Pensions are retiring

The notion of people working loyally for one employer and departing at a reasonable age on a worthy pension to enjoy many fruitful and active years of retirement seems just as much a rose-tinted memory as employment for life these days.  Excluding senior civil servants, judges and others with gold-plated careers and pensions, loyalty to employees, rewarded by a decent pension based on service and final salary is a thing of the past.

The arguments for why this is suddenly so contentious an issue are well rehearsed, so it barely seems worthwhile repeating them, but for the benefit of those catching up I will do so:

  1. We all live far longer, fitter and healthier lives, and therefore have longer of active retirement to fund
  2. Pensions based on final salary schemes are deemed “too expensive” to operate, so are being changed to reduce the benefits people receive
  3. People are being forced to work longer to fund pensions, not least planned extensions to the “official” retirement age, providing they can actually find jobs to do at that age…
  4. …and if people do stay on in work longer rather than retiring, jobs available to the young are potentially squeezed.

In the ideal world, a decent pension would be available so we can all live a life of comfort to pursue our dreams and ambitions.  Sadly, very few can live like that.  Taking the issues one at a time, let’s start with retirement age.  Traditionally, 65 has been the nominal minimum age for men, 60 for women, to claim state pensions, though actual retirement will depend on what work we have, whether our health and inclination allow us to pursue.  And, of course, what alternatives might exist to allow us to taper off the working life into a graceful but productive retirement.

At a time of full employment, there was pressure to reduce retirement ages, either to 60 for both genders or even as low as 55 for women, though now we are heading for equality of the sexes and an intended destination of 67 to claim the fairly minimal state pension.  In practice, people may retire when they feel the time is right, though many, like my dad, have no choice: the work runs out because many organisations simply don’t want to employ people after a certain age.  By law they can’t discriminate on age grounds, but if they want you to go, you will go.

Yet when the people concerned are actually self-employed, the situation is worse. In the case of self-employed TV presenters, contracts are routinely not renewed, though there is no logical grounds for dismissing popular most popular presenters – other than their being higher earners.  Women in particular suffer shocking age discrimination in professions where “glamour” is associated with youth – though older women can look more glamorous with age.  In short, prejudice and agism is absolutely rife in the employment market.

Consider also the many inconsistencies in this: Police Officers retire on full pension after 30 years service these days at an average age of 50, in spite of the vast knowledge and experience they take with them, on the grounds that they are unlikely to be as fit for front-line duties as once they were; Judges typically work into their 70s and beyond without being forced to retire, and are said to benefit from their accumulated wisdom (though others might say they merely become yet further estranged from modern culture.)

That could easily be said of many professions, though unlike the law they tend to move on and thinking is refreshed.  You would hope people could work as little or as much as they choose to, depending on financial circumstances and inclination, but that is really not much of an option.  Either we are forced to leave and end up on the scrapheap, our health or circumstances intervene, or, if very lucky, our plans for retirement are realised and funded.

Now that may be something simple.  You might choose to sell up, buy a nice cottage and spend your life pottering in the garden, organising bring & buy sales for charities, playing golf and bridge, whatever floats your boat.  Or you may want to travel and see the world, all the things you intended to do before children and/or career got in the way.  But if so, you will need serious investments to fund your lifestyle, and you will be one of the lucky few.  If you are dependent on state pension, you might as well stop dreaming this second!

State pensions funded from National Insurance and not and never have been linked to a genuine investment scheme at all.  They should have been in a real and protected insurance pot to maximise returns for the taxpayer.  Instead, NI is merely another tax and the pension is funded from current government revenues, not that it would fund anything like the sort of lifestyle we would hope to live anyway.  It is a supplement but as a sole source of income it would be a meagre living indeed.

So, what are the alternatives?  A pension scheme, occupational or otherwise.  You get tax benefits for taking it out, but never see the capital ever again.  Pop your clogs one day after retirement and the benefit dies with you.  Such is retirement roulette!  However, since most of us do live much longer lives the value to be extracted from such money purchase schemes is now severely limited.  Unless you have saved a huge pot of cash between your own contributions and those of your employer, it will be increasingly difficult to earn a huge income.

Worse still, the benefits of almost all public sector schemes, which traditionally were the compensation for loyalty at less than private sector salary rates, are being eroded, not least to fund cuts in government spending, and contributions increasing.  Small wonder unions and workers have been protesting, albeit in vain.

Then there are the millions who have nothing, or certainly not enough to fund any sort of a retirement.  Perhaps we intend never to retire, just work until we drop?  More to the point, we probably prefer to avoid thinking about it.  This is even before we get around to the threat of losing our homes to fund nursing homes.  Clearly the thought that we might not be immortal and possibly incapable of earning is deeply uncomfortable.

So what to do? Well assuming we can’t all acquire a property empire or some other such amassed fortune in paintings, wine or other saleable commodity, we have to life by our wits and find ways to be useful that don’t fall prey to prejudice and ageism, but do enable us to use the resources at our disposal, even when we are old, grey and less capable than once we were.

People my age have taken to second careers buying and selling via eBay, for example.  It doesn’t take much effort, and so long as you know the market in which you deal.  For me, though, the solution is simple: so long as I have a brain in my head, working eyes and fingers, and a decent computer and internet connection, writing will be the unit of currency, providing the rate of exchange are at least viable.  What price the written word?

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