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Independent view – Fiona Sharp

I watched the run-up to the general election with interest. I was curious to see which of the three major parties would deal with the financial issues that we, as IFAs, enc-ounter daily.

I remained impartial but unfortunately none of the top politicians gave me any hope that the financial futures of the younger generations of this country will be secured.

The Conservative Party off-ered an extra 10p in the pound on pension tax relief which was better than nothing but not a major highlight of its campaign. The Tories vowed to increase the stamp duty threshold to 250,000 which would also have helped.

The LibDems offered us new guidelines on long-term care which, in fairness, has been a priority for the party for some time. They also paid lip service to increased pensions for women but these were comments that lacked substance.

And New Labour? What has Tony Blair offered? A seemingly sound economy with low interest rates is what has been established but how much is really being achieved?

If interest rates fall further, as recently predicted, will the British public remain happy to spend what they cannot afford instead of saving for their futures? After all, Chancellor Gordon Brown has overspent in many areas so what sort of an example has he set to the country? Will the markets suffer as a result?

The average UK 2.2 fam- ily already has to contend with too many difficulties such as high property prices, stamp duty, longer working hours, spiralling tuition fees and student loans. With little disposable income, is it any wonder that retirement planning is not a high priority?

If it is a toss-up between a pension contribution or trendy trainers to keep the kids quiet, then Nike will probably win hands down every time.

I do not want to be the harbinger of doom but I remain convinced that the financial infrastructure of this country will implode in around 30 years by the time the current 35-45- year-old generation reaches retirement age.

We do not have the ing-rained thrift of the post-war era, nor (probably) the benefits of a supportive state pension system. We are “past it” in terms of starting to save early for retirement unless we were lucky enough to have got advice or accidentally joined an employer-sponsored pension scheme.

The accumulated debt of the overspenders will not be cleared by retirement and no one but the prudent will have anything to live on. The lazy will blame the Government and not themselves although they will have a point.

What does the Government offer in terms of tax breaks and incentives to enc-ourage us to save? Brown has already plundered pensions by removing tax credits on dividends and the whole savings gap issue remains under the carpet, where it was swept some years ago.

Ironically, with the advent of A-Day, we are on the verge of the sexiest, most positive piece of pension legislation ever. The thought of being able to buy a residential property via a pension fund has cer- tainly rekindled interest among even the most cynical. Unfortunately, while the aspiration may be to finally buy that Spanish villa, the average current UK private pension fund is more likely to achieve a tent on Clapham Common.

More needs to be done at Government level to encourage Joe Public to take more responsibility for their own financial security throughout their working lives but also to give them the help to do so. Tax credits do assist with much needed cashflow but would it be better if some of that money was a direct credit into a pension fund? Perhaps compul-sory pension contributions, as in Australia, are the answer?

No doubt someone would argue that we cannot force people to save because it is not politically correct but what is so wrong with thrift and what was the original purpose of (mandatory) National Insurance contributions if they were not partly to build up some form of state income in retirement?

Maybe the fact that Labour only just made it back into Government with a reduced minority means that attitudes are changing. Perhaps this is just the ideal opportunity for us as advisers to really get home the “save now spend later” message as opposed to the “spend now pay later” ideals.

Blair said when he ret- urned to power that he had “listened to the people and learned”. I just hope that he sorts this mess out, with our industry’s help, of course.

Fiona Sharp is senior adviser at Finance4Women


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