PICTURE: RIGHT LADS, WHO’S FOR SORTING PENSIONS?
Get your hard-hats on as N&W MD Dave Ward has a crack at HMG over pensions…
By Dave Ward (republished from ‘Managing In Vending‘).
In order to see things clearly, sometimes it pays to look at something from a slightly off the wall angle to get a clearer picture of what’s actually going on. A case in point? Pensions.
It’s almost impossible to get your head around it: the people who make the rules on pensions have the best non (or almost none) contributory schemes known to man and – get this – they’re exempt from many of the rules applied to the rest of us.
If you, like me, find it hard to fathom how such anarchy can prosper in a democracy, imagine that the Whitehall ‘suits’ responsible for our pensions are actually the Rt. Hon. Jim Hacker, Prime Minister; Permanent Secretary Sir Humphrey Appleby and Principal Private Secretary, Bernard Woolley…
Yes, Prime Minister.
The ‘Pensions’ episode would go like this: while Sir Humphrey is outwardly deferential towards the PM, he is prepared to defend the status quo at all costs. Bernard is sympathetic towards Hacker but as Sir Humphrey reminds him, his civil servant superiors will have much to say about the course of his future career, while ministers do not usually stay long in one department… Hacker’s proposals are frustrated by Sir Humphrey, and Sir Humphrey’s counter proposals are rejected by Hacker. Bernard’s best attempts to have the sides see sense are futile and the unthinkable suddenly becomes legislation.
Think of it that way: that’s the whole pensions saga in a nutshell, right there.
Back in the real world, don’t small business owners have enough issues to deal with, without the backdrop of an ever-changing pensions climate? How many of us really understand all the buzzwords? ‘Final salary’, ‘defined benefit’, ‘SIPP’, ‘annuity’, ‘stakeholder’, ‘contracted in’, ‘contracted out’; ‘SERPS single tier’, ‘income draw down’ and so on and on and on…
If you are my age, (commiserations, by the way), most of these terms have applied to us in some way, shape or form. On a personal note, my case is further complicated because I lived and worked in Germany for several years and I’m due to get a little something from over there to factor into my sums.
(I’ll tell you what: we may have free movement of labour within the EU but, when it comes to social benefits, it’s ‘every man for himself.’)
It takes a lifetime of effort to save for retirement, but that never stops the government (regardless of what flavour it is) from changing the rules every few years, usually to the detriment of our old mate ‘the man in the street’. Who will ever forget the raid on pensions made when tax relief on dividends was removed? That was the final nail in the coffin of final salary schemes, except – you guessed it – for civil servants.
How motivated would you be to save for a pension when everything keeps changing?
They try to headline every change to us as a benefit, but it never takes long for the time bombs hidden inside to reveal themselves. Only a few years ago, they changed the rules so that you needed just 30 years contributions for a full pension, down from 40 something. Great! (Especially for the fairer sex who were a bit of a second class citizen when it came to pensions). Except then, you find out that this is for people retiring between 2014 and 2016 (!) and just as you get your head round that, it’s changing again, from 2016, to 35 years. So 40 years in work, but a change in pension rules within 2-3 years.
I really sympathise with people starting out in work today. How motivated would you be to save for a pension when everything keeps changing? The retirement goal posts keep on moving and the whole subject seems so time-consumingly complicated that you convince yourself you don’t understand, so you do nothing and all the time, your retirement date keeps moving away and besides, you need your money now…
And that’s without even mentioning auto enrolment. What a dog’s breakfast that is!
Which brings me back to where I started. It’s like something out of Yes, Prime Minister. You couldn’t make it up – unless of course your name is Antony Jay or Jonathan Lynn.
If I can get the pension issues sorted, maybe I’ll have time to write something about vending for the next newsletter. Funny, isn’t it, how government red tape takes your focus away from where it should be – on your business?
