Like many, I am filled with trepidation when I think about my retirement. The decisions most under the age of 50 must take in planning for when we stop working go to the root of how we view life: balancing being in the moment, with forgoing current pleasures, with the need to save for an increasingly uncertain old age. We live in an era where we may be struck down by cancer in our 50s or 60s or go on to live well into our late 80s and 90s. How can you strategise for that?
I am long past believing the state will look after me well in old age, despite the quantities of tax we hand over from our pay packets. Miserable underfunded hospitals and care homes beckon.
Unless you are earning big sums or gain an inheritance from your boomer parents, the amount you personally need to put aside, while struggling with childcare and paying your mortgage, and saving for your home, feels unattainable. Younger generations will bear the increasing burden of the wealth-grabbing baby boomers, even as they enjoy holidays, pensions and healthcare we will essentially pay for.
Growth has stunted for the first time in generations and the generous pensions, including the final salary schemes your parents and grandparents likely enjoyed, are all but over. Private-sector contributions have gone from an average of 21 per cent to eight per cent. Meanwhile, huge numbers among younger generations have shifted to freelance work.
The outcome is that nine in 10 workers are saving less than needed for retirement, the Institute of Fiscal Studies warned yesterday, with middle earners the worst affected. And pensions have “collapsed” among the self-employed. Only 17 per cent are saving for a pension, down from 46 per cent in 1998. Our pensions are shrinking while we, like no other generation before us, must pay in taxes for the ageing boomers above us.
Not so long ago pensioners were the poorest in society. Not so now. The over-55s form the wealthiest cohort (and yes, they also voted overwhelmingly for Brexit). But the retired still get bus passes, Tube travel and prescriptions, whatever their assets or pension pots. Those in their 60s have greater assets than most and economic power has moved in their favour. Many are sitting tight in large houses, and without enough new homes being built property prices continue to rise for those starting on the property ladder. The proportion of second homes has increased. And guess who owns those?
On top of that, despite our private pensions being worth around £2.5 trillion, they are not being invested for economic growth in productive investments as those are often riskier.
Then there is the triple lock on pensions. Current inflation has vastly boosted contributions, while real wages for current workers have fallen. And to add insult to injury, Chancellor Jeremy Hunt delivered a huge pensions giveaway in his last Budget to the wealthiest one per cent.
So what’s to be done? Automatic enrolment has brought millions into workplace pensions but at eight per cent, when we realistically need to be saving 10-15 per cent. For those who reach retirement age and are paying rent, the figure will be higher.
Employers need to be helped to increase contributions without further burden being added to small and middle-sized businesses that are already struggling to survive. There needs to be far better tax incentives for the self-employed and SME owners to save.
Rishi Sunak is apparently looking at loosening the rules so that pension funds can be more productively invested for growth in our economy. But the Government needs to further reduce pressure on the young via house prices and childcare, so they have more disposable income to save into a pension. That means building more houses. And more schemes like the Lifetime ISA, available for 18–39-year-olds saving for a first home, with the Government topping up your contributions by up to £1,000 per year. Why not introduce this for pensions for the self-employed as an incentive?
There should also be more tax breaks for mothers to go back to work, given childcare costs. Equally, if they stay at home to care for children, their working tax allowance could go to their partner, or be paid directly into a private pension.
Further action is urgently needed. Old age should be welcomed, not feared.
CBI stories could be terminal
thankfully sexual harassment in the workplace is on the wane. But it’s certainly not vanquished. In my 20s I was told by a more senior colleague that they knew I had only been hired because the boss wanted to ‘f**k me’ (not true, to be clear). You won’t get that in offices now. But you might if you have been working at the CBI these past years.
We learnt last night that members of the business lobby group have been warned to expect far more serious allegations. Even with a new female director in place, it is hard to see how the CBI can survive this crisis, especially with “potentially criminal matters” now with the police.
When you speak on behalf of 190,000 businesses and a scandal this shocking emerges, including an allegation of rape, what self-respecting business will keep paying its membership? Other lobby groups must step in. Big business needs a trusted voice.
Tom Parker Bowles right about Camilla
Tom Parker Bowles has defended his mother, the Queen Consort, against Prince Harry’s claim that she had played a ‘long game’ with a ‘campaign aimed at marriage’, saying she married the King purely for love. Let’s be clear, she has far more sense than to have wanted to marry into the royal family for anything other than love. She didn’t need the money, nor wanted the ghastly attention.
What is often forgotten in all the current and past dramas is that it was the elders of the royal family who made clear their disapproval of Charles and Camilla being together when they were young. It was in their power to let him marry the woman he loved.
