Springsteen may have said that “you’ve got to live it every day” but Richard Harvey has been thinking about those whose daily lives are not so fortunate
Addressing anyone in the vicinity who was inclined to listen, the man with the illustrated arms, strange earring and downing lager recently in my local pub loudly opined: “The world’s gorn mad. Stark, raving mad”. Normally, this geezer has rancid views about life in general – things like all immigration is bad or that we should tell the EU where to stuff their backstop – but on this rare occasion it was difficult not to cede that he had a point.
Race Against Time
He’d just read (God knows where, because his usual intake is the greyhound racing column in the Daily Star) that while Britain is the fifth largest economy in the world, we had, according to the latest report from the Joseph Rowntree Trust, breathtaking levels of poverty across the nation.
Now I’m no bleeding heart liberal, as the Americans so charmingly put it, but it is difficult to walk the streets of London without seeing clear evidence of begging and rough sleeping. The last time I did this was en route to a splashy Christmas lunch at The Dorchester, which compounded my swiftly-growing sense of guilt.
Destitution is, of course, relative. The Joseph Rowntree report stated that poverty now affects increasing numbers of people with jobs – allegedly more than half a million workers have fallen into poverty in the last five years. To those begging on the streets of the West End, they would nevertheless seem comfortably well off.
Because it doesn’t matter where you are on the income scale, we all fear a sudden fall in living standards, which is particularly acute among those coming up to retirement.
Because it doesn’t matter where you are on the income scale, we all fear a sudden fall in living standards, which is particularly acute among those coming up to retirement
Risk And Reward
As advisers will no doubt know, it was only in 2004 that the Pension Protection Fund (PPF) was set up, saving many people from a miserable old age in instances where their private sector pension schemes collapsed.
Although retirees whose pension schemes have fallen into the merciful embrace of the PPF will at least see 90 percent of their benefits preserved, it is annoying to see some commentators still describing defined benefit or final-salary schemes as “risk free”. They’re not, as confirmed by one St James’s Place adviser who I sat next to at the Dorchester lunch.
But what about the freelancers and the self-employed who place their faith in an IFA to help them to plan ahead and build their savings, or – and I’ve come across one or two – who manage their own savings? What’s the protection for them?
Because it’s not looking good out there, is it? Sliding share prices, worries about the health of the global economy, business investment curtailed because of Brexit, the destruction of High Street retail property values all threaten the savings of everyone with a pension plan, but particularly those who do not have an employer-provided scheme.
Of course if the retirement fund of a freelancer taking advice from an IFA is damaged by an inappropriately risky punt, one would hope that the overall portfolio is sufficiently well diversified so that losses on one holding are made up by gains elsewhere. In serious instances where such diversification is sadly lacking, and the adviser didn’t quite deliver an appropriate solution to meet the client’s original needs, they can always complain – a journey
Although retirees whose pension schemes have fallen into the merciful embrace of the PPF will at least see 90 percent of their benefits preserved, it is annoying to see some commentators still describing defined benefit or final-salary schemes as “risk free”.
which might even end up with the Financial Services Compensation Authority (FSCS). The FSCS paid out £372 million last year. As IFA Magazine readers will probably know, they also take a long time to decide whether or not to uphold a claim. It’s not perfect by any means.
Even those in the public sector will be looking nervously over their shoulder because it surely cannot be too long before government has to bring their own employees’ pension benefits more in line with those paid to the rest of the population, simply in the interests of “fairness” (a word much beloved of politicians).
Perhaps the money saved by reducing public sector pensions – plus Gordon Brown’s notorious tax raid on pension scheme dividends – might be channelled into ensuring that those living on our streets are given at least some basic protection and income. Or is that too “bleeding heart”?