Pensions continue to be in the spotlight, with pensioner poverty and ill-judged decisions being the foundations of much talk and planning.
Personally, I doubt whether anything other than a mandatory contribution system will be able to prevent (or at least, reduce) pensioner poverty. No matter how much you make pensions ‘attractive’ there will always be a significant minority – perhaps even a majority – who will not see the long-term necessity of making such provision.
If my pension is not going to be enough, then the state expects me to make private provision – which I may choose not to do, or may be unable to. So, I can either be forced to do it, through the national insurance – or perhaps the income tax – system, or asked to do it. Will I be prepared to make pension savings if I am having to manage on a limited budget? If pension provision becomes more and more voluntary, then more and more people are going to make poor decisions.
It surely should not matter whether my contribution goes to the state, or to another provider, as long as I get my pension in the end. So let me say the politically unthinkable: an enforced contribution through the tax or NI system is the only sure way that pensioner poverty can be controlled, and it is the only way the pension benefits system for those with insufficient retirement income can be moderated and reduced. All right, so taxes rise, presumably in line with what I should otherwise have been expected to put into a personal pension plan, but this should not affect my disposable income one bit. Is this the nanny state, you may say? Are seatbelts, crash helmets, mandatory airplane servicing, food hygiene inspectors, and the financial services compensation scheme the nanny state?
David Carter
Chartered financial planner,
Jigsaw Financial Solutions,
Tiverton, Devon
