Managing pension expectations – are we doing enough?

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This is one of those blogs where my focus is on big Government – or policy – rather than the little things that go into making political strategy happen.

For a long time, as long as I’ve been working, there has been an expectation that the wages we get from our pensions and investments would cover around two thirds of our salary. This was what our parents and grandparents were told and though it didn’t always work out, it was what was on offer for a lifetime’s work in public service or from a private company with a pension scheme.

So I read this tweet with the shock that comes from listening to an old friend who you’ve been ignoring a while. Andy Young is an old friend and I have been – well – ignoring what he’s been saying. But I can’t for ever- not only has he been right throughout his career as one of the Government’s senior actuaries, but he is growing older with no loss of his acuity.

Why we can’t save enough is clear. There is not enough going into our bank accounts from our wage packets to let us live the lives we’ve promised ourselves and spend enough on our retirement to meet the promise bought by our parents and grandparents.

Either we get a lot more productive while we work so that we can afford to spend more on the future, or we change our futures to meet our diminished financial resource.

“I won’t be able to afford to retire” is a common theme from working people. Unpleasant as it sounds, pushing out retirement beyond that other great misconception – retirement age – is generally accepted by the working class (by which I mean the class of people still working).

But for those who cannot work?

The problems become acute when people stop working. I was alarmed to read this news from the ever-reliable Paul Lewis.

Of course yesterday, people were looking the other way (apart from Paul) and surprisingly the Daily Mailhomeless 2

It’s no surprise to see the benefits for those below state pension age being eroded. The DWP get their money from the Treasury and the Treasury do not look kindly on anything that smacks of moral hazard. So those sleeping rough the next few (cold) nights should remember that they have no one to blame but themselves.

If you read those last two lines and thought that I’d turned into some far-right Gradgrind, then I’m a better impersonator of some of the Treasury mandarins I’ve met – than I thought!

It’s no laughing matter. If you have lost the will or capacity to work because you’ve become mentally or physically sick, learning that there is nothing coming your way by way of pension credit till you reach the state pension age is very bad news indeed. That what you had, may be taken away from you, because your partner is still to meet this arbitrary retirement age, will be doubly depressing.


Hard times?

These should not be hard times. For most of the people who read this blog – they are not hard times. This year will mark the 80th year since the outbreak of the last meaningful way this country waged. Since then we have been enjoying an extended peace dividend.

It worked for our parents and grandparents and if your are my age – it’s working for us but it doesn’t seem to be extending to the generations coming behind and the peace dividend doesn’t seem to be spread to those claiming benefits, who are seeing those benefits being eroded cut after cut.homeless 5

I am asking myself – is this the society I want to be in? Do I want to see people’s expectations for older age being managed downwards. Do I want the threat of destitution on those who have saved nothing?

The answer – and this will appall many people – is no I don’t. I would rather see more spent on benefits than less and I would rather target my tax on alleviating destitution – which I see 30 yards from my front door on cold mornings like this, than return to a Victorian value set.

Managing pension expectations?

It seems that the pension expectations of pension millionaires can be understood and campaigned for by the Treasury.

It would seem that  we still see pensions as important for some people – even if the 1.2m people who in 2019 will not get promised help with pension contributions – are to be ignored by the Treasury.

It is almost impossible to square this circle unless you believe in that Victorian value set which rewards the worthy and deplores the poor.

That is not how I want this fine country to manage pension expectations. We must look very hard at the way we are distributing the wealth of this country and make quite sure that the curse of destitution in old age does not spread.

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About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, age wage, pensions, religion and tagged , , , , , . Bookmark the permalink.

2 Responses to Managing pension expectations – are we doing enough?

  1. Brian G says:

    Fine words. But you are a member of the tory party so you clearly don’t mean what you say about the redistribution of wealth.

    • DC says:

      Redistribution of income is different to the redistribution of wealth.

      ‘Progressive’ income rates demonstrably reduce the most efficient tax yield, as people and companies become more aware of what is being ripped out of their wages and seek to mitigate against it.

      Capitalists want to keep to provide for themselves and their families, socialists want to steal to further their Marxist political agenda.

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