With the consumer money pages constantly warning of the importance of making effective private provision for retirement, Richard Harvey wonders if they might be going too far. At least, for IFAs, clients will be somewhat prepared for the scary results of the cash flow forecast! Â
After a lifetime working as a newspaper hack and spinmeister, it’s probably ungrateful of me to advise friends to spend less time reading the media, and get out a bit more.
No, it’s not that they are depressed beyond measure about Brexit, Combover Donald in the White House, or whether Jeremy Corbyn can ever be Prime Minister if he keeps wearing that Russian revolutionary’s hat.
What concerns them more is the tidal wave of media warnings that unless they have squirreled away each and every year the annual wage earned by, say, an admin clerk, they are destined for an old age of Cup-A-Soup and weekends peering out gloomily from the bus shelter.
The times they aren’t a changin’…
It’s unremitting. Leading the field is Times Newspapers, with the sort of editorials which have you asking yourself whether the rope you bought is too long to hang yourself from the bannisters.
The Sunday Times reported on an experiment, in which they asked 29-year-old Charlene Coulbeck to live on the State pension of £159.55 a week, taking into account she would have no mortgage payments and was entitled to OAP discounts at the swimming pool and cinema.
Surprise, surprise, Charlene’s verdict was she couldn’t have sustained that lifestyle for much longer – no new clothes or shoes or visits to friends. She didn’t actually say if she enjoyed the Odeon’s discount Tuesday afternoon screenings for crumblies, or sharing the pool with ladies and gents best advised to don burkinis.
A few days later, Times columnist Jenni Russell recounted harrowing tales about acquaintances approaching retirement who were facing difficulties at best, penury at worst, as a result of unwise divorce settlements, declining earnings and simple mistakes.
In particular, she highlighted the case of a BBC producer who opted out of the Corporation’s lavish pension scheme only to discover, decades later, that the £12,000 per annum he was likely to receive from his private policies, even topped up by the State pension, would severely curtail his more-than-comfortable lifestyle.
Apparently, that £12,000 is a quarter of what he would have received if he had stuck with the BBC scheme.
Loud voices
Meanwhile, other media were trumpeting a litany of alarming warnings, such as….
- An increase in pensioners plundering their savings while wilfully ignoring that the lolly is likely to run out long before they go into “that long, dark night”.
- The ‘triple lock’ on the State pension is not long for this world, meaning that the annual uplift is almost certain to be reined back by a future Chancellor
- One in ten households currently enjoying a middle- or high-income lifestyle, will fall into a low-income retirement.
- One in six pensioners live in poverty.
All of which means that IFAs have a gilt-edged opportunity to help clients avoid this kind of Doomsday scenario. Whether those clients will be willing to tuck away the sort of savings forecast which is needed to give them a decent retirement is, of course, a different matter. And it does mean that there is no time to waste with action needed immediately – if not sooner.
These tales of misery are principally targeted at those who have worked for private sector employers, rather than public sector functionaries who – scandalously – are still enjoying pension plans way out of the reach of those whose taxes help to pay for them.
Did you notice that when EU officials were wagging their fingers at Mrs May before Brexit negotiations had even begun, they insisted the UK’s checkout bill should be put right at the top of the agenda? The ludicrous Jean-Claude Juncker even suggested it could be £60 billion, or higher.
And what would that pay for? Well, a large chunk would be needed to fund EU officials’ pensions. Naturellement!
