The Chancellor recently announced that the increase in State Pension Age needs to be accelerated. This
throws up some huge challenges for society.
Individuals must plan
We’re
all going to be working longer and the temptation to allow the powerful forces
of both procrastination and lack of foresight to do their worst and put off
saving for the future is a strong one.
If
individuals want to cease working sooner then pension planning actually becomes
more relevant, rather than less so, when providing that replacement income. Individuals must decouple the rising State
Pension age with the time to cease working completely.
Pensions must adapt...
Government
policy and the financial services industry must do a number of things now to
stem this:
- Financial education in the schools to actively espouse the benefits of long-term savings in to a pension scheme.
- The Government needs to re-open the debate on early access.
- Pensions may have to end and become something else so they can be accessed for other socially helpful purposes such as health care provision. Or defer your tax-free cash as an invested lump sum to help. Or why not let a pension scheme run a retirement home for its pensioners. Part of the pension can be an income and another proportion of the pension could be accommodation and health care.
Savers
need to be encouraged to save and understand that it’s their responsibility to
provide for themselves in their dotage.
Employers - the front line
Employers
are going to be at the front line of this problem. I am all for removing
restrictions and allowing individuals more flexibility in their lives. However,
there is a risk that employees will not be able to afford to retire. Succession planning will falter, younger
employees will be held back as older colleagues remain in the workforce and
businesses will under-perform and potentially fail.
David Brooks
Pensions Consultant
Pensions Consultant
Telephone: +44 (0)20 7893 3456
Email: contactus@broadstoneltd.co.uk
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