It’s amazing how anything gets done in the pensions industry over the combined noise of final nails being hammered into coffins, perfect storms brewing overhead and the agonising yelps which presumably occur when one grasps the nettle.
I accept that much of the responsibility for the use of idioms like these must fall at the door of journalists, but it’s not just headline writers to blame: many such phrases are commonly used by people who really should know better.
The funny thing is these idioms are so overused that they have become a lazy shorthand and are often wheeled out to cover news which at best could be described as a storm in a teacup (sorry, it’s a hard habit to break). Just this week a pensions story had me sighing in despair as a commentator described some recent figures as a good indication of a “perfect storm”. How anyone can translate figures from the Office of National Statistics into something as dramatic and awe-inspiring as a perfect storm – whatever one of those actually looks like – is usually beyond me. But the more I read, the more I began to think it was time to batten down the hatches.
The figures in question show that fewer people are saving into a company pension plan than at any point for the past 60 years, with the number of people in an occupational pension scheme plunging to 8.2 million or 35%.
Given the terminal decline in final salary pension funds, this isn’t so surprising, but seeing the figures in black and white is nevertheless alarming.
However, here comes Scottish Widows’ Robert Cochran, to add another storm head to the mix. “Not only is the number of people in workplace pension schemes at its lowest level in 60 years, but recent research from Scottish Widows found that expectations for income in retirement are still increasing,” says Cochran.
“To meet these aspirations, a 30 year old saver would need to save £12,000 a year, or £1,000 per month every year until retirement.”
As someone comfortably over 30 and uncomfortably saving a good deal less than £1000 a month, this is a worry for me and many others. An earlier set of ONS figures revealed a man reaching retirement age today would have to have saved £152,000 in his pension in order to by an annuity paying out a grand total of £5000 a year.
The news for anyone who missed out on a final salary pension seems to be unremittingly bleak. Initiatives such as auto-enrolment will help, but by how much is hard to tell. Let’s just say with all those perfect storms on the horizon, I’m not planning my retirement cruise just yet.
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