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Nic Cicutti: Why are we still surprised by the lack of trust in pensions?

Politicians continually avoid crucial opportunities to reduce the public’s suspicion and apathy

What is it that contributes to an all-pervasive sense of mistrust about the pensions system in this country? That makes people less, rather than more, likely to save for their retirement? Why do so many of us have such a fatalistic attitude to how we will manage financially when we stop working?

I have been pondering these questions over the past few weeks and – contrary to what many readers of this column might expect me to say – I do not believe the financial services industry is solely to blame for the sense of disillusionment in this country.

Sure, we all know about extensive personal pension misselling in the past. It is also true that people are instinctively mistrusting about being ‘sold’ financial products they do not understand, which have a nasty habit of delivering far less than they promised at the outset.

Nic Cicutti: Start young to win the battle against pensions apathy

But all the evidence points to intertwined scepticism about the entire pensions edifice, whether part of the private or public sector. It is not that the pension providers are bad and the state is good, or vice versa; more a sense that they are all as bad as each other.

I have recently been emailed by a woman who is part of the Women Against State Pension Inequality age cohort – those born on or after 6 April 1951 and who have been faced with sharp and unforeseen hikes in their retirement ages.

The woman in question had read a column I wrote in Money Marketing last year and wondered if there were any developments to the story.

The unfortunate truth is that, no, there is not. Saccharine sympathy from some Tories ahead of the June 2017 election has now been transformed into a refusal to arrive at any compromise that would address the plight of the Waspis.

Meanwhile, Labour, Liberal Democrat and Scottish National Party sympathy for the Waspi cause has also come to nothing, with proposals from the Official Opposition amounting to a row of beans. To give women the right to stop work two years early but on an actuarially reduced state pension is bonkers: which bit of “can’t afford to retire” does Labour not understand?

Millions of women are affected by the decision to accelerate their retirement ages in 2011. They have families – husbands, sons and daughters – who are familiar with their plight and want to see this issue resolved.

Steve Bee: Why still no justice for Waspi women?  

Yet now the election is out of the way for a few more years, all they have been shown is two fingers by the government and a few embarrassed coughs from the Opposition.

Then there was the excellent recent article by Guardian financial journalist Rupert Jones about a World War Two RAF pilot and war hero, who retired to Australia in 1987.

Harry Penny OBE died two years ago, aged 94. At the time of his death, his state pension was frozen at just £38.80, the same level at which it was first paid when he retired.

His widow Gay, who is 95, also receives a basic state pension frozen at £38.80 a week.

Harry was one of more than 500,000 Brits living overseas caught in a bizarre pension trap whereby their pensions will never be uprated in line with inflation,  as they would in the UK, no matter how much tax they paid or National Insurance contributions they made during their working lives.

There are more than 100 countries where the value of a Brit retiree’s pension remains frozen in perpetuity. Among the oddities like Afghanistan, Albania or Burundi, the key countries the vast majority of UK pensioners are likely to live, and where pensions are frozen, are Canada, New Zealand, Australia, Pakistan and a number of other Commonwealth countries.

Nic Cicutti: Enough is enough with FOS arrogance and incompetence

In an earlier story on this same issue, Jones drew attention to a Falklands War veteran, who met and married a Falklands islander, moved to live permanently in that territory with his wife in 1986 before retiring there six years ago. Now aged 71, his weekly pension of £106 is already £20 less than someone living in the UK.

Had he moved to the US, Turkey, even the Philippines, his pension would continue to be uprated with inflation. Had he retired to Bermuda, not only would his pension be protected but he would be entitled to a winter fuel allowance.

The estimated cost of addressing this issue, increasing every retired person’s state pension to the levels currently paid in the UK, is £500m a year, though in one parliamentary debate I have read, a partial uprating – increasing the pensions currently paid in line with inflation from now on – would only cost £37m year.

I can think of plenty of ways the government could save or raise money that would help both the Waspis and the overseas pensioners. It will, of course, refuse to listen and, even assuming Corbyn and his mates get to office, they too will do little or nothing.

The end result, for many people, is a sense of suspicion that ultimately drives the apathy they feel about saving for their retirement. Politicians sow the seeds and the rest of us reap the rewards, in more ways than one.

 Nic Cicutti can be contacted at



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Robert Milligan 9th May 2018 at 12:09 pm

    Come on nick, some have been banging the equality rights for years, finally something is not in a certain favour, so becomes worth writing about, who ever gave women the NRA of sixty anyway, Surly that in its self was discriminatory! I have to wait until I am sixty six, Regarding “Pension” the word has been used as a Political Punch Bag post 1988, the rules keep changing and the public are fed up of “Locking” money up for so long, most of my clients are funding for retirement “other” than using a “Pension” plan, many of whom are worth over seven figures. They want ownership without scurrilous charges, political manipulation and see both income and capital growth, after all the real wealth in this country is owned by the big “Trust” Estate’s avoiding IHT and mainly owning land. Its the product Providers who are pushing the “Pension” policy, think about it, if HMRC is contributing, over £43 Billion a year into their coffers, the management charges simply of that part is colossal. Why do you think they yet again are recruiting Ex’ Regulators.

  2. Trevor Harrington 9th May 2018 at 12:15 pm

    Good morning Nic,

    Excellent observations.

    Personally, I have been trying to highlight this problem for many years now – if people are betrayed by their state pensions, then how can we be stupid enough to believe that they will want to contribute to private schemes – of whatever nature?

    Indeed, there are many more aspects to this theft of state pension promises, than those points to which you allude (increased state pension ages and averaging down to a paltry £159 per week, and removal of index linking for those who retire to certain Country’s overseas).

    For instance, historically, the classic government solution to what they see as unaffordable state pensions, has been to invent a new state pension scheme all together, and then latterly deny or denigrate the benefits that people have accumulated through the previous state schemes – examples :-

    1) Index linked Graduated State Pensions from 1960s and 70s which have been frozen since 1978 (inflation has made them worthless).

    2) SERPS pensions since 1978 which were funded by increased NIS contributions – we still pay the increased NIS contributions but the SERPS benefit has been removed.

    3) The commencement of taxation on dividends inside pensions in 1997 (by Brown – two months after being elected on a “no tax increases” manifesto) – which probably finalised the demise of company final salary pensions, as well as pillaging the benefits inside personal pensions.

    And now, of course, the overspend in the public sector in the last 20 years has reached such huge proportions, that our budget deficit and national debt can only be controlled by increasing state pension ages, whilst also averaging down the state pension benefit to an unlivable £159 per week.

    Incidentally, if one is in doubt about the gravity of our budget deficit and the resulting national debt, it is interesting to note that the national debt is currently the equivalent of an individual holding an bank overdraft on their ordinary current account of around 2.5 to 3 times their average annual salary.

    It is also interesting to note that the recent changes to state pensions means that many clients who managed to achieve state pension age before this latest attack, will continue to receive their £250 to £300 per week state pensions – and very few of them could reasonably be described as being “wealthy”.

    The issue, is that we have huge numbers of public sector employees, on unaffordable salaries, (for instance, we now have 510 local councillors earning more than the Prime Minister) and therefore utterly unaffordable occupational pensions, let alone all those public sector employees, who have retired on spurious grounds of ill health on enhanced service index linked pensions …. most of whom then run around like spring lambs the day after their fraudulent award has been received.

    As a Country, we need journalists to start reporting these issues accurately, and without their usual party allegiances, and we certainly need some realism in the awards of public sector employments and pension benefits.

    The fake press … and the establishment … ?
    Sounds familiar ?

  3. In a week where (I think it was) the Resolution Foundation proposed capping PCLS at £40,000 and elsewhere there are demands by some for pension income to be subject to NI if employed income is subject to such a deduction where working beyond State Pension Age, there is no wonder there is suspicion.

    Pensions face frequent and significant political interference and yet they are based on the premise you have to set the money aside for the longer term in return for ‘benefits’ in doing so.

    Short term tax need will often outweigh the nations best interest and therefore suspicions are perhaps justified (albeit unhelpful).

  4. I just want to know how much Winter Fuel Allowances for Bermudan expats costs the exchequer…

    • Trevor Harrington 9th May 2018 at 3:30 pm

      My mother passed away on 22nd September, and as the winter fuel allowance is assessed (?) in the first week of September, they still insisted on paying it to her estate …..
      I guess we could have put it towards the costs of her cremation …
      Sorry about the black humour !

  5. Well said Nic

    Did I miss comments on the Govt. messing with contributions, tax relief and the lifetime allowance?

    I made a decent living out of the continual changes to the pension rules. 226A, SIPPs, SSAS, S32, PPs, Stakeholder – you name it. How on earth can a non financial person possibly keep up?

    Governments – all of them – just play the Hokey Kokey with pensions and are then surprised that people are not interested and prefer buy to let instead.

    • Julian Stevens 10th May 2018 at 2:41 pm

      I quite agree. One almost feels guilty these days about recommending a PP to somebody in their late teens/early twenties. With increases to the LTA shackled to inflation, set against investment returns likely to be at least twice that rate (or so we sincerely hope), most such investors will breach it [the LTA] decades before retirement. As that situation approaches, they’ll need to stop their pension contributions and cast around for the next best thing. How do you recommend a PP knowing that almost certain outcome?

      And the latest Pensions Minister, like all his predecessors, is under strict instructions to avoid at all costs any mention of the LTA. Talk about anything you like, Mr Opperman, anything at all, but ANY mention whatsoever of the LTA will land you in the hottest of water and you’ll be out on your ear before you can say Jack Spratt.

      How is that a recipe for improving public confidence in retirement funding?

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