Don’t take the state pension for granted

I am a big supporter of taking responsibility and saving for a pension. In addition to the tax-free growth and tax-deferred income, employer contributions mean you are effectively accruing free money as you contribute. With the new flexibilities set to come in next year, private saving should become more attractive.

At a recent family dinner, we got talking about pensions (probably driven by me) and one person told me it was their “right” to get a state pension from the public purse.

This really angered me. Why should the government have to contribute towards your retirement? People moan that we are heading towards a ‘nanny’ state, well personal responsibility will have to eventually mean providing for yourself in retirement and not taking from the state, if you can.

At £155 a week the ‘flat rate’ state pension will equate to around £8,060 a year, which while it won’t give you a Caribbean holiday every year, it will ensure you can pay the heating bill.

It also puts a huge bill - far bigger than working age benefits - on the exchequer. Pensions will cost £114bn this year and the triple-lock guarantees this will rise faster than inflation.

I believe people should take responsibility for their own actions, including their retirement, and make sure they have enough money to get by. Of course, some will simply not be able to and for them absolutely there should be some provision.

For myself, I want £25,000 a year in retirement which means I need a pension pot of around £1.3m. While this may be slightly unattainable, at least I know what my figure is and what I am striving to achieve.

Interestingly, the female members of my family got the most annoyed by my view. In particular, they already feel disenfranchised because several will not get the full state pension as it stands because they have not built up enough contributions.

Those who gave up careers to raise children are often not entitled to the full state pension if they have failed to achieve 30 years in national insurance contributions, if they retired in 2010 or after. From 2016, 35 years will be needed.

This is wrong. It’s not as though our NI contributions are put to one side and ring-fenced: if you need help you get it, otherwise you don’t. State pension for all, but only if you hit an arbitrary number of years’ contributions, belies the ‘fairness’ at the heart of the contributory principle.

As a consequence of raising children, some of these women did not have an income to save for a private pension, so its often a ‘lose, lose’ situation to boot.

While I don’t agree that people should depend on a state pension, nor take one for granted, I do think it’s unfair that women who raised children are sold short.

donia.o’loughlin@ft.com