Let me start by laying it bare.
I have worked for 25 years in the DC pensions industry and apart from flipping burgers and pulling pints at college it is the only job/industry I know. To those that know me, I am passionate, probably a bit mad and often a little left field. I am not blessed with a computer for a brain but have been lucky to work with many that do. I am at best a strategy man - believing in fairness for everyone at my core.
So you can imagine that being told by someone a few days ago, that I'd lost my passion for DC, came as rather a shock. It hit me hard, and I realised that I was so affected because, at the heart of it - I knew it to be true.
During those 25 hard-working years I've tried to do my utmost to improve DC, but in looking at the bigger picture, I seem to have achieved very little. Now we sit at yet another crossroads in pensions, and between the politics and the industry I fear who cares for the saver.
"Stop the tinkering and realise that long term stability is key"
I don't have many answers, and the questions are starting to wear me down. I don't know what the outcome of the Green Paper on strengthening the incentive to save will be but I doubt it will herald the birth of a new savings nation. Things really just ain't that simple.
In the struggle to cure austerity, taking a 'pension pill' seems a very easy medicine to take. Can you blame the Government for that? Would you advise a person in debt to save for the future? Are tax incentives the driver for normal people to save? If you look at the evidence in the numerous surveys out there - maybe . . . or maybe not. I hope that if a change is to be made we look to a fairer and more sustainable spread of tax relief - not because it will incentivise more saving, but just because it seems sensible.
Having said that, and before the Government goes throwing the baby out with the bath water, tax relief is important to the employer. In fact keeping the employer onside with pensions is an absolute imperative. The vast majority of pension contributions in the UK come directly from them. The key lesson I learned from my experience in Australia, brief as it was, is that an unengaged employer is very bad news.
I may also not weep openly that decision makers with pots above £1mn are excluded from participating in pensions, but I am realistic that they may not therefore value their provision above what is required by law. Surely a sensible Annual Allowance will keep engagement, and the withdrawal of Lifetime Allowance will create a more simplistic model.
I am not a big fan of scaring todays youth into saving vast amounts of their hard-earned money into a pension scheme when we are living longer and healthier lives. Get in, and stay in if you can afford it, would seem to be the best approach here. Think about how much your retirement may cost after you have lived a little/shored up medium term needs or cleared debt. Realise that the utopia of retiring at 60/65 is a façade and that pension income was never suppose to last 25 years plus. Accept you will work longer (though not necessarily full time) and free yourself from the yoke.
Employers - educate your employees. Government - incentivise employers to do so. Stop the tinkering and realise that long term stability is key. If I am fed up with change and it's my job - can you imagine how a widget maker feels . . ?
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