Hard times ahead for millions of workers

Posted on: 02 August 2011 by Alexander Hay

A pensions crisis looms, making retirement a distant dream for many, while others face retirement with no pension at all

Feeling the pinch? Many already are

There may be trouble ahead. Or at least, a lot less money as this BBC news story suggests:

...The Workplace Retirement Income Commission says 14 million people are not saving into a workplace pension scheme at all.

And those who are in a scheme often get charged too much for a service that is complicated and inefficient...

Which is to say, you may as well not try in the first place. 

"...Too many people are stuck in a complex, costly and inefficient system that relegates the consumer's interest to second place. On top of that, they simply are not saving enough to secure a decent retirement," said Lord McFall...

"...People need to get more bang for their buck or they are not going to bother with a pension. Instead, they will end up spending today, ignoring tomorrow and scraping by in poverty on the state pension. The complacency of many in the pensions industry is alarming..."

Sadly, Saga hasn't quite got the message about what this means yet:

...Ros Altmann, director general of Saga, said: "We need to reform the state pension and we also need to help people understand that pensions are not magic.

"If you don't save while you are earning, what are you going to live on in retirement? Either you are going to be very poor or you're going to have to keep working..."

Saving is neither here nor there if what you end up with isn't enough to cover your retirement or if the system you're part of effectively punishes you for trying. Reforming the state pension system is likewise wishful thinking unless you make people pay more for what they will get at the end, and here is the real issue. 

Neither private pensions (crippled by the antics of one Gordon Brown) nor state provision are going to work until someone starts paying more for them. Revising or reforming an empty bucket is no guarantee of more water.

Meanwhile, the slow death of final pension salary schemes and the government's attempts to welch on the public sector pensions it promised to deliver on prove that for all the talk of this being a serious issue, it is not treated as such.

(Incidentally, did you know that senior ministers get pensions that are worth millions? For them, there is no inefficiency, or poverty for that matter.)

[SOURCE: BBC]

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Alexander Hay

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