Connections to Health - Pension crisis? What pension crisis?

THE ISHTA HOLISTIC HEALTH CENTRE

CONNECTIONS to HEALTH

Pension crisis? What pension crisis?

A new survey carried out by Fidelity International reveals that someone aged 65 has a fifty-fifty chance of reaching 87 years old.
The same study reveals that a couple retiring at 65 have a one in six chance that one of them will live to be a hundred.
Now that might be appealing to you, it may not.
If it means I am going to be dribbling into my soup for twenty years I might not think it is such a great thing after all. But one thing is for sure, how the heck are you going to finance your lifestyle when you could be retired for the same amount of time you were at work?
Will a million pounds do it?

If you are one of those people who has trouble making ends meet when you have a salary coming in each month, imagine how difficult it will be when you have to survive for another thirty or forty years with nothing but the remains of an under-performing pension scheme.
To put this into perspective, imagine that at the age of 50 you win a million pounds.
On Monday you tell the boss to stick his job and sit down to plan the golden years of leisure and freedom that now lie ahead of you. If this million pounds is going to be your spending money, how long will it last?
Well, if you have a fifty-fifty chance of lasting until you are 87 then divide a million by the 37 years still to go and you will be horrified to discover it's only worth just over £27,000 a year. That's less than your job was paying you and you haven't spent a penny yet on expensive cars and luxury yachts or even paid off the mortgage.
And if you want to support two people up to the age of 87 that equates to only £13,513 per person annual income. You can forget about interest on the money by the way, that will be swallowed up by inflation.
If you are both unlucky enough to live to be one hundred then the figure falls even more to a paltry £10,000 each per year.
Clearly a million pound windfall is way short of what you need to retire in the lap of luxury these days.
What has happened to pensions?

Last week I watched a programme on the dreadful state of the pension industry in this country. I think it aired in January, we're behind in watching what we've recorded.
It was called "Whatever happened to my pension?" or something like that. While the style of production could be criticised, I can understand why the Director wanted to make an otherwise boring subject a little bit more interesting, what couldn't be criticised was the programme content, which showed how the pension industry stole defeat from the jaws of victory in less than ten years.
The programme quoted four key reasons for this change of fortunes:

1. When the pension funds were performing well, company bosses decided to stop putting money into the schemes as they had a "better" use for the money elsewhere. The funds were already overflowing with cash, but bosses failed to recognise that this money was not surplus cash but money that was needed to finance the pensions of those retirees who had been paying into these schemes all of their working lives. While money going into the schemes was reduced, the amount of money going out was on the increase and anyone retiring ten years ago on a fixed salary pension scheme is certainly living the life of Riley right now. The programme showed plenty of examples of people who had retired in the nineties who now had little to worry about "other than inheritance tax". Nice money if you can get it.
2. The Actuaries, whose job it is to work out how much money needed to be paid into the scheme in order to finance future pension benefits made dreadful errors in calculating how long people were going to live in the future. Better diet, better living conditions, better healthcare and better education have all led to people living much longer. Actuaries failed to recognise this and include it in their calculations despite the fact that it was common knowledge.
3. The investment companies were next in this sorry tale. The stock market has not performed as well as many people expected. Furthermore, the big pension providers did not achieve the kind of performance you might expect, particularly bearing in mind the fees that they charge. As the markets and the investment companies continued to under-perform, so the value of the pension schemes fell even further.
4. And finally, the biggest villain of them all was named as the Rt. Hon. Gordon Brown, the chancellor of the exchequer.
The programme criticised Brown in three key areas. First of all he has been chancellor throughout the entire sorry period and cannot therefore claim that he was merely handed the problem by someone else. Secondly, the government positively encouraged workers to invest heavily in company pension schemes, claiming that they were safe, secure and high performers. When the state of the pension industry turned sour the government then claimed that it was absolutely nothing to do with them.
5. And finally, if the above was not enough, the coup de gras was to introduce stinging tax changes that meant around £5 billion was taken out of the pension schemes every year in tax revenues.
80% 0f people will be poor.

One spokesperson on the programme estimated that a staggering 80 per cent of UK residents will not have a pension that will support even their basic requirements in old age.
Imagine hitting 60 and having no money coming in.
Imagine hitting 65 and having no money coming in.
Now remember that you have a 50-50 chance of living another 22 years.

Whose advice should you take?

I am sure that it is obvious that all four groups of people charged with creating the pension crisis in this country are the most highly paid and well educated in society today. While your pension fund has crumbled to nothing they have been taking huge fees for their "professional" services.
When you realise that it is the very people who you turn to for advice that have created this problem you will start to see things in a different way. You will certainly start to see you future in a different way.
I urge you to take matters into your own hands when it comes to looking after your retirement. Whatever it takes - do not become a victim.
Do not spend your last twenty years on this planet in poverty, bitter, resentful and blaming everyone else for your sorry life. Strike out now - do something before it is too late.

An alternative approach

We are having a talk at the Ishta Centre about a way you can create your own "pension" that will support you in your twighlight years/decades.
The talk is on Thursday 22nd March and starts at 7pm and will last about an hour to an hour and a quarter, depending on how many questions there are.

If you would like to attend, please talk to Allyn or Sue at the centre as space is limited. If you want more information please ask for a free DVD.