Pensions are dead – long live pensions!

Pensions are dead

Can pensions return from the grave?

The OECD have spoken – British workers will have worse pensions than folk from any other OECD country;

this from Patrick Collinson in  the Guardian.

Workers in the UK will have the worst pensions of any major economy and the oldest official retirement age of any country, according to the Organisation for Economic Cooperation and Development.

The typical British worker can look forward to a pension worth only 38% of their salary, once state and private pensions are combined. The Paris-based thinktanksaid on Tuesday that this compares with above 90% in the Netherlands and Austria and 80% in Spain and Italy.

Only Mexico and Chile offer their workers a worse prospect after retirement, although Turkey is the surprise table topper, giving its retirees an average pension equal to 105% of average wages, according to the OECD report.

The Guardian produce a handy graphic

Screen Shot 2015-12-02 at 06.11.47

So what’s gone wrong?  Well if “pensioncide” was a crime, successive UK Governments would be cited as war-criminals dealing in weapons of mass destruction including “the appropriate personal pension” , FRS17 and most recently “Pension Freedoms”. The final ingredient in the toxic brew will be revealed in April’s budget.

The concept of second pillar pensions have been undermined by our obsession with personal financial empowerment, a concept that has failed. We are not saving enough voluntarily and haven’t been for some time.

Worse, we ran down state provision, believing private pensions would take the strain to the point where we need something as bizarre as the triple-lock , to get the safety net off the ground. A failed second pillar and a partially demolished first pillar – no wonder the OECD are laughing at us (Je ne suis pas OECD btw).

buy to let

What Britain has, which I suspect no other OECD country has to the same extent is skin in the housing game. Not only is our home – our castle – but for many of us, our second home is our pension. Indeed, as one correspondent pointed out to Paul Lewis, his second home was a Scottish Castle, so proud was he of his equity in his English property.

And here I will be nationalist and say that this property thing is not  a British phenomena, it really is an English phenomena, no other nation within the United Kingdom comes close to us English for pride in our property!

buy to let 2

Which is why George Osborne is turning the gun turrets of his austerity tank on the buy-to-letters and why they are waking up to the stealth taxes which are eroding value in our secondary housing stock.

Check this from the canny “Flying Scotsman on Accounting Web”

So what is George Osborne really up to  – Is it a political dash as part of his leadership offensive or is it a genuine attempt to sort our housing woes out ?

Whatever his intent , it sends a contradictory message to the army of buy to let SME owners , who are carefully looking towards a retirement nest egg. Do the Tories still support them and their aspirations or are they now rich enough to look after themselves whilst he tries to drag up those with less money into the vaunted middle income space ?

I am not sure, but what I do know is that my next buy to let house is going to cost me 3% more 

Have your clients been queuing up asking you how to avoid it ? I bet they will after reading today’s financial columns

There is nothing financial that arouses more passion (or blog comments) than the buy-to-let market. The Flying Scotsman directly links buy-to-let with pensions and he’s right. It is the third pillar of our pension savings for those with a modicum of borrowing capacity, much more so even than the ISA (which coincidentally got a welcome sibling on December 1st- helping first time buyers to get out of letting!

Rackman’s legacy lives on in the popular imagination via Rising Damp and Robbie Fowler. We may not be a nation of landlords but it feels like it.

Hubble-bubble – toil – trouble!


“The final ingredient in the toxic brew will be revealed in April’s budget’

My theme is simple, just as pensions have reached an all time low, so buy-to-let has bubbled (can i use that word?).

Bubbling to me means to me “about to pop” and that’s where the rented sector nay be going, certainly as a means of extracting a nice fat pension for doing nothing.

Meanwhile, auto-enrolment is increasing savings rates and those with their eye to the main chance, should be looking at the opportunities presented by our current EET tax system on pensions WHILE THEY STILL HAVE THEM!

I predict the remaining years of current generous tax relief will see the wealth of the nation diverted from their pillar buy to let pensions into good quality workplace savings plans.

We will have bigger and better pots with which to buy our pensions, now we just have to work out how to spend them!


The Treasury is still working on pension tax relief

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Pensions are dead – long live pensions!

  1. Gerry Flynn says:


    What percentage of people retiring over the next 10 years are going to be in a position to be able to afford to enter the world of “Buy to Let”, 70%,50% or perhaps more like 10%? The great majority of the poor buggers are not even going to get a look in.

    I hope but very much doubt that the OECD report will silence the “right wing” rhetoric regarding the alleged generosity of the State Pension in the UK and the need for it to be cut back.

    PS: Why is it snowing on your home page or is it my computer?

  2. henry tapper says:

    You got dandruff or something?

  3. Jonathan Lawlor says:

    Yes, Henry, I can see the snow. Maybe it’s Christmas?

    • henry tapper says:

      I do indeed have a button on my auto-settings which allows me to turn on snow in advent. If anyone finds this distracting then I suggest they get a life!

      Merry Christmas!

  4. Gerry Flynn says:

    Have you not got a button for rain as that would be more in keeping with the weather in the UK!

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