“Britain’s great pension crisis” – beware or despair?

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Going out after the watershed, Channel 5’s two part exploration of how fit we are to retire, sits awkwardly between the Yorkshire Vet and Chris Tarrant’s Extreme Railways, not the kind of TV you’d watch unless you’re into Michael Buerk and Felicity Hannah.

I’m a fan of episode one and , though I’m crusty enough to have difficulty with catch-up, I’ll be watching episode two when I get in from the Rewards awards tonight

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Last night we saw Aron Ling and Rachael Newton  sandwiched between Michael and Felicity work out that they haven’t saved enough to realise their dream of a gite in France and were on course for two weeks in a caravan overlooking the north sea.

They also found they would need to hand back two thirds of their week Lidl run , were they living on their post retirement AgeWage.

And they discovered that their posh steak supper at the local bistro would be downgraded to an open fish and chip supper.

All of which made them think, and it made me think too, as this couple were old enough to know better and clearly didn’t. He’s a fireman who in the public service would be looking forward to a proper pension , but he works for Norwich airport and has £60,000 in a Scottish Widows workplace pension.


A crisis of expectation

This wasn’t a program about investments or dashboards or guarantees or anything else of the paraphernalia we call “the pension industry”, it was about money saved and money to be spent.

Put simply, the couple thought they were doing ok with £60,000 put away and Felicity kept delivering envelopes that told them otherwise. Here were two working people with a reasonably affluent lifestyle and a house worth £180,000 who had a “pot but no plan”.

There wasn’t a financial planner in sight, but as Felicity kept banging on that financial planning was what this couple needed. There but for the grace of God go I and I bet a high proportion of those who stayed tuned in after the Yorkshire Vet were making some mental calculations about whether they were any different.

The harsh reality of this program was not sensational, it was horribly familiar. People are enjoying the fruits of today and complaining they cannot give up their current lifestyle for the fruits of tomorrow.

And it didn’t stop with lifestyle , one of the stories was a lot darker

 


 

A problem easier to illustrate than solve

We know from the election just how expensive it is to put pensions right on a national basis. The cost of restituting a part of the “stolen” WASPI pension is estimated at £58,000,000,000. The DWP estimate the cost of full restitution to be three times that. The cost of meeting the expectations of everyone like  Aron and Rachael could run into trillions (there are two hundred £50 billions in a trillion).

That’s how short we are of meeting our collective expectation of an age in later age. It will take a massive lifestyle shift akin to giving up smoking and drinking to adjust to a world where we are effectively saving for the retirement we dream of. While this blog focusses on the minutiae, (scam-avoidance, ending rip-off charges  and providing people with proper income choices in later life) , the big picture was on Channel 5 last night. It didn’t make for comfortable viewing for Nic

And the program didn’t stop at confronting people’s unreasonable post-retirement expectations. The sections that looked at the cost of care focussed on the post-retirement finances on a lucid lady who was losing both the love of her life and her life savings.

More questions than answers and Joe – the optimist was frustrated by the lack of magic money trees. Is it any wonder that successive Governments have been kicking these cans down the road? We can barely afford the front-line NHS, we are nowhere near affording to meet the 400 pensioners a week who sell their houses to meet their later life care costs. Opinion on social media (among my lot) was divided – but more positive than negative

 


 

The obligatory scandal slot.

Pension programs cannot get by without talking about the perils of investment and this one was no different. A couple of retired civil servants had placed the proceeds of their savings with a Forex specialist who had gone bust and now owed them their dream home in the south of Europe. They had tried to hedge their currency exposure with the wrong people and the story told us about the vulnerability we all have in the strait of Hormuz. Our tankers are laden with oil and there are pirates about. There should be protection but there not always is. My friend Joe got hot extremely hot under the collar about this,

The program walked the fine line between fear and hope, need and greed. I thought it walked the line.


 

Beware or despair?

As with so many crisis – including our nearest and dearest BREXIT, the impending catastrophe rarely turns out to be quite as bad as we thought and it is usually averted by pre-planning. The ads to the program included a cheery salesman from an equity release broker telling us that we could buy our sausages with bricks. On a day when M&G closed its mega-property fund for lack of liquidity, I was a little sceptical

There was a section of the program when Aron and Rachael discussed their business planning for later life. It was clear they were simply unaware of what the future held. This program stress-tested their dreams and found them falling well short of the £250,000 minimum savings threshold they’d need to stop working.

The truth is in short supply but there was plenty of it in this program.

The big question is whether this truth makes us aware – or despair.

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 and tagged , , , , , , . Bookmark the permalink.

3 Responses to “Britain’s great pension crisis” – beware or despair?

  1. John Mather says:

    It seems that they were saved from the clutches of advice. Clearly they could have considered the situation many years earlier but no doubt they were given comfort from the press that they were avoiding high charges. Now they can enjoy 100% of nothing. Even free guidance didn’t reach them

    The truth

    Nothing happens until someone sells

    • henry tapper says:

      But they both have pensions….

      • Brian G says:

        But they weren’t advised. Advice is about planning not investing. Financial advisers know as much as anyone else about investing – nothing! However advisers know about long term diversification and know much more about inspiring people to reduce their current spending levels by showing them and persuading them to divert some of that expenditure to fund future fun.

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