Whateve else you believe about pensions, believe this

All sorts of people and all sorts of organisations are saying all sorts of things at the moment about the future of pensions and other long-term savings. 

But whatever you’re saying, or doing, or believing, believe this: ordinary people on average incomes saving their own money will never, ever build up retirement savings pots worth bothering about.

I think that at retirement today, the average value of a personal pension pot is a little over £30,000.  Via an annuity, that will produce an income of about £1800 a year.  That’s nothing like enough.

Why are “ordinary” people saving their own money never going to do much better than this?  Partly for what we call “emotional” reasons, like the fact that they don’t trust pensions an inch and, on balance, even though they understand the advantages, can’t live with the idea of locking their precious money away for so long.

But actually, much more to do with rational reasons. Like the fact that average incomes for people in full-time work are now about £25,000 pa.  Like the fact that since the average age for having children is now 28, you’re still helping them with university funding nearly up to the age of 50.  Like the fact that the average age of a first-time mortgage borrower is now 34, so if you’re going to help them with the deposit and/or the repayments you’ll be doing so at around the age of 60.

it’s a funny thing, that while lifetimes have got longer and longer, the Savings Years have got shorter and shorter – to the extent that many people today don’t actually have any Savings Years at all, they just go straight from the Spending Years to the Oh Fuck Is That All We’ve Got Years.

And don’t tell me that the answer is for them to all carry on working till they’re 70, or 75, or whatever.  There aren’t that many jobs at B&Q.  And – bearing in mind the banker, adman and architect chums of mine who’ve been made redundant in their 50s and told there’s no chance of getting another job at the same level until hell freezes over – we should be honest enough to admit it if what we actually mean is that people in their 50s, 60s and 70s, whatever their skills and cvs, should take any demeaning and menial job available to keep body and soul together till they die.  We had that idea once before, and we called it the workhouse.

There may be answers to this living-longer-in-a-spending-culture thing.  But believing that if we can just get the pieces of the organisational puzzle in place, ordinary people will solve it for themselves by making adequate provision for their older age, is the daftest and most fantastical of behaviours.   


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