Often in casual conversation, when you mention that you work in pensions, the response is something along the lines of:

“Oh goodness, I know nothing about pensions”, or “I don’t even want to think about how my pension is doing”.

More often than not, the awkwardness of small talk takes over. I might make an unremarkable comment and the moment passes. At those times, pensions truly is the introvert at the party. Other times, however, I feel a pressure to act in the public interest and make a 30-second elevator pitch that may influence that person positively (without, of course, dispensing professional advice!).

That happened recently when I was having my photograph taken and the photographer got me chatting. He said his pension was tanking. I responded that whilst markets were volatile right now and informed investment selection could be beneficial, it was important to remember that pensions are a long-term investment and ups and downs are part of the journey.

Putting money away for as long as 40 years may feel impractical, and indeed impossible, for many people right now. The cost of living crisis is real and it puts the focus on getting through the present rather than planning for the future. In these circumstances, are there sensitive ways we can help keep pensions in mind? My colleague Liam recently wrote a blog on what employers can do to welcome pensions back to the party, but individuals who work in the pensions industry can also play a part in this in their everyday lives. With Pensions Awareness Week coming up in September, it’s a good time for some gentle nudges.

What are the top three messages we can share when, as a pensions professional, we speak to someone outwith the industry? Here are mine:

1. Straight in at number one, compound interest. Say it louder for the people at the back! It’s obvious that the earlier you start saving money, the more you can save, but many people don’t understand quite how much more. Assuming a modest 5% per year return, a 30-year-old starting to save £100 a month could expect a fund of c£114,000 at age 65. If this same person had waited until age 35 to start saving, their fund would be c£84,000 – over £30,000 less. How much you can afford to put away is clearly a consideration, but how long for is just as important. It’s difficult to picture your life in decades to come, but most people aspire to eventually work less and spend more time with family. Whatever you want life in older age to look like, it will be easier to achieve the earlier you start saving, helped by compound interest.
2. Investing can feel scary, but it doesn’t have to be. Admittedly, for Defined Contribution (DC) savers, staying focused on long-term objectives and not reacting to short-term shocks might be easier said than done. Although you don’t need to be an investment expert to save for your pension, it’s worth doing some homework. If you are choosing a personal pension (and assuming independent financial advice is not accessible to you) there are a lot of providers out there, so start with a reputable one you know to avoid overwhelm. For me, the key things to remember are: choose a diversified portfolio that’s in line with your risk appetite, objectives and personal values, and be aware of the charges. Pension investment options | MoneyHelper gives a good overview of the things you should consider. If you have a workplace pension, there is always the default fund; a responsible employer will endeavour to ensure that their workplace pension offers a good value default fund designed to be suitable for most employees. It’s worth asking your employer what governance they have in place over their pensions offering – how they selected a suitable provider, and if they monitor performance and charges to ensure value for their employees.
3. A pension can take many forms, and it may not be what you think. Iona Bain from Young Money thinks we should re-brand pensions as our “future funds” and I agree, especially now DC pensions are the norm rather than Defined Benefit. The concept of “retirement” looks different for younger generations who may gradually reduce their hours rather than stop work altogether, and who rent, rather than buy a home. The term “pension” is therefore outdated and belies the multitude of options now available to save for your long-term future in a tax-efficient manner.  Flexible drawdown means you can stay invested and continue to benefit from returns while drawing from your fund. Even in a workplace pension, investment choice is usually possible and the range of environmentally/socially conscious and Sharia-compliant funds on offer is increasing, so it’s easier to find something that fits with your personal values.

Whether you work in pensions or you’re a nervous pensions saver (or both!), what are your top three messages or concerns? Whichever side of the conversation you have found yourself on, I would love to hear your ideas so get in touch if you fancy a chat. Perhaps these small interactions can create a more positive discussion about pensions amongst more people.

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