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Piecing together pension jigsaw

As a fan of Fawlty Towers, I have many favourite lines and scenes but when Adair Turner published his paper, only one sprang to mind.

Pension strategy in the country has resembled dodgems, where contact is neatly avoided by judicious spins of the wheel. Just as the actuarial brethren avoid decisions by pushing items on a few years, using the age-old protection method of ensuring that if anything goes wrong, it happens on someone else&#39s watch.

I would recommend that all IFAs interested or active in pensions take the time to read this paper. The statistics alone are well worth digesting and make excellent sales aides, underlining the recent Sofa research study on longevity. Clients simply do not realise just how long a holiday retirement can be. As to compulsion, I do not believe that this or any Government will want to launch son of poll tax but some sort of matching scheme, where tax relief is boosted in a way similar to contracting out was back in the late 1980s, could just do the trick.

The paper admits that the margin prevents the provision of advice just where it is needed. The reality is that for those on low incomes with little net spendable income in a discretionary format, saving at the required level is simply not an option. We must recognise that there will be some that need to fall on the state and the state pension set up needs to reflect this if we are to avoid grannies rioting in the streets. I do question some of the points made, especially the way domestic property is seen as the most volatile asset class, something which is not borne out in practice.

The revisions needed are simple – scrap the meanstested benefits, raise the basic state pension and give thought to reducing tax or enhancing tax allowances for pensioners. We also need an end to early retirement in local authority schemes unless it is for genuine health reasons and not as a perk for long service.

The Government needs to take evidence not from actuaries, academics and social scientists but from those advisers who have dealt with the reality of people&#39s retirements. Theory is fine but nothing beats experience. As advisers, we need to take on the role of educator and not just adviser alone. For this, we need the backing of the FSA. The publication and distribution of booklets will not take us forward we need face-to-face sessions if the public are to take action.

But back to Basil and his ability to sum up all of this in an immortal phrase. The line that came to mind was when Basil says to Sybil, you should have a degree in stating the bleeding obvious. Given all the dodging to date, perhaps Turner has done us all a favour by doing exactly that. Sometimes the obvious is the bit that gets forgotten.

Robert Reid is director of Syndaxi Financial Planning


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