Investment

The Pension Dilemma

The Pension Dilemma
Posted by Adam

Every so often the issue of pensions raises its head above the parapet only to drop off the news map again for a few months. Pensions are the ultimate political hot potato. They are a huge problem but doing anything to tackle the situation is going to alienate voters at an unprecedented rate. Why? Because solving the pension nightmare is going to involve relieving people of more of their income and that might well be political suicide. Unfortunately ignoring the problem is storing up a major disaster for the future so who is going to be brave enough to make changes in time?

Long Lives

We are all living longer lives which is good thing in every way other than the fact that we need some form of income to live on. If we work for 40 years to fund 10 to 15 years of retirement the finances are manageable but now some of us will be retired for as long as we were working and that is an entirely different kettle of fish. The proportion of our incomes that we would need to set aside is enormous. Add to this the effects of the recession and rising energy costs leaving many people feeling the pinch, how can anyone afford to make the pension contributions that they need to?

Pensions

The truth is that many people have no pension provision at all and most of those who do are no saving enough. Governments have tried various tactics like stakeholder pensions and tax relief to induce people to act but some just don’t consider the future and others can’t afford to lose any of their income. The only solution is to compel people to save either by making pensions a legal requirement or by introducing a new tax to fund the state pension.

Taxes

Like everyone I hate taxes and I am happy to admit that I do everything I can to limit the amount I pay. But I think I just might have to face the fact that this is one form of taxation that I should embrace because millions of people are staring down the barrel of poverty in retirement and if I am not careful I could be one of them!

Shortfall

I have a personal pension but it won’t be nearly enough to fund any sort of decent lifestyle. I always intended to work at least part time to make up the difference but now realise that finding work when you are older is no easy matter. I am only 50 years old and yet I can already see that ageism is a problem. I have a decent house which would enable me to downsize and release capital but what about the people of have no significant assets?

Living the Dream

We all dream of a pleasant retirement and relish the idea of having the time to do all the things that we can’t fit into to our busy schedules, but that dream could quickly turn into a nightmare. The idea of spending our days happily fishing on the river bank are all very well but if we are not careful we won’t even be able to afford the bait. We all need a plan of action and if people are reluctant to accept that fact then they may have to be forced into making provision. I wonder who is going to be prepared to kill their own political careers in an attempt to solve the problem. I suspect that the answer to that is nobody.