I trust you are still wearing your natty blue ‘Pension Awareness Day’ wristband (10 for £10 via pensionawarenessday.com) from last week. After all, we are all ‘in it’ together as advisers, industry practitioners and financial journalists – that is, promoting the virtues of long-term savings.
Looking at mine that still adorns my left wrist, I would say it is quite a financial fashion statement. Cooler than a NatWest Piggy money box or a Metro Bank ballpoint pen (both of which I proudly possess). “What concert have you just been to Dad?” asked my youngest son, James, when he saw me wearing it last week on my way via train to watch West Bromwich Albion play West Ham United in the bloated Premiership. He said it in an incredulous tone that indicated he could not believe his father was still attending concerts at such a ripe old age (the cheek of it).
I did not dare admit it was a pension wristband – he already thinks I am an unsaveable financial geek without coming clean that I also wear financial jewellery. “Watchet Live Music Festival,” I mumbled. “UB40, Real Thing, The Wurzels.” That line-up soon shut him up.
Pension Awareness Day was last Thursday, although it was preceded and followed by a full week of pension awakening. Central to it all was a pensions battle bus that pitched up in six cities to spread the pension gospel – Edinburgh, Birmingham, Leeds, Liverpool, Bristol and Brighton (yes Brighton is a city) were the lucky venues.
On board the bus were representatives from that august organisation called Pension Wise, gushing out reams of pensions guidance to anyone who cared to listen. Free as well.
One shouldn’t knock it. There has been a Pension Awareness Day every September 15 since 2014 so hats off to the organisers, insurer Scottish Widows and communications agency Pension Geeks! Long may it continue.
After all, any initiative that helps people understand a little better the increasingly complicated world of pensions should be applauded, although it is a bit sad that we have had to resort to battle buses, Pension Wise counsellors and wristbands to spread the message.
All the current signals, from recent surveys carried out by financial institutions, certainly suggest that pension savings is now at a crisis point.Although auto-enrolment has widened the savings net, introducing 6m workers to pensions, it has not deepened it, with only 12 per cent of the UK population on financial track for the kind of retirement they want (source: Aegon UK). Pension experts agree that to be ‘on track’, savers should be putting 12 per cent of their salary into a pension from as early an age as possible.
Furthermore, concerns over the economy as we splutter towards Brexit is threatening to dent the pension savings habit even more.
Analysis from Willis Towers Watson and Scottish Widows suggests as much. Actuaries at Willis Towers talk about a ‘pension road block’, with many savers currently put off by a mix of economic uncertainty, conflicting financial priorities and too much pension choice. Nearly half of UK employees, it says, are suffering a crisis of confidence over saving for retirement.
Scottish Widows, meanwhile, says two thirds of savers will not increase their pension contributions next year because they are fearful about the health of the economy and the state of their own personal finances. Post the Brexit vote, only one in five savers are hopeful about their retirement prospects, compared with one in three before the referendum.
Given this pension road block, this pension fragility, it is essential that Chancellor Philip Hammond does not upset the pension applecart any further when he issues his debut Autumn statement on November 23.
No doubt, as ‘A Day’ fast approaches, rumours will abound that pensions are for the cut again. Maybe a further reduction in the lifetime savings allowance from its current level of £1m. Maybe a cut in the £40,000 annual contribution allowance for more than just additional rate taxpayers.
But I trust Mr Hammond will leave well alone. Although another stripping back of pension tax breaks would represent easy pickings for a financially pressed Chancellor, he should find savings elsewhere (the overseas aid budget for example).
Pensions have been plundered too often in recent years. It is time for some respite.
Fine, Mr Hammond, go ahead with the Lifetime Individual Savings Account, although some reputable institutions, such as Nationwide Building Society, have already said they want nothing to do with it. And fine, maybe confirm that at some stage the tax relief available on pension contributions will be overhauled so it is fairer for basic rate taxpayers. But on November 23, it would be lovely for once if a Chancellor stood up and said nothing on pensions whatsoever.
Until then, I will wear my Pension Awareness Day wristband with pride.
Jeff Prestridge is personal finance editor of the Mail on Sunday
