August 1, 2002
A decade ago the subject of pensions aroused little passion. The young would not consider it and single women, in the main, ignored the prospect. The main pension planners were couples beyond the age of thirty and executives looking for the best working deals.
This may be a generalisation but the public’s lack of detailed interest has now left this country’s pensions industry in a mess.
Some parts of the financial services sector have had such high profile problems that savers are now very wary. The mis-selling scandals in the public sector, the ongoing disaster at Equitable Life and the mess with annuities has undermined the public’s belief in pension savings.
The future is not so sweet as was envisaged before the last election when conventional wisdom had it that the UK was in a markedly superior position than any of its EU neighbours. Not only were UK pensions better funded but over half of the pot of private pensions accumulated by individuals in the EU as a whole had been deposited here.
Today the future does not appear so rosy for Britain and we must all put our energies to getting back that trust.
The more I talk to young constituents the more I hear that they are guided to buy property as the only safe haven for their long term money. If that continues it must lead to disaster for this country in the same way that Japan has suffered for the last decade from its over-investment in residential property.
Recently we have seen company after company tear up their final salary pension commitments for new employees saying it costs too much. By the same token more and more employees have little expectation of a job for life and don’t expect to have a long-term pensionable commitment from their employers. In 30 years time the question must be how this country can support the ever longer living population when so few have made proper provision towards their retirement save for the state pension.
As with all financial matters it will be the vulnerable and those with the lowest income levels in society who will suffer most even if the middle-income savers will be the ones most disappointed with the returns they achieve from their lifetime savings. Today there is much debate about making pensions compulsory. However, only if the pensions industry is made safer and people regard it as worthy of their trust can we properly contemplate any move to forcing people to save.
If the law effectively forces us all to hand over an unspent surplus of our hard-earned cash to those who are either unqualified or less than competent then there is little incentive for anyone to save for their future. It is up to us politicians to make sure these savings stay safe and that no one who has acted responsibility in savings matters is left impoverished by the failure of public trust that surrounds the financial services sector.
I would be very pleased to hear from anybody who has either personal or professional comments to make on this matter so please write to me:
Mark Field MP, House of Commons, London SW1A 0AA.