Palmer talks Pensions: Drowning not waving

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Pensions have never been so popular, but only in the sense that they are getting so much attention. Every week someone is raising the danger flag and waving it with some ferocity in our faces.

The latest warning is from Help the Aged and Age Concern who report that almost two-thirds of over-50s fear they may have to work longer than planned as their savings and pensions are hit by the recession.

A falling stock market and rising unemployment have left 47% of respondents more concerned about their pensions and savings than at the start of 2009, according to the charities’ new study. This is not surprising as unemployment among the over 50s has been particularly steep. The rather obvious observation to make here is that people may fear they have to work longer than planned but they may have very little chance of doing so.

Too many workers are now finding out for the first time that they are expected to look after their own financial futures. For some it is too late to do much about it, others will come to the conclusion that they have no chance of getting it right and throw in the towel. Personal accounts won’t save the over 50s from a poor retirement. The lucky ones will still be retiring from defined benefit schemes but only four blue chip companies (Shell, Tesco, Cadbury and Diageo) and of course some of the public sector (including the MPs’ schemes) are still offering this type of scheme to new recruits.

The news is bleak and there are plenty of studies to tell us so. The solutions are less in evidence. The government has come up with a partial answer in personal accounts but it must also support the good efforts of employers who want to assist employees with retirement saving. This means ensuring that employers are not afraid to provide workplace financial guidance and are not de-motivated by regulations which, while seeking to solve one problem, create another.

The recession, longevity gains and regulation have all piled the pressure on firms trying to do the right thing. Perhaps it is time for another critical look at where UK pension policy is taking us.

On a happier note: the revelations about MPs’ expenses have caused heavyweight jaw dropping but it could have been worse. If, instead of generous allowances, MPs had been given the rise in salary they have been asking for, the future pension liability on the public purse would have been even higher than it is now.

Two things you can always guarantee: birds of a certain feather have well-upholstered nests and there will be yet another pensions minister (or two) along tomorrow. Let’s hope the next one(s) will be receptive to good advice.

Martin Palmer is head of corporate pensions marketing at Friends Provident

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