Article date: 14 June 2006
Introducing compulsory financial education into the curriculumcould make Britons much better off by their late 40s, according toa new report published today (Wednesday).
The report commissioned by Norwich Union and written by ipprtrading - the consultancy arm of the Institute for Public PolicyResearch (ippr) - highlights research from the US that showscompulsory financial education for school children can lead topeople being, on average, richer by a year's earnings between theages of 35-49. Translated into the UK this could mean that:
- A couple with two children aged five and 11 could bebetter off by about £32,000
- A couple with no children could be better off by about£22,000
- A single person with no children could be better off by about£13,000.
The research also looks at behaviouralpsychology to understand how education and public policy canenhance financial capability in the UK.
The report cites evidence that while 17 million adults successfullymanage their finances (by making ends meet, keeping track offinances, planning ahead choosing products and staying informedabout products) as many as 10.5 million experience difficulty in atleast one of those areas.
According to the findings, the most common reasons for not engagingin financial planning are complexity, lack of low-cost advice andthe desire for short-term gain over long term security.
The report also investigates the psychology behind this lack ofengagement and looks at when and how government and the financialservices industry should intervene to change behaviour.
Norwich Union, as one of the leading providers of pension, life andinvestment products, commissioned the report to help understand theunderlying factors to low levels of financial capability in the UK.Norwich Union offers these findings to policy makers to provokethought on how financial capability can be tackled throughnon-traditional methods.
David Barral, distribution director, Norwich Union, said: "A betterunderstanding of why people act as they do is crucial if thefinancial services industry and government are to engage consumersmore effectively. We need to help motivate people to overcome theirinertia and enable them to take greater personal responsibility fortheir finances.
"Norwich Union is pleased to have worked with the ippr to bringcurrent thinking on the psychology of the decision making processto a broader audience."
Miranda Lewis, senior research fellow for ippr trading ltd, said:"It pays to get clued up. This research shows that when financialeducation is introduced onto the curriculum next year it could payreal dividends later in life. But we also need to go beyondeducation to support the millions of adults who are currentlystruggling with their finances. More advice and support needs to bemade available to all adults."
Rethinking Financial Capability by Mike Dixon:
Norwich Union press office contacts:
Cheryl Cox 01904 452791 Out of hours 07800 695275
David Gwyer 01904 452828 Out of hours 07800 699508
ippr trading ltd
Matt Jackson 020 7339 0007 Out ofhours 07753 719289
Notes to editors:
- Source: Statistics used come from Levels of FinancialCapability in the UK. - Results of base survey; Atkinson et al,Bristol 2006
- For more information about financial education visit: http://www.fsa.gov.uk/financial_capability/or www.pfeg.org
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading providerof life, pensions and investment products and one of the largestfinancial adviser (FA) providers. FAs provide over 70% of thecompany's long-term savings business in the UK.
Norwich Union is the UK's largest general insurer with a marketshare of around 14%, with a focus on insurance for individuals andsmall businesses.
Norwich Union's news releases and a selection of images areavailable from Aviva's internet press centre atwww.aviva.com/media
ippr trading ltd
The report was commissioned byNorwich Union from ippr trading ltd, the trading subsidiary of theippr. The ippr is the UK's leading progressive think tank. To findout more visit www.ippr.org