Pensions in purgatory

By TONY HAZELL FOR THE DAILY MAIL
Updated:

 

AS OUR greedy, self-centred MPs decide to prop up their pensions with a further £1.2m of our money, the latest report from the Pensions Commission warns that the rest of us face an impoverished retirement unless we save more or work longer.

The signs are not good. The report says that 56% of the private sector workforce has no private pension provision and fewer private sector employers are providing pensions. This compares with 44% in 1996, before Labour came to power and Gordon Brown instigated his £5bn-a-year tax raid on pensions. No wonder Commission chairman Adair Turner concludes that 'the existing voluntary system of private pension provision combined with the existing state system is not fit for purpose'.

So what are we offered in its place? A higher state pension makes sense and linking it to a later retirement age seems inevitable. But the higher taxes or National Insurance that could result may be hard to stomach both for voters and politicians. Meanwhile, the proposed National Pensions Savings Scheme is years away.

Expect to see much tedious squabbling between industry self-interest groups, under-informed politicians and penny-pinching Chancellors before anything substantial sees the light of day.

And despite Lord Turner's assertions, there is still a real chance that this report and its conclusions could be heading for the long grass as politicians prove reluctant to tackle it head on.

So for now we must be satisfied with A-Day, which, from tomorrow, will give many of us more flexibility in how we save towards our retirement. The problem is that there are no new incentives to save, and without those it's likely that only high earners will take advantage of their potentially bigger tax breaks while the great unsaved will continue to ignore the pensions crisis.

And unlike our politicians, they cannot simply vote themselves more taxpayers' money when their pension pot starts to diminish.

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ONE aspect of the child trust fund that has always bothered me is that, once they turn 18, youngsters can spend the money on whatever they wish. It seems at worst to be an invitation to load the roads with teenage joy-riders whizzing around in uninsured cars and at best a profits opportunity for Pizza Hut which can clean up on all-you-can eat 18th birthday dinners.

Given this, parents Sue Jepson and Narinder Dhillon, seem to be taking a very sensible attitude. While they've chosen the widely recommended Family Investments fund, they won't be adding further top-ups. As they point out, if they add the full £1,200 top-up each year, it could be worth £30,000 and that is a lot of money for an 18-year-old. So they're putting money away separately instead for their son's education. Other parents should take note.

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THREE points on your licence, a £60 fine and your insurance premiums rise by up to 20%. Next time you're caught doing just over 70 mph on an empty motorway, take comfort in the fact that you're clearly benefiting the economy.

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