“Pension Crystal Ball” 2

For the first blog on this issue, see “PENSION CRYSTAL BALL” 1 in the TAG CLOUD.

So, what can I see in my Pension Crystal Ball:-

Some things are very clear:-

  • Pension age is going to rise.  It was 60 for women and 65 for men.  By 2020 it will be 66 for men and women.  Then 67 by 2028 and 68 by 2046.  By 2050 the state retirement age will be 70.  This has big implications for the young of today but no impact on existing pensioners.
  • Pension saving will become compulsory.  Currently almost half of working people are not saving enough and many save nothing at all.  The Government’s first move has been to introduce automatic enrolment in occupational pensions – its nest scheme but people can still opt out of this, and are obviously not included if they are unemployed.

The question is – will they save enough for a comfortable retirement or just enough to disqualify themselves from welfare benefit support.  The lowest paid workers who earn less than £15,000 may well conclude it is not worth saving at all and opt out of the nest scheme.

I predict a future Government will make saving for a pension compulsory before very long.

  • The value of universal benefits will be eroded.   This has already been started by linking benefit increases to consumer price index rather than retail price index.   It is just a matter of time and political opportunity before winter fuel allowance, the free bus pass and free TV licences are removed from wealthier pensioners.   This is probably a good thing, but will it be matched by a corresponding increase in the universal state pension.   The illusory £140 pension (see “THE £140 PENSION ILLUSION” in the TAG CLOUD).
  • Free health care will gradually shrink.  For the elderly it has been an issue for many years.   In theory health care is free but in many cases it has not been available.  Equally the care of elderly people in the NHS has a bad reputation which discourages people from coming forward.
  • Free social care will become a thing of the past.  It is already limited only to critical cases in most areas of the country.   When the Dilnot report is finally accepted in principle, it will cap total care costs, although it has subtly added in a £10,000 annual accommodation charge.   I also predict the cap will be around £50,000 rather than Dilnot’s £35,000 and that the qualification for care cost will be tightly proscribed.

In Conclusion:

  • You’re going to have to look after yourself.  The state pension will cover a subsistence level of retirement.   Any quality of life or health and social care support you need will have to be funded through your own resources.

So if you’re still young, start saving at least 20% of your earnings every year towards your eventual retirement at 70 plus.

If you are already retired consider using whatever equity you have – most obviously your house to buy yourself the life style and support you want or need.

THE SELF-WELFARE STATE

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