Bracing for the shock of the old
John Eisenhammer on rocky times for future pensioners
Thursday 27 April 1995
She has been in the job only a couple of days but has no time to lose in publicising her message: today she will be thrust into the hurly-burly of the NAPF annual meeting in Birmingham.
This important gathering brings together some of the most influential financial players in the country, those who manage the hundreds of billions of pounds saved by people for their pensions.
But the two-day meeting is important above all because the issues it grapples with are assuming considerable urgency - something that Mrs Robinson insists must be appreciated by everyone. The traditional notion of a stable job leading to a decent pension and old-age care secured by one's employer and the state is disintegrating fast.
"We are on the verge of a revolution in attitudes," Mrs Robinson says. "People need radically to rethink what it means to provide for old age. The time we could equate this with a pension is going. We will have to think much more broadly about saving for the future."
The Government, in pushing personal pensions, has been saying for some time that we should do more to provide for our old age. But Mrs Robinson believes the implications of the changes have not sunk in.
The past few years have seen people in Britain thinking, and worrying, about pensions as rarely before. Robert Maxwell and the scandal over the selling of inappropriate personal pensions to people in occupational schemes were largely responsible. But there are far greater causes for concern.
While no government is so suicidally inclined as to say the old-age provisions of many of its citizens are not safe, there is an urgent case for admitting just that. Most people under the age of 45 can no longer afford to take their retirement finances for granted. The demographic time-bomb is largely the reason.
All Western industrial countries are ageing rapidly. In Britain, the proportion of over-65s, as a percentage of the population aged 15-64, will soar from over 20 to nearly 40 per cent in the next 50 years. They will be very expensive to care for.
The state, desperately overstretched, is trying to reduce its commitments. To carry on as now with old-age provision would send taxation through the roof. But it is not just the state that is cracking.
Companies with their own occupational pension schemes are facing the difficulties of fewer workers paying contributions to finance a growing army of pensioners. Employees are retiring early; working and remuneration patterns are changing dramatically; the investment climate has grown tougher, and there are constantly new regulations and provisions, all placing huge strains on the traditional ability of firms to give the generous guarantee of a pension based on final salary.
A number of household-name companies are considering whether they may have to move to schemes whereby people's pensions are defined by how much they contribute - meaning that if they want decent provision they will probably have to pay considerably more out of current earnings.
While such pressures are a headache for many pension managers, they also hold out the prospect of vast new wealth for the industry as a whole. As individuals start to save more for old age, there will be a massive increase in funds to be managed.
Although the change will be far greater on the Continent, where pension funds are largely undeveloped, the savings and investment landscape in Britain would also be radically transformed. Moreover, as Mrs Robinson says, people will have to get used to saving again for the long term.
"We British have become inflation junkies, addicted to property booms, rushing out to drink champagne today and never mind tomorrow. We are coming to a completely new set of expectations, where people want low inflation, and will feel better off having savings rather than speculating on house prices."
People must get used to thinking of a broad range of savings for old age, including their home. "Is it so extraordinary that people, when they go into a nursing home, should sell their house to pay the fees? Caring for the elderly is damned expensive, and the state simply cannot cope any more," she notes.
This fact has been dramatically brought home by the recent change in the law, which has seen the state largely withdraw from paying for nursing home care, shifting the funding burden to the individual who must use savings and home to cover costs that can be £1,500 a month.
"The idea of property cascading down the generations is no longer on. People must see property as part of their retirement savings, we shall have to rethink our inheritance expectations," Mrs Robinson says.
Though many of us are likely in future to be less well off as we save more of current earnings for old age, Mrs Robinson has little time for the inference that people will feel poorer.
"We have all become richer in the past 30-40 years - look at GDP, at the social data. How many people now live in a house without heating or a bathroom? We are rich enough to pay for our own old age."
- 1 Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
- 2 What supermodels really think about posing in the nude
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 5 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
North Korean defector flees to Finland 'with evidence of chemical testing on humans'
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
Father faces deportation to Thailand after 27 years in Britain for two 'stupid crimes'
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...