Inflation has long been a benchmark for the current Government with the independence of the monetary policy committee being a supposed guard on the figures being massaged.
The introduction of the personal inflation calculator is an example of how unconnected ideas can be unhelpful. Early users now realise just how manipulated the RPI has remained, with items such as utility and loan costs removed when they are liable to cause a rise in the index.
Now that we can all calculate our own personal inflation rate, this may reduce spending and bring inflation under control and could even encourage saving over spending when people realise the damage that inflation does to insufficient levels of investment allocated to post retirement. Not what you want to hear when your economic policy needs the spending to continue.
The levels of payment into the NPSS will never provide adequate savings and will be as popular as Christmas hampers as the means’ test bites and the benefits melt away. If people are to make it in retirement they need to recognise the need to save significant funds to make their dreams a reality.
We also have a duty to help the next generation as one by one the defined-benefit schemes close. Last week’s European ruling can only put more pressure on the PPF with higher levies the inevit-able result. If you have not yet come across it, I recommend a book called The Number by Lee Eisenberg. The book focuses on the range of numbers people that apply to the amount they need to be financially independent for the rest of their life. This dose of reality is sobering and underlines the scope of the task.
Regrettably this Government sees the NPSS as the solution to having everyone saving for retirement and they see the numbers taking part being more important than the amount they save being adequate and there is the rub.
We need to ensure that our communications are not all internet-based and that the people who are not proficient in reading skills are not forgotten, the internet is a one to one medium and as these issues often concern couples the internet is not the perfect solution.
Workplace education is a vital component but the current project with the FSA excludes one-to-one meetings and whatever we might wish worked instead. The reality is that one to one is what the majority find the most effective.
This means the definition of generic advice needs to lose the grey areas. It lacks definition and large swathes of the market will lack advice, free or otherwise.
Before I forget, I must take issue with the chap upstairs, Nic Cicutti. His dismissal of the Nacab/Personal Finance Society pilot scheme does him no credit. If we are to ensure that money invested into free financial advice delivers benefits, we need to continue to run this pilot which, as it turns out, provides valuable research to feed into the other project being headed by Otto Thorensen.
Perhaps he could focus on the need to remove meanstesting as the major impediment to these projects making a difference. I just hope that this report is not filed away as so many have been to date.