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I’ve read a number of interesting articles lately about pensions, both on here and more recently Mike Morrison’s question on whatever happened to simplification in Money Marketing today.
My view is that politicians are inherently incapable of delivering the changes our pension systems need, even if that change is no change at all. I’ll highlight just three reasons why.
Firstly, there’s a lot of money in pensions. Hundreds of billions already and future promises of hundreds of billions more as we continue to save, even in ever dwindling amounts. Small changes around the edges of this vast resource can raise government revenues by significant amounts, and with pensions largely inaccessible for most of our lives, there’s precious little that anyone can / will do about it. The temptation to skim off the top (or the bottom) is irresistible.
Secondly, the demographics of our nation also work against us. Pension savers range from teenagers to centenarians and whenever a change is introduced the very nature of ages, other demographics and the legacy of changing pension legislation means that inevitably, someone somewhere is going to feel they’re losing out. Even if that change will benefit millions within just a few years, if ten thousand are adversely affected (and with lobbying the way it is that can also mean not benefiting as much let alone being disadvantaged) their position often stymies change for the whole.
Thirdly, those demographics again, the long term nature of pension saving and a general lack of understanding on how retirement saving works. That results in the majority of the population easily becoming disgruntled about something that might affect them in the future, even if they don’t really understand it, delivering a sway in their votes. However, they’re far less likely to recognise a change that can genuinely benefit them, and subsequently influence a positive vote.
There are many more reasons (please add your own if you agree or have a different view) but only one sensible solution: take pension policy out of the hands of politicians.