In a classic display of financial melodrama, UK pension companies are once more drumming up fear, urging the public to fork over even more money than the £2 trillion already under management. They’ve also managed to sway some gullible MPs into thinking this must be cemented into law. It’s convenient how they entirely sidestep the other side of the coin – earnings longevity.
Let's be real: globally, people are living longer. Seventy is the new sixty, and beyond. Yet, these doomsday retirement narratives pressure already stretched workers to scrimp more and hand over more cash to the fat cats.
Politically, what we should be doing is enhancing our health span to reduce periods of morbidity and extend the longevity of earned income well into later years.
Imagine a world where work doesn’t feel like work, and people never want to retire.
That's the dream, right? Instead of piling on the pressure to save more, we should create multiple income streams, including passive ones. Encourage the public to invest in productive assets – think know-how, character, skills, and connections. Leverage entrepreneurial opportunities to create sustainable livelihoods that stretch into old age.
Our focus should be on saving what we can afford, in low-cost, well-diversified savings vehicles that are readily available. At the same time, we should foster earnings growth, longevity, and resilience through smart investment and sound policy.
This is the balanced rhetoric we, as a society, need to demand from our institutions and governments.
Ah, here it is – the offending article. According to FT Adviser, an extra 1.2 million people are now not on track for even a minimum retirement lifestyle as the UK pension savings gap widens.
The Scottish Widows’ annual retirement report claims that the percentage of people not on track for what the PLSA deems a minimum retirement has worsened from 35% to 38% since 2023.
This report found that 54% of UK retirees expect to work "longer than they’d like", on average by seven years, and 27% of those who have made retirement plans don’t feel they’ll ever be able to afford it.
But surveys show that working in meaningful projects in later life improve health life expectancy and life expectancy.
Younger people, aged 18-29, would like to retire even earlier, ideally at 61, and are only prepared to work until they reach 64, if necessary. But do Gen Z's really understand the relationship between decent work and improved health life expectancy?
The increase in those projected to "suffer the poorest retirement outcomes" has been driven by rises in the cost of living outpacing wage growth, which has averaged just 6.2%, according to Scottish Widows.
Only 42% of people felt they had the leeway above day-to-day pressures to save anything for retirement. 58% have empty pockets, and not even fat cats can empty pockets that have already been picked!
Pete Glancy, head of pensions policy at Scottish Widows, expressed "great concern" over the growing gap in retirement outcomes and quality of life between current retirees and future retirees. He notes that while people are starting to consider how their private pension pot might interact with their state pension entitlement, there remains a heavy reliance on the state pension.
“It’s the right moment for the new government to take a holistic view on people’s financial resilience throughout life, especially for those whose retirement outcomes are predicted to be much lower,” Glancy added.
The report also revealed that 54% of respondents expect the state pension to form a meaningful part of their retirement income, with 75% calling it “hugely important” for everyday necessities. However, 12% are skeptical about this level of support being available by the time they retire.
Paul Leandro of Barnett Waddingham echoed these concerns, warning that the UK has yet to “defuse the ticking time bomb” of its pension system. He stressed the inadequacy of pension contributions across all age groups and the need for significant increases to avoid worsening the situation.
Brian Byrnes, head of personal finance at Moneybox, said we are “sleepwalking into a retirement crisis” and emphasised the need for systemic changes to consumer interactions now to prevent many from facing a future without enough saved for a comfortable retirement.
Conclusion
The narrative is clear: scare the public into thinking they need to save more, while conveniently ignoring the potential for increased earnings longevity and sustainable income streams. Instead of succumbing to these fear tactics, we should be pushing for policies that enhance our health, extend our earning years, and create multiple income streams. Let’s demand a new, balanced rhetoric from our institutions and governments. They are here to serve us, rather than us serve them! It’s time to focus on what truly matters for a secure and fulfilling future.
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