Two-thirds of employer pension schemes have closed their doors to new members, while a tenth have stopped new accruals. Younger people, in their 20s and 30s, are making no Advertisement
provision for retirement. At that age you feel immortal and money goes on priorities that seem far greater.
Yet there is one chunk of the population snug in its pensions' cocoon: the public sector. Be they civil servants, local authority staff or soldiers, lavish resources clock in once they reach 60 or 65. They have gold-plated, tax-funded, index-linked security as the rest of us float off free and confused. It is a curious paradox that a government wanting to unite us in benevolence should create two castes: the well-pensioned and the non-pensioned.
All sorts of questions need to be asked. Not many have obvious answers. Are we seeing the complete dissolution of private sector company pensions? Will non-civil servants have to save for themselves in personal isolation? Is this not contrary to human nature? Will real penury not engulf those who live longer than anticipated?
A huge degree of risk is being imposed on those not outside the public sector. I can find no indication of coherent thinking about this from any branch of the government. The only contribution has been to tax private pension funds to make annuities even more difficult for those retiring in future. The rules for taking annuities themselves seemed locked in a past when most had expired by 70.
Pensions can represent a subtle form of serfdom. We all know friends or neighbours who have lingered in jobs they hate to maximise their pension fund. This used to be true of corporate pension schemes too, but as they close down the phenomenon of people lingering in roles they loath is becoming a distinctly public-sector feature.
Apart from marriages and mortgages, pensions are the longest-term contracts we enter into, yet it is far from easy to be responsible let alone comprehending. The nature of compound interest is such that we ought to save most early in our careers. Yet these are the years we have children and their related costs and our home loans loom large.
Those locked outside the luxury of civil service pensions suddenly panic in their 50s and try to build pots of capital to keep warm when working ceases.
There is the state pension, but that offers only a modest cushion. Britain is singular in the shrivelled nature of its state pension compared to the other European Union nations.This is probably to our advantage as continental nations face huge rises in taxes to fund the retired. Yet what are those with little or no savings to do?
Edinburgh has a huge concentration of fund managers. I rarely understand what they say as I don't speak algebra. Everyone in the pensions business seems to have an alien patois of technical gobbledegook. What I can see is that after a sustained bull market in equities since 1980, most private pension funds are part of the aggregate deficit of £100 billions. For all their expertise, they believed far too much in shares. Members retiring now have more modest resources than they were led to believe.
The parable that illustrates the flaws in the pension craft is the near evaporation of Equitable Life - taking down all those professionals who thought they were wise and secure to save with this once illustrious mutual fund. Equitable Life was tripped up by two hazards it might have foreseen: interest rates staying low as inflation stayed low and lawyers capable of creating a catastrophe out of a minor headache.
The defined benefit company pension scheme only ever made sense if you worked throughout most of your career for one employer. That applied to many 30 years ago. Now only the most inert and less venturesome will expect to stay with a single company. Even they are not safe. Such is the flux of the market that your employer can be gobbled up or cease to trade.
The assumption that o