View more on these topics

Steve Bee: Are we nearing the final days for pensions?

steve bee

I have been working in the pensions industry for almost five decades now. In that time, I have been witness to a great deal of upheaval in what seems like an unnecessarily ever-changing sector.

That said, I honestly do not think I have ever encountered such a strong feeling of hopelessness as that which currently engulfs the subject of pensions provision in our country.

Everyone I talk to, everything I read in the financial press and almost everything I see on social media points to negativity on the issue. To me, this paints a very bleak future. It feels as if we are nearing the final days for pensions:

  • Days in which we are far more likely to hear of pension schemes closing than opening; when advisers feel unable to advise on the freedom and choice regime
  • Days when the certainties of the state pension promise evaporate before our eyes
  • Days when ever more effort is concentrated on stopping a few people from saving too much; when hardly any is expended on helping the vast majority save at all
  • Days when rival products to pensions are devised by those who should really know what is best for us
  • Days that will never be looked back on as a golden age for pensions; when looking out for yourself has overtaken the natural urge to look out for others.

Over the course of the past few years, a national pension protest movement has grown in towns and cities up and down the land. It is known as the Women Against State Pension Inequality, although its Waspi acronym has become so familiar it is no longer necessary for most who talk about it to explain what it is.

Will pensions prevail?

The poorly-communicated increases to the state pension ages towards the end of the 20th century left a whole generation of women with little or no time to readjust their already fragile retirement plans, and the most vulnerable among them have been left with no contingency in place.

A generation of women who, by and large, had not been well served by the pension system of the 60s, 70s and 80s anyway were laid low by the quiet changes of the next decade.

That the same generation was subjected to further increases in their pension ages in 2011, when many of them were already grandmothers – another kick in the teeth for them.

These millions of women have many valid complaints. Their complaints fall on deaf political ears but they are being heard loud and clear by the many millions of children and grandchildren who bear daily witness to their plight.

What kind of message about the pension system in this country does this send cascading down the generations? It is certainly nothing positive, only adding to the general negativity surrounding the sector in these dark times.

Steve Bee is director at Jargonfree Benefits

Recommended

DWP-Department-Work-Pensions-700x450.jpg
102

Waspi amendment to Pensions Bill stalls as splinter group plans protest

The Women Against State Pension Inequality campaign’s attempt to get an amendment into the Pension Schemes Bill appears to have faltered as political parties failed to reach a consensus on its introduction. The Bill, which relates to the regulation of master trusts, had its second reading in the House of Commons last night. The Scottish […]

14

MPs pile pressure on Govt to scrap state pension triple-lock

A committee of MPs has said it will continue to press for the state pension triple-lock to be scrapped after the Government failed to agree to its recommendation. As part of an inquiry into inter-generational fairness, The Work and Pensions Committee published a report in November calling on the Government to ditch the triple-lock – […]

FAMR – a familiar response

Pension specialist Fiona Tait takes a look at the Financial Advice Market Review and assesses the three areas where it suggests improvements can be made With significant budget changes ruled out (for a while anyway), the pension community briefly turned its attention to the FCA’s final report on its Financial Advice Market Review (FAMR), hoping […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 40 comments at the moment, we would love to hear your opinion too.

  1. Cant disagree with you on this Steve…..

    Is the pension the metaphorical, dead horse, continuing to be flogged to see if can struggle on for a few more steps ?

  2. Trevor Harrington 6th February 2017 at 2:22 pm

    You are right Steve – very depressing indeed.

    In fact the destruction of our pension systems, both private pensions and the state pension, is fundamental to the public’s acute feelings of extreme distrust of the Government, and all that they say and do.

    I have personally written many times about this, and the reasons for it.

    However, it does not seem any the more palatable even after recognising that successive Governments of all political persuasions have failed to act on the UK’s obvious changing demographics, and after they have spent our National Insurance Contributions on all things relating to their own re-election rather than that to which they were intended – namely our retirement savings and prosperity.

    There is, in fact, a way back to a living state pension, and indeed a state pension at age 60 for all, but it will take some years to achieve. Arguably, we are on that course now, with a maximum lifetime allowance of £800,000 and what I fully expect to be a super tax on pension income over £40,000 per year. However, even then, it will only be achievable if we all understand the current problem, and most importantly, how that problem came about in the first place.

    Not even a Government can spend the same money twice.
    Taxation revenues are for the betterment of the people, and not for furthering the election prospects of the government in power at the time.

    Finally, and this is the utmost important point, which the people and Governments desperately need to understand –
    It does not matter how important, or how essential you might feel a particular Government policy, or undertaking might be, and neither does it matter one jot if you, we or they believe that the pet project concerned is of such high social importance that we simply must have it …. if we cannot afford it as a country and an economy …. then we simply cannot have it.

    Successive Government overspending was bound to come home to roost eventually, and perhaps we are the generation when that did indeed happen.

    The people have lost their pensions, and subsequently they have lost any trust or belief in those who purport to lead us … Governments. Both the Brexit vote, and the Presidential election are examples in point. As a private comment, I would also say … God help us all if Marine Le Pen succeeds in her endeavour to be elected as the French President, as the collapse of the Euro, and the EU would then be almost certain, and it is quite easy to see another war with Germany.

    The fact is … Successive Governments have spent all of our pensions ….. on something else, and then more so.

  3. True words but then its not just pensions, its every area of life that politicians and lobbying offices are destroying. There is actually very little thought from opposition other than how can I gain political or moral points, spouting promises and solutions that are in many cases totally unworkable.
    There is a constant drive to have everything for next to nothing, whilst imposing greater costs to pay for the politicians, regulation and lobbyist.
    As for the State Pension, it has become a vote sweetener that will bankrupt the country, promising greater payments we cannot afford. The Government is already placing the cost of their promises back on the private sector via AUTO Enrolment, whilst taking employer NI stating this is paying for your state pension.
    The only Final Salary arrangements are now mainly in the Public Sector, as the Private Sector cannot afford them. Again, this is building up a debt the nation cannot afford, but everyone is to afraid the tell the Doctors, Nurses, Police, Fire, Armed Forces that the nation cannot afford these schemes.
    The real eye burning fact is, this is all paid for by the private sector, as their taxes are the true revenue, Public Sector taxes are no more then claiming back what the Private Sector had already paid, paid out and tax again.

  4. “Everyone I talk to, everything I read in the financial press and almost everything I see on social media points to negativity on the issue. ”

    Then maybe you should unfollow WASPI.

    https://en.wikipedia.org/wiki/Betteridge's_law_of_headlines

    “These millions of women have many valid complaints. Their complaints fall on deaf political ears but they are being heard loud and clear by the many millions of children and grandchildren who bear daily witness to their plight.”

    WASPI was at its peak a few tens of thousands, and following the acrimonius schism among the five founders, who fell out over whether to demand a full reversal of the 1995 Pensions Act or mere “transitional measures” that would leave most of their members in exactly the same position as they are now, it now probably numbers no more than a thousand. Ridiculous hyperbole.

    The vast majority of women were well aware of the legislation passed to eliminate inequality between men and women in regard to State Pension Age. It was extensively discussed in newspapers, TV shows and government leaflets.

    • You are badly informed or perhaps you actually believe what you read in the Tory press concerning WASPI. Membership is still high, as evinced by the response to the fundraising ,which was closed at over £100K, to pay Bindmans to examine the files with a view to mounting a legal challenge.
      The FOI done by WASPI revealed that No informative letters were sent out until 2011, after the 2011 SP Act, when 50s women were informed of the 3 stage increase in retirement age.
      The advertisements you allude to in the press were extremely few and buried in the Broadsheet pages of The Times, Financial Times and, Telegraph, and only on certain random dates. The tablets, mainly read by working class women, were not included. There was categorically NO informative campaign. Employers did not notify their employees as they also were kept ignorant of the imminent rise in SP age. The Govt did not stick to the agreed staggered retirement but compressed it in a very unfair timescale and then by the 2011 Act added a further 12 -18 months to retirement age. George Osborne openly boasted that it was the easiest financial saving he had ever made in targeting 50s women. Most of these women have worked since the age of 15//16, many in physically demanding roles and are in poor health, unable to access any Welfare Benefits, Pension Credit was abolished until SP age, and forced to sell their homes in order to survive on dwindling savings. 50s women were victimised as an easy financial target to save money and yet I read today that this Govt is to give 1.3 Billion in further Foreign Aid, to help China’s OAPs at a time when elder care in the UK is in meltdown. Little wonder that 50s women are angry and militant when they are treated with such contempt by this Govt.

      • I took out my first pension at 18, working for BT. My pension age was 60. Over the year of changing jobs I have more small pensions, all saying my pension age is 60.
        A lifetime of years have gone and I am now 61… with 5 more years before I can draw my old age pension. Still working and worrying every day if my company will kick me our before then.
        This is not what I have worked 43 for…. George Osborne… hang you head in shame.

      • Osborne’s quote was that half a trillion would be saved over the next 50 years due to the changes to the timetable for future state pension increases.

        The bulk of these savings were from bringing forward the rises to 66 (2011 Pensions Act) and 67 (2014 Pensions Act) by several years. It’s completely misleading to suggest that Osborne “targeted 50s women” when the majority of savings he made from raising the State Pension Age were at the expense of the 1960s men and women.

        1960s women will presumably be grateful to WASPI for crowdfunding legal action that (if successful) will benefit them the most.

      • I could not agree more with you on this matter, as a fifties woman who was told at the end of 2011 that I would have to wait till almost 67 I was shocked as by this time I have serious health problems and no way to do much about it as when I had savings I had to live off of that, I was married to a military man so moved around a lot and did not have much in the way of a private pension, not everyone will be a fit healthy grandmother, if it was one year more like the men would not be so bad, perhaps the government are hoping we will drop dead before then thus saving them even more money, whatever happened to taking care of your own back yard first, we see the NHS having problems, essential services being cut, homelessness,people with mental health not getting the support they need and yet we continue to send vast amounts out of the country when ,whatever happened to charity begins at home, by all means help but they should be serving the people of this country first.

    • I did not receive any letters from the DWP, I also did not know via newspapers, I E the Financial Times, I was too busy holding down a full time job, bringing up three children and looking after my husband, trying to make ends meet.
      42 years national insurance contributions and I have to wait an extra six years, made redundant at 58 never claimed any benefits and now on the scrap heap at 61.

  5. Sascha K – Many women were totally unaware that their pension rights were being altered without proper consultation by somebody we should all be able to trust . – The Government.
    An advert in the newspaper or a government leaflet does not constitute consultation.

    Steve Bee is very kind with his word – I say the government is a thief.

    • I agree, an advert in a newspaper does not constitute a consultation.

      However, a green paper inviting responses, followed by a white paper policy document and a Bill debated and passed through parliament does constitute a “proper consultation”.

  6. Sascha K – If the legislation had been widely discussed, surely someone might have noticed that women born in ’53 were due to reach state pension age in 5 different years – 2015,16,17,18,19. Even Steve Webb has admitted he was wrongly advised and didn’t understand the consequences.

    • How could Steve Webb not understand the consequences? Regardless of whether or not you agree with the timetable, it isn’t exactly difficult to understand. The briefing paper he was provided with included both a timetable and a chart showing the steepness of the rise. What consequences did he not understand?

      For someone who was apparently bamboozled by the Act, he did a remarkably good job defending it against heavy scrutiny from the opposition across several debates.

  7. Trevor Harrington 6th February 2017 at 5:15 pm

    It does not matter whether you think that people had sufficient consultation or not.
    In fact it does not really matter if people had any consultation at all.
    It certainly does not matter whether you agreed with the changes or not.
    And it does not matter whether the changes to male and female pensions was fair or not.

    There was no other way that any Government could save that amount of public expenditure.
    There was a massive Government overspend on revenues being received.
    There was no money left in the Government tax revenues – Labour left a note to confirm this.

    There was and is NO MONEY LEFT.
    We have NO MONEY for state pensions of the magnitude that they were.

    Successive Governments have spent you pension money on other things.
    (see my comments above in the second post).

    • Carole Archibald 7th February 2017 at 9:48 am

      So is it okay for women of the ’50’s to be the only demographic group forced to pay over £100 per week for upwards of six years to help balance the nation’s budget? That’s all right, is it?

      • Every woman born after 6 April 1950 and every man born after 6 December 1953 has had their state pension age increased. The steepest rises have been imposed on women born in the 1960s and 70s, who have had 7-8 years put on top of their expected retirement age when they started working.

        It is truly bizarre that some 1950s women try to claim a monopoly on state pension age rises, and claim that they are the worst affected (or even in this case the only affected). This inexplicable myopia is one of the main reasons that the issue is largely ignored in the mainstream media.

      • The rise in the state pension age doesn’t just affect people born in the 50s! It affects everyone born in the 60s, 70s, 80s, 90s, 2000s etc. The SPA is expected to rise to 70, and beyond, probably, for those born later than we 50s babies. Bearing that in mind, 66 seems like a walk in the park!

    • Christina Coggins 7th February 2017 at 1:22 pm

      The Government had no money left. Really?! Well today I read they’re sending millions to China to help with social care of their elderly. Something they cannot seem to do with our own elderly. The abuse of our taxes and NI contributions is truly shocking.

  8. “…..looking out for yourself has overtaken the natural urge to look out for others”

    Am I to presume that this piece laments the passing of DB schemes? If so there will be no tears from me or many firms either. It is the responsibility of firms to provide a competitive salary and conducive working conditions. There are not benefit agencies or an ex-officio arm of the DWP.
    It is most definitely the responsibility of each and every one of us to look out for ourselves as far as our pensions, savings, and general finances are concerned. (With, of course, the help of a good IFA).
    Where I will agree is the interminable fiddling with the rules, the disincentivisation of those who actually want to save into a pension and the disjointed and stupid ideas coming from those who govern us in order to squeeze out as much tax revenue as possible. As for those who are not saving – this is crocodile tears. These people (by and large) are heavily indebted and would probably be better advised to reduce their debt burden before even considering all the wonderful products on offer from the financial services community.

  9. Trevor Harrington – I understand that there is no money for state pensions of the magnitude they were but what I don’t understand is that if the Government raise the money (through taxes and borrowing) to pay a £27bn one year Housing Benefits bill and a £30bn one year tax credits bill, why are they unwilling to spend £8bn spread of several years to help the women who find themselves with a state pension age so much greater than others born the same year or the year before.
    Mick Hudson – I think this is what Steve Webb meant when he said he didn’t understand the consequences – the women born at the end of ’53 (SPA 65 years 3 months) might have paid a lot into SERPS and SP2 but been unable to contribute to a private pension, others born at beginning of ’53 (SPA 62 years 8 months) are treated so much more generously.

    • Trevor Harrington 7th February 2017 at 10:12 am

      Good morning Christine,

      I agree with what you are saying – if you are making the point that one expenditure item is more desirable than the other.

      However, unfortunately all of that argument concerning choice of expenditure counts for absolutely nothing. It comes back to my previous comment already made above.

      Governments of all political persuasions, but if I may be so bold particularly our previous Labour Governments, have got to come to a clear understanding of a basic principle of economics and mathematics :
      If they have not got the money coming in through revenues (tax revenues in their case), then they simply MUST NOT spend it – regardless of what they may like to think is an essential part of their political programme, a specific social need, or indeed their desire to get themselves re-elected.

      Christine, if our governments restricted themselves to spending ONLY that which they have coming in, then we could all get into a proper discussion concerning social priorities … in which case I am quite sure your own argument for funding women’s state pensions would be a priority … as indeed would the restoration of a proper living state pension for all, and an equal retirement age of 60 for all as well.

    • Christine – I think we need to take Steve Webb’s words with caution, as it is difficult to reconcile his claims with extensive knowledge he demonstrated during the debates on the 2011 Act, and the thorough briefing and research papers ministers were provided with.

      That said, I agree that the speed of the 2011 increases were badly thought out. £8bn may well be within the realms of “political will” if the government really wanted to do it. However, they’ve probably come to the conclusion that it wouldn’t appease the majority of Waspi supporters, and that the compensation back to 60 mob would still be turning up at Westminster chanting “we paid in you paid out” regardless. A weak and ineffective opposition doesn’t help matters either.

  10. Why did Govt leave pensions out of their Published Savings Leaflet? People in their 50’s were ‘stiffed’ by people selling Endowments and now have no trust and consider Pensions in the exact same way as Endowments; promises and no substance.

    • I really don’t think anyone with any common sense equates modern pensions with endowment policies.
      Unless you mean, plenty of people are willing to tell fibs in order to get a payout from the Provider?

  11. My comment above should read ‘£8bn spread over several years’

  12. I agree Harry. In life people have choices and it is far easier to choose to have a new car, holidays go out clubbing every weekend then save for the future. The live for today culture is fine until tomorrow comes along and then of course it is everybody else’s fault, the governments, employers etc etc. People need to take individual responsibility and stop blaming everybody but themselves.

    • If only it was so simple, life happens, the financial landscape is totally different from the 60 and 70 women were on lower wages then men, unable to join pension schemes. Mortgage rates at there highest. My husband paid extra into his state pension, paid extra into his work pension, and died of cancer at 57. I have to wait 18mnths longer for my state pension then some one who is 4 months older them me. New cars and holidays would have been great, try saving when one of you is dying of cancer. You I think must have lead a charmed life.

  13. William Bottomley 7th February 2017 at 9:31 am

    We live in interesting times Steve, but it seems to me that the clock of history is turning in such a way that we will have to find alternatives to the boom time for post retirement living. The NHS is on its’ knees, the care provision is totally inadequate and the younger generation can’t afford to leave home. My hope is that this time will become a time a refocus on the family and the rekindling of the responsibilities we all have to look after each other. Needs must…

  14. Given that the government would doubtless trumpet the (forced) success of AE Schemes, the only observation with which issue might be taken is that “hardly any [effort] is expended on helping the vast majority save at all”.

    But, even then, the spectres of the frozen (and possibly yet to be reduced still further) LTA and AIA loom large. For those who choose not to contribute any more than the absolute minima, these are unlikely to be issues of concern, but they’re certainly disincentives to contributing much more and the sorts of fund sizes likely to be accumulated from just the basic level of AE contributions are unlikely to achieve much more than avoiding absolute penury in retirement.

    It is indeed a depressing picture and, for someone who’s lived and breathed pensions for so many decades to express such an opinion, things must be really, really bad.

  15. You have summed the situation up perfectly.
    I’m a WASPI, thought I’d get my SP at 60, that has changed 3 times without being notified. SP will now be paid at 66. Like most ladies of my generation we started work after school at 16, so many will pay way more than the new 35yrs required to get a basic SP. We’ve been critised by the younger generation for being greedy!?….they need to look back at how life has changed since we brought our families up.
    We had no child care subsidies, most worked part time and many have also cared (and still are caring) for ageing parents. The world has dramatically changed in the last 20yrs. We are the generation that kept everything ticking over before the ‘tech’ revolution and now we are being walked over. Sadly I believe many career politicians (not all) do their palimentary role to fulfil their self interest and their end goal of a lifetime of financial security; their pension rights for example. They benefit way beyond ‘JoePublic’ and we put them in their positions. If they as the power brokers wanted to build a fairer more equal society, they have the power to do it, they don’t because of self interest, it’s always about getting elected in the next 4/5yrs. So no long term planning for the greater good, never changing or improving the outlook for those most in need.
    Rant finished! Thanks.

    • Suzanne Albright 7th February 2017 at 3:48 pm

      If you get your state pension paid from your 66th birthday, your SPA was only changed twice, not 3 times. Once in the 1995 Act and once in the 2011 Act.

      Women just a year or two younger than you, who lived and worked in much the same environment as you did, had indeed 3 increases, as the 2014 Act raised their SPA yet again.

      As one who, like you, had 2 increases, I really can’t understand the wailing of WASPI women – we aren’t any more special than women born in the 60s, 70s or later. We are simply the first tranche of women whose SPA has no longer been 60 since 1995, and we got away relatively lightly as the maximum increase for us is 6 years whilst for all women born after April 5th 1960, it increases further, for up to two years. The notion that someone born in 1960 was dealt a better card in life than someone born in 1959 and had adequate notice of the increases is, frankly, quite pathetic.

  16. I too am a 50s woman I was due to retire aged 60 last year, I was not notified in any shape or form, bringing up a family, looking after poorly parents did not afford me much time for reading newspapers We 50s women and men are not afforded the annual salary of £74k (basic) and handsome expenses packages, also a private pensions along with the other enhancements MPs enjoy Maybe it’s time to cut back on all the perks they receive so their constituents can live without worry in their one and only house
    Possibly time to cut back on the second house and all the other extras our taxes pay for
    Then maybe their constituents could have a better life with a decent pension I will have paid in for 50 years by the time I can retire aged 66, oh and by the way that is not 18 months more than I was led to believe I would retire at, that is a whole 6 years Not really fair is it!

  17. I was born on 6 December 1953. I have worked all my life. My friend was born in June 1953 she is about to receive her pension but I have to wait until 6 months after my 65th birthday. What is fair about that. I don’t even get it on my 65th birthday. There is no justice and no-one wants to know. I won’t get a fullnpension even though I have 42 years in as because I was a civil servant for some of my working life the government opted me out of the state pension I have only found this out too. I have worked and paid into the pot all my life. You can understand why I am ver unhappy about my situation.

  18. So my friend receives her pension at 63 years and I have to wait until 6 months after I an 65 years. The contract I had with the government stated I would receive my pension at 60. It is so very unfair.
    Wendy Elliott

  19. Suzanne Albright – You are correct that if Kanne (above) has a SPA of 66 her SPA has only been changed twice but Kanne could have been born as early as 6 September 1954. Every women from then until 5 April 1960 has a SPA of 66. That is why you are incorrect in saying that women just a year or two younger than Kanne have had 3 increases (that would only be the case if Kanne was born in ’59.) This is where the problem lies – the speed of the 1995 timetable with the added injustice of the 2011 timetable. The SPA moves from 66 to 67 too fast (same rate as the 1995 timetable) DOB 5 April 1960 SPA 66, DOB 6 March 61 SPA 67. It then stays at 67 until 5 April 1977.

    I agree that it is nonsense to say that someone born in 1960 was dealt a better card than someone born in 1959. That is why the ’63 is the new 60’ proposal is not fair to those born in 1960. The state pension age has to move and I do not think a woman born in 1959 should have the same SPA as one born in 1954.

    You say you ‘really can’t understand the wailing WASPI women’. Do you have no sympathy at all for the single woman born on 6 December 1953 (SPA 65 years 3 months) who started work at 15, has paid full tax, SERPS, SP2, has never had the support of a husband, never claimed a penny in any form of benefits and sees her friend born at the beginning of the same year (SPA 62 years 8 months) who has been (since 2015) enjoying all the benefits reaching state pension age brings while she has to wait until 2019?

  20. Trevor Harrington 7th February 2017 at 5:45 pm

    Bearing in mind that it was the last Labour Government that went berserk with their spending, way over and above any tax revenues that were coming in at the time, and that is undisputedly the principle reason why this Government has no money – you might remember that Blair and Brown even left a note on the desk in the Treasury to say that “there is no money left” …. I assume that no WASPI woman will ever vote Labour ever again.

  21. Trevor – I think WASPI women must be very confused as to what Labour are prepared to support as a possible solution to the State Pension fiasco.

  22. £205 bn spent on a useless WMD…and you don’t want us to have our state pensions, because we don’t have any money! Open your eyes!

Leave a comment