Julian Knight: Pension compromise simply postpones the inevitable pain
Sunday 05 February 2012
Related articles
The Institute of Fiscal Studies was busy last week. First, the IFS calculated that the Government's public-sector pension reforms will not save the Exchequer any money.
The problem is that so much ground has been given to the unions, and more pertinently the Lib Dem part of the coalition, that there will be no cost saving. It's depressing that we have been through strikes and a year or so of mud-slinging to reach such a situation.
It means, of course, like the Labour government's agreement with the unions, that we will have to go through it all again in the near future because the sums do not add up. It's as I feared when the details came out about the compromise being proposed by the Government. It's gone too far. The argument for me isn't about who has the better pension, public or private, it's that the private sector is taking on the investment risk for those in the public sector. And, according to the IFS, that will still be the case despite the reforms.
The IFS's other area of activity last week was its recommendation for the upcoming Budget.
It put the case for a tax cut to ease the economic situation. Now with the UK's budget deficit worse than Greece's you'd think that this was a mad time to cut taxes, we need every penny we can get.
However, the crisis in the eurozone is dragging our economy down, and although it would be a massive error for the Government to go back on its public-sector spending cuts – this is necessary to rebalance the economy back to more productive private enterprise as well as keeping the international markets on side – putting some money in people's pockets right now could be just the tonic needed to see the economy out of this dip. A few billion given back in the Budget could mean much more gathered through the tax-take from greater economic activity.
It would help consumers who are being squeezed by higher prices and poor wage settlements and lift the mood a little. Confidence is key to avoiding a dip turning into a full-blown recession. There is a small amount of wiggle room: the markets will understand as long as the programme of public-sector spending cuts is restated and the IFS is right to suggest the Chancellor takes this opportunity.
Future penury
So much for enjoying your golden years. Pension provider Friends Life has produced a report on the future home of the pensioner. And instead of relaxing in an armchair to a bit of Countdown and a sweet sherry in the afternoon, we face having to manage a host of cottage industries to fend off abject poverty.
Pensioner homes will be part-time work places with silver surfers flogging their prized possessions on eBay, tutoring or even managing a crèche. Our later life could be more manic than our working one, according to Friends Life, unless we save sufficient amounts in, guess what? A pension.
One way though that pension providers could save us from old age penury and toddler lassooing is by lowering their charges. Last week, a study showed that someone paying £200 a month into a pension over 25 years could expect to pay £20,000 extra in charges between the highest and lowest charging pension plans.
True and Fair
On the subject of charges, the True and Fair campaign was launched by husband and wife team Alan and Gina Miller last week. Both are names in the City and, with the backing of consumer groups and a smattering of MPs, the dynamic duo would like to see a clearer explanation of fund charges given to investors.
At present we have a plethora of small charges loaded on investment funds with no easy way to tell which funds are cheap and which expensive. In fact, all too often the huge number of poor performing funds are able to get away with charging the same as the best performers.
Now putting aside the subject of what passes for pillow talk in the Miller household, we are long overdue real transparency in this sector and I hope there will be some real momentum behind them. Last week a couple of managers cut charges on some products. But the fear is that those paying lip service to more transparency will return to the old ways as soon as the fuss dies down. It is, after all, easy money.
- 1 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 2 Swedes set up 'ultimate Viking movie'
- 3 After woman sells virginity for $780,000, here are the results of our prostitution survey
- 4 Far-right French historian, 78-year-old Dominique Venner, commits suicide in Notre Dame in protest against gay marriage
- 5 'It was just like the movie Twister': Man survives Oklahoma tornado by taking refuge in horse stall
Get your summer started with British Military Fitness
BMF is the UK’s biggest and best loved outdoor fitness classes
Visit York
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Enter the latest Independent competitions
Win anything from gadgets to five-star holidays on our competitions and offers page.
Business videos from commercial thought leaders
Watch the best in the business world give their insights into the world of business.
iJobs Money & Business
Programme Change Manager
£850 - £1000 per day: Orgtel: Programme Change Manager - Banking - London - £8...
Operations Analyst
£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...
Finance Business Analyst - Banking - £500pd
£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...
Senior Finance Project Manager
£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...
Day In a Page
Tetbury, Gloucestershire
Stoke Newington, N16
Wapping, E1W
Norwich, Norfolk, NR12
Bassett Road, North Kensington, W10
South Gloucestershire, GL12,
Greenwich, SE10
Maida Vale, W9
Waltham Abbey, Essex EN9
Clapham, SW4
Torquay, Devon TQ1
Canonbury, N1
Canterbury, CT1
Haywards Heath, RH16
Wandsworth, SW8
Peckham, SE15
Southend-on-Sea, SS1
Battersea, SW11
Woodbridge, Suffolk IP13
Stratford, E15
Keswick, Norwich NR4
Stamford Brook, London W12
Claverton Down, Bath BA2
Gasthorpe, IP22
Battersea, SW11
Brockley, SE4
Cambridge, CB1
Oxford, OX4
Near Tatworth, Somerset TA20
Hoxton Wharf, London N1
Axminster, Devon
Shepherds Bush, W12
Chingford, E4
Tonbridge, Kent, TN10
Fulham, SW6
Sydenham, SE20
Acton, London W3
Aylesbury, Bucks HP19
Hackney, London E8
Wimbledon, SW19
Chiswick Park, London W4
St Erth Praze, Cornwall TR27
Queen's Park, London NW6
Norton Sub Hamdon, Somerset TA14
Ladbroke, NW10
Bethnal Green, London E2
Norwich Road, Ipswich, IP1
Battersea, SW11
Lower Ufford, Suffolk IP13
Whitechapel, E1
Tetbury, Gloucestershire
A four-bedroom house with stone-walled gardens. £438,000
Stoke Newington, N16
A modern home of almost 1,000sq ft is close to Stoke Newington's high street. £499,950
Wapping, E1W
One-bedroom flat close to the City and St Katharine’s Dock. £314,995
Norwich, Norfolk, NR12
A five-bedroom bungalow in Hoveton with riverside garden and mooring dock, £550,000
Bassett Road, North Kensington, W10
A refurbished one-bedroom flat with south-facing reception and high ceilings. £579,950
South Gloucestershire, GL12,
Four-bedroom detached period cottage in Wotton-Under-Edge. £625,000
Greenwich, SE10
A four-bedroom three-storey Victorian home with a south facing garden. £849,950
Maida Vale, W9
A two-bedroom ground-floor apartment which opens onto attractive gardens. £375,000
Waltham Abbey, Essex EN9
A four-bedroom Grade II-listed house in Nazeing with large gardens. £550,000
Clapham, SW4
A three-bedroom flat within a quiet communal courtyard in Clapham Old Town. £665,000
Torquay, Devon TQ1
A five-bedroom home plus a separate flat above Torquay Harbour. £640,000
Canonbury, N1
A new-build two-bedroom house with a roof terrace in a gated mews. £550,000
Canterbury, CT1
Three-bedroom house with a private garden and conservatory. £355,000
Haywards Heath, RH16
A new two-bedroom flat located in central Haywards Heath. £200,000
Wandsworth, SW8
Three-bedroom early-Victorian terraced house. £635,000
Peckham, SE15
A modern four-bedroom house in a converted stable within walking distance to Peckham Rye. £695,000
Southend-on-Sea, SS1
Four-bedroom semi-detached house within walking distance of the sea. £299,995
Battersea, SW11
Three-bedroom house in a quiet residential area within close distance to Battersea Park. £450,000
Woodbridge, Suffolk IP13
A four-bedroom Georgian gatehouse with a self-contained annexe. £525,000.
Stratford, E15
A one-bedroom flat close to Stratford station and Westfield. £250,000.
Keswick, Norwich NR4
A three-bedroom semi-detached cottage in the village of Keswick. £335,000.
Stamford Brook, London W12
A four-bedroom house with a decked garden and a roof terrace. £775,000.
Claverton Down, Bath BA2
A contemporary four-bedroom house close to Bath University. £760,000.
Gasthorpe, IP22
A three-bedroom cottage within commuting distance of London, Norwich and Cambridge. £250,000
Battersea, SW11
Two-bedroom flat close to Battersea Park. £415,000
Brockley, SE4
A three-bedroom flat with two reception rooms and a private garden. £359,950
Cambridge, CB1
A new one-bedroom flat in the city centre of Cambridge. £270,000.
Oxford, OX4
A two-bedroom terrace house with a garden near Radley station. £192,500.
Near Tatworth, Somerset TA20
A two-bedroom cottage with a sun room and gardens in South Chard. £350,000.
Hoxton Wharf, London N1
A two-bedroom fifth-floor flat overlooking Regent's Canal. £470,000
Axminster, Devon
A three-bedroom Devon Longhouse overlooking the Blackdown Hills. £475,000.
Shepherds Bush, W12
A three-bedroom semi-detached house with a roof terrace and garage. £750,000
Chingford, E4
A brand new four-bedroom house with a family-sized rear garden. £375,000
Tonbridge, Kent, TN10
A three-bedroom semi-detached house with original features including fireplaces and wooden flooring. £399,950
Fulham, SW6
A modern two-bedroom flat split across two floors and close to several public transport links. £595,000
Sydenham, SE20
A three-bedroom terraced home with modern interiors and a rear garden. £399,950
Acton, London W3
A split-level flat with three bedrooms close to North Acton Tube station. £375,000
Aylesbury, Bucks HP19
A lakeside one-bedroom flat in Whinchat with stunning views. £125,000.
Hackney, London E8
A one-bedroom flat with an open-plan reception/kitchen and private balcony. £315,000.
Wimbledon, SW19
A three-bedroom mid-terraced home with a rear garden. £700,000
Chiswick Park, London W4
A bright two-bedroom garden flat between South Acton and Chiswick Park. £499,950.
St Erth Praze, Cornwall TR27
A listed four-bedroom farmhouse with stables, set in four acres. £500,000.
Queen's Park, London NW6
A three-storey family home with four bedrooms and an extended kitchen/diner. £995,000.
Norton Sub Hamdon, Somerset TA14
A three-bedroom Hamstone cottage in the rolling Somerset countryside. £430,000.
Ladbroke, NW10
Two-bedroom garden flat located between Ladbroke Grove and Queen’s Park. £495,000
Bethnal Green, London E2
A one-bedroom flat with a separate kitchen/diner and balcony. £285,000.
Norwich Road, Ipswich, IP1
An Edwardian house with four bedrooms and a large rear garden. £299,950.
Battersea, SW11
A luxury one-bedroom apartment on the first floor of a converted Victorian house. £425,000.
Lower Ufford, Suffolk IP13
A bright and spacious three-bedroom house near Woodbridge. £585,000.
Whitechapel, E1
A three-bedroom luxury flat, minutes from Brick Lane. £650,000.
How to say ‘I’m a sellout’
Why clubs are keen to take a stand





Comments