ISAs  

Private schools, pensions and acronyms

Charlotte Beugge

Charlotte Beugge

Warning: do not approach any parent of a 10 or 11-year-old today and expect to escape with your eardrums intact. You may not realise it, but March 1 is a big day if you have got a child in the final year of primary school.

It is when you find out what school your child will be going to for their secondary education. Cue much gnashing of teeth, tears and – for the lucky ones – victorious punching of the air. I am in possession of a Year 6 child.

Every conversation I have had with mothers and fathers of my son’s classmates recently has been about where their kids will be educated from September. My son currently goes to a private primary school. The fees for private secondary schools are much higher than for primary education.

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For the one my son might go to, they come in at more than £15,000 a year. Places at the local state secondary school – which is good enough for the local estate agents to highlight if properties are in its catchment area – are hotly contested. We have applied, but might not get a place.

Anyway, at the moment, I am stuck between choosing the good (but enormous) state school or the good (but costly) private school. My son wants to stay with his friends who are going to the private school. He might get a scholarship (we find that out this week too: more pressure), which would reduce the fees.

Even so, the thought of seven years of private education eroding my savings (inherited from my late mother) is terrifying. I cannot do anything more adventurous with the money than leave it on deposit earning less than inflation – because if I lose money, I cannot then pay the fees.

Of course, leaving the cash on deposit means I am losing money. School fees rise by more than inflation – last year, by 3.5 per cent according to the Independent Schools Council. That is five times what I am getting on my savings.

How do other parents manage? My research completed in the playground suggests a few sources for the money: the bank of grandma and grandad; inheritance; long working hours (including husbands sleeping on friends' sofas in London during the week to benefit from the capital’s higher wages) and, for some, remortgaging and relying on the overdraft while praying that their sprog will one day have a good enough job to keep them in their impoverished old age.

 

Tarnished pensions

Have pensions ever been out of the news this century? These days, employees strike about pensions rather than salaries. Company takeovers are derailed by holes in pension schemes. High street names vanish thanks to their pension pledges. Defined contribution schemes perform badly. Annuities seem consigned to history.

Now the gold standard of pensions, the defined benefit scheme, starts to look tarnished. A government Green Paper out last month proposed that the 11m Britons in defined benefit schemes might get less than they hoped in retirement if businesses were allowed to increase pension payments by CPI rather than RPI.