I would not seek to take issue with any of the technical aspects of Keith Popplewell’s article on the vagaries of retirement income funding but what it does highlight is all the reasons why the public are so deterred from putting money into a personal pension.Faced with such a near-infinite combination of factors, most ordinary people will throw up their hands and declare the exercise to be such an unfathomable tangle of possibilities that they would prefer almost any alternative to a pension plan. Future investment growth rates? Unknowable. Future inflation? Unknowable. Future annuity rates? Unknowable (but directly age-related and deteriorating relentlessly). Future Government policy towards (private sector) pensions? Unknowable but on the strength of recent history, decidedly discouraging. Tax treatment of unused funds? It just got worse and will probably continue to do so. On top of all this, we have:1: Calls in Parliament for the removal (just for the private sector, of course) of any option to take part of one’s pension fund as a tax-free lump sum.2: The Government’s total abdication of its responsibilities for the dire state of so many occu-pational pension schemes,3: A long history of damaging Government intervention in the ways in which private companies run their pension schemes, the latest of which seems to be the proposal for compulsory transferability of preserved benefits from one scheme to another. Never mind that the benefits’ structure of one scheme may be awkwardly incompatible with that of another (not an issue with the public sector schemes, of course). To the policymakers, it sounds like a good idea so let’s ram it down the throat of the private sector regardless. Private pensions? How can the Government possibly claim to be doing anything other than destroying all incentives to invest in them? In 20 years time, good (and unrestricted) pensions will have become the sole preserve of the civil service, funded, of course, by the rest of us.
Partner, WDS IFAs Bristol