Tuesday, 6 October 2009

Where's my pension?

Last night I watched a programme on television about people who had lost out with pensions.

The programme featured people with concerns about final salary pensions, private pensions and even public sector pensions.

The person in the final salary feature described how she had worked for her employer for 20 years and was looking forward to retiring in her sixties with two thirds of her final salary. However her employer had recently entered into a consultation process with her (and others in the workforce I suspect) with a view to seeking her agreement to end her entitlement to a final salary pension. Her entitlement to date would be preserved but the final salary scheme itself would be scrapped. My own view is that the employer is merely going through the consultation motions and will unilaterally impose this change in the absence of mutual agreement. There was some talk of the employer offering a small “sweetener” in return for agreement. What recourse does this lady have? Well, she could sue the employer for breach of contract, but how practical is this? A common tactic for employers in this situation is to dismiss the employee under the old terms of the contract and immediately re-engage under the new terms, this can be a legitimate action for employers to take in some circumstances. In reality I fear she will just have to put up and shut up.

Anyway, this lady described how she was looking forward to her retirement so she could do all the things she had wanted to do when she was working!!!! This was someone in her early forties who described with sadness that she did not now think she would be able to afford to go to Peru or stay in nice hotels which she had thought her final salary pension would pay for. It seemed she was banking on that money. I will be honest, I sympathise with her but I was also surprised at her naivety. This is someone who had the luxury of having a reasonably well paid job with the SAME employer for over 20 years. How many of us have had that luxury?

The programme also featured a man whose private pension had drastically been reduced in value and now had to return to the workforce in poor health in his sixties. There was another man who had lost his pension fund when his employers went into administration who was campaigning for compensation from the government, he too had to go back to work because he needed the money badly only he couldn't find a job. He was trying to sell his house for £700,000! but no takers (it looked overpriced).

It struck me that it was a great shame that someone seemed prepared to wait until their sixties to go and do what they really wanted to do. The programme also featured other people whose final salary pensions were disappearing and this included public sector workers.

I don’t have a private pension, I put money away myself to enjoy my life now rather than when I’m in my sixties, when I may or may not be around. According to the governments present rules I will be 68 before I am entitled to draw my state pension. Yes 68. This is incompatible with the fact that employers can compulsorily retire employees once they are age 65 or over, this is a mockery of the age discrimination laws. So if you can be legitimately sacked when you are 65 but you are not old enough to get the state pension how are you supposed to provide for yourself?

I am not banking on the state pension. I have no doubt that the Government will keep on raising the qualifying ages for the state pension.

In these times I think pensions are a big con, they are sold and recommended by the same people who have a vested interest in people taking the longest route possible to retirement i.e. financial advisers and the Government. But this is another example of the herd mentality of society, work until your 65 and then you can take your pension and enjoy life. No, we can opt out of the traditional 40 plus years of full time working and find other ways to support ourselves. Why not semis retire at 35 for example? Why not have mini retirements or long sabbaticals. It doesn’t have to be all or nothing.

We have to make our own provision in life, because if we don’t no one else will.

1 comment:

The Executioner said...

You hit the nail on the head with this post. Figure out what you want, and how to get there. And don't look back.