Darren
I received this blog/testimony from Darren Jefferson, who many will know for his work in setting up auto-enrolment schemes over the past five years. The title’s my own, the words are his.
Don’t take other people’s money for granted.
A few weeks ago I had a trip up North to meet up with some of my old mates.
I grew up with these guys and taught martial arts for years to their families and friends. Having the karate club gave them something to focus on and take their anger out in a controlled environment.
These guys work in white collar roles, the majority of them rent their homes and they are living for today, not tomorrow. But I was shocked at how literal this is.
They earn well below the national average salary and hardly have anything left at the end of each month after rent, utilities, food, kids clothes, petrol and a small holiday fund.
They all work hard, provide for their families and are genuine blokes but are also realists. They realise that over the next few years some of the roles they undertake may well be taken over by robots.
As we reminisced I brought up the subject of pensions, auto enrolment and increasing contributions. That’s when it got colourful..
Some of the comments that came out are below. I’ve toned down so as to remain professional:
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‘Do these pensions experts realise that we have no spare cash at the end of each month. We can’t afford to save more into a pension’
- ‘These people need to get in the real world. We are living hand to mouth and just surviving’
- ‘We know we won’t be able to retire and the state pension will be a lot less, if there at all’
- ‘Tell these pension people to stop sending us stuff. There’s too much of it, we don’t understand it and we will be coming out of the pension as we can’t afford the increased contributions. They’re wasting their time’
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‘We work hard and want some pleasures. A pensions bloke once told us that if we gave up a few pints we could save that in a pension. What planet are they on?’
I only met up with 10 or so but they did say that their views are representative of a large part of their community. I’m sure this will be the same in other parts of the country.
So as the Master Trusts prepare to receive increased contributions, consultants think about possible DC strategy work spare a thought for my mates in Leeds. They genuinely can’t afford these increased costs but they are not expecting the State to bail them out.
I don’t have the answers and these discussions will continue but don’t forget those who the system is aimed at.
Darren is, unfortunately, quite right in what he says. Sure, we “experts” know that “realistic” pension funding is what is needed, but I know a lot of people for whom this is simply unaffordable. I’m based in Somerset, and there are plenty of struggling individuals and families here, too. My wife volunteers in the local food bank and you might be surprised as to how quickly someone might need to call on its services. A bout of ill-health or losing a job is a key trigger.
These are not all renters, but men and women with substantial mortgages, children, university students and the dreaded car PCP arrangements. Many see the forthcoming increase in pension contributions as a simple pay cut, enough to throw them perhaps permanently in the red.
I don’t have any solutions, but something very serious has gone wrong somewhere and maybe that’s why we are seeing the worrying demise of “centrist” liberal politics in exchange for more extreme left and right-leaning demagogues?
Meanwhile the companies/business owners that they work for are becoming increasingly richer, as are the shareholders. Why are the companies/business owners not required to pay a share of their profits into a staff pension scheme like they did in the past? Auto-enrolment is a joke. I worked for a business owner in the North West who drove a Ferrari whilst his employees all opted out of auto-enrolment as they could not afford to pay 1% into a pension, as similarly they were all living hand to mouth. The great divide, the rich get richer and the poor get poorer, when the generations in their 40s and below reach retirement the divide will be bigger than ever. Not many of these generations have the gold plated final salary schemes that your website talks about.
See this https://www.theguardian.com/money/2018/jan/25/uk-workers-chronically-broke-study-economic-insecurity for example.