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A lost generation of savers

Open letter to Treasury Economic Secretary Ed Balls

I entered the financial services industry in 1974 when the then respected minister of pensions Barbara Castle set about tackling the problems with contracting out and extending pension security by underwriting occupational schemes against inflation and collapse.

Against the background of a Middle East crisis, double-digit inflation and an unstable housing market and stockmarket, I set about advising clients to save for retirement.

Over the last few years, I have continued to advise these clients, many of whom retired earlier than 60 or 65, but through their hard work and sacrifice have enjoyed a long and healthy retirement.

I am now advising their children and grandchildren. I am sure when they come in for advice we will touch on the current Middle East crisis, the effects that high fuel costs will have on inflation and how it affects their daily lives. We discuss the volatile stockmarket and the effect a rise in interest rates will have on the housing market.

I am sure that the most difficult part of the discussion will centre around retirement planning in which I will have to advise on the probability that they will be saving into a state scheme which they will get at a later age than their parents, which in real terms will be reduced, unlike the 1970s, where my clients, despite the economic hardship they endured at the time, saw the benefits of self-sacrifice to plan for their retirement.

I will have to advise a generation that has lost complete faith in the pension system as a result of recent policies such as the loss of tax benefits on pension schemes and the difficulties this has caused many final-salary arrangements.

On top of that, I have to convince them of the benefits of saving some of today’s income rather than fall into the misconceived policy of living for today.

In all probability, this generation will have to face the problems of longevity and a reduced lifestyle to that of which their parents are currently enjoying.

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