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Compulsion is only way

People without a pension will never get around to it unless they are forced

The fifth anniversary is just behind us of 9/11, a truly horrific act that will go down in infamy, to use the words of Franklin D Roosevelt about the attack on Pearl Harbour. I listened to the programmes associated with this anniversary and one phrase kept cropping up – “An act that changed the world forever.”

I find myself thinking that the act in itself did not change the world, people have just forgotten how inhumane human beings can be to each other. After all, it is not the most horrific act that human beings have perpetrated on each other. The world has not changed, just our attitudes.

The Labour Government had a chance to change attitudes with regard to pensions when it first came to power. The world would have rem-ained unchanged but our attitudes to pension plan-ning could have been chan-ged by this Government for good. It missed that oppor-tunity and it has been playing catch-up ever since.

When Labour came to power in 1997, one of its first acts was to raid pension funds of billions of pounds. Its next act was to instigate a review and introduc a cheap pension policy called stakeholder, with the premise of thinking that if you created a policy that was cheap and simple, people would start pension policies. Wrong.

Five years later, they have effectively abandoned this way of thinking because it does not work. It has not solved a fundamental problem that 29 per cent of the UK population has no form of pension planning.

The Government went back to the drawing board and instigated another three reviews and now we have the national pensions saving scheme or whatever it is going to be called. This, we are told, will be the solution to all the country’s pension problems. Again, this is designed on the premise of cheapness and simplicity.

Most people with a pension have one because of a company or employer scheme. In my view, there are very few people who have by design started their own pension policy. More and more, I come to the opinion that compulsion is the only method by which any Government will solve the problem of the growing pension hole but it would take an extremely brave Government to make this decision.

Labour had the opportunity and the majority to make this decision six years ago but it missed this opportunity and muddled through with initiatives, committees, consultation and reports. In the end, we have ended up with another bodged-up scheme full of compromises which, in five years’ time, will be scrapped.

Those who do not have a pension will never get around to it unless they are forced to do so. I originally thought that the stakeholder pension was the road to a compulsory national pension scheme. The next step in my opinion should have been to say to those who did not have a pension that there was absolutely no reason why they should not have one because it could not be a question of cost.

Some people will at this point say what about low-paid workers? Where will they get the money from? Well, I say, this Government has introduced 80 different types of taxes and somewhere in that lot, they could have introduced compulsion. Some of those tax rises have affected the low paid in one way or another, therefore compulsion could have been introduced without much further harm being done.

How many more missed opportunities will there be before someone takes the decision that needs to be taken. My worry is that those of us who have bothered to save for our retirement will find that at some point in the future, another Chancellor will raid our pension funds.

John Winful is a partner at Winful Associates


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