savings can help employees feel more confident about being able to put money away for the longer term.

Building up jars of accessible savings for emergencies, long-term savings for retirement and even for shorter goals such as a holiday helps create a comfortable, confident approach to financial wellbeing. That, in turn, will enable employees to better understand and work towards a long-term retirement that is jam-packed, not jam-tomorrow.

The author is Maggie Williams, content director at REBA.

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