Pensions Crisis

I'll drink to a longer life, but I'm not sure how I'll pay for it If you are anything like me, you can't help salivating when you walk past the glistening vitrines of the estate agents. Ooh yes, there it is, some hutch or hovel of exactly the kind you bought 10 years ago - and look at it now. Listen to the breathless adjectives with which the realtors announce this "rare opportunity to purchase" some hopeless, sunless, gardenless dump. Hark at them raving about the outlook of the kitchen, when you know in your heart it has all the charm and amenity of Fred West's cellar. Then look at the price, my dears. Look at those zeroes spooling across the page like a child blowing bubbles. I know it is rude to discuss property prices, but this column has never been bashful, and I propose to give you the eye-popping history of the Johnson investments. In 1995 we bought a house worth x. About four years later we sold it for 2x, and bought a bigger house worth y. Unless the prices in the estate agents' are wrong, it now appears to be worth 2y, or possibly even 2.1y, where y is already a pretty chunky sum. Englishman's home is his castle.jpg It is quite mad. It is not as if the people of the neighbourhood have all struck oil in the basement. It's everywhere, this deep, dark love of inflation, not just in Henley-on-Thames, the hottest house-price hotspot in Britain, but across the country. An astonishing 70 per cent of British adults are owner-occupiers, and the result is that huge numbers of us have become hopelessly addicted to property porn. We drool over the leaflets shoved through our doors. We marvel that anyone can seriously ask that much for that shack down the road with the ulcerated stucco and the buddleia growing out of the architrave. Then we secretly pat ourselves on the back for being so smart as to invest in property; and we forget the wider consequences, not just for Britain, but also for ourselves. The national obsession with house prices means that if there is the slightest tremor in the market, the press becomes almost unhinged with alarm; and it means the economy as a whole is steadily skewed out of shape. The total wealth of the British people is about £5,000 billion, of which £1,300 billion is in our funded pensions, and a stunning £2,500 billion - half the national wealth - is in the value of our houses net of mortgages; and over the past 20 years, that proportion has been growing, as the proportion of our wealth held in pensions has been shrinking. Houses cost more and more; and for those who are not owner-occupiers, of course, the position becomes worse and worse. All MPs meet young people who are desperate to get on the property ladder, but who cannot afford it, and this is having a serious demographic impact. Every year from 1997 to 2003, the average age of first-time buyers increased. The longer couples have to wait to find a house, the longer they delay having children. The longer they delay having children, the fewer they have; and it is the general shortage of children that is at the heart of the pensions crisis. An ever higher percentage of the population is now over 65, and an ever smaller percentage of the population is below 16, and that means, bluntly, that the dependency ratio is getting more and more alarming. As the century goes on, there will be a huge wedge of ageing baby-boomers depending on the graft, effort and taxes of a relatively diminishing number of young people. We baby-boomers fully intend to live longer and longer (I am told it is likely that thousands of us, in the 1964 baby boom, will live to see 2064, and I will certainly give it a shot with the help of my patent red-wine diet), and we will need more and more pension, and the decrepitude of our old age will be attended by ever more expensive NHS interventions. There is only one way to change that dependency ratio, and that is for the women of Britain to punch out more babies. As is well known, the fertility of the average British woman hovers around 1.7, which is well below the rate of replenishment, and insofar as the British population is set to grow, it is entirely thanks to immigration. All sorts of explanations are offered for the national baby famine. Traditionalists say it is to do with women's lib, and girls thinking of their careers, and leaving it too late. At which point in the argument, the girls get very testy, and say it is all the fault of the young men these days, who are useless and reluctant to commit. I do not propose to enter that particular dispute. I merely wish to point out not just that the housing problem is also a deterrent to reproduction, but that the pensions crisis is related to the housing crisis. What impression, all in all, do we take away from all these stories about pensions? That the pensions industry, public and private, is in a bit of a shambles; that schemes we hoped to rely on are worth a pitcher of warm spit. We know that Gordon Brown has inflicted disaster on private occupational pensions, robbing their funds of upwards of £5 billion a year to pay for his ballooning numbers of state sector pensions. We can see that the Government can't even afford to fund these public sector pensions, and will shortly be forced to push up the age of retirement, even if it means a war with the unions. Above all, we know that for a huge number of people, it hardly seems worth saving for their retirement, because if they do, they will find themselves penalised by the withdrawal of the means-tested benefits that are spreading ever upwards in the income groups. Young people realise that if they start saving now for their pension fund, they could end up with less than those who put nothing by; and that is among the reasons why the savings ratio in this country has fallen so fast. People look at all this pensions malarkey, they suck their teeth, and they decide that one way or another it is likely to be a rip-off. Which is precisely why, as a nation, we pump ever more of our resources into houses. We have a touching belief that bricks and mortar cannot evaporate. That is among the reasons why house prices have tended to rise ever higher, with fewer and fewer people in them. Labour has made such a hash of things that an Englishman's home is not only his castle, but his pension, too.

40 thoughts on “Pensions Crisis”

  1. >I am told it is likely that thousands of us, in the 1964 baby boom, will live to see 2064, and I will certainly give it a shot with the help of my patent red-wine diet

    I liked to hear that Boris would live till beyond 100 – he wouldn’t do a George Best on us

  2. Although somewhat of an economic nincompoop, it seemed to me from a very early age that it didn’t matter how much dosh you had, unless there were people working to produce goods and services it wouldn’t do you much good.

    If I have x amount of money to spend in my retirement, or any other time, then I should be able to corner x/y proportion of goods and services, where y is the amount of disposable income. If the proletariat are producing less g and s, then I will have less g and s. All other things being equal if the proletariat is fewer then this follows through to me having less g and s.

    Why are there so many surprised people?

    B. A. Economics, Neasden University College (Failed)

  3. How many units of red wine do you recommend, Boris?
    I don’t think i could take more than ten per week. You might need to scale down the dose for lesser mortals like myself.

  4. Just heard ( on the fabulous Radio 4) a student’s answer to the question about his possible pension age and the amount he might be expect at that time,should things remain the same as now and I quote:” I’ll be busy repaying money which I borrowed for my education,, so why should I bother about my pension”.

    Reply , (at least from me) ,” If you can’t be bothered about your pension, , why the hell should the remaining population?” This sort of attitude,fostered by lack of assumed future self responsibility, in particular by the very young and immature, can only be altered by a root and branch shake up of fiscal education, starting at the top.

    We are told that the minority of non contibuters :the workshy and the wasteful, will receive but a little less than those who have worked ; saved and ensured a life , if not of luxury, at least above the poverty line. Hardly fair , but Nanny knows best.

    If it were not already too late to avoid this pension crisis, there might have been ways to avoid it altogether. Brown got us into it by legally stealing large lumps of pension fund monies.

    Were Browns actions not as questionable; as reprehensible as those of Maxwell, who famously( or infamously), did the same to the funds of his employees?

    In order to grasp the thistle ( very apt in the case of Prudence ), he should set income tax , and / or national insurance at a level which would sustain a fair pension, whilst at the same time reducing the insidious stealth taxes, so beloved of Labour.

    The people of this country are quite intelligent, Prudence , and know that from nothing , comes nothing: you are frightened of the backlash , which you would undoubtedly get , from putting the income tax and national insurance levels up a few pence, but that is as nothing compared to the chaos you are engendering by not addressing the future problems before they become completely out of hand.

  5. You are so right about the “non-baby boom” at present. My daughter and her husband saved for years to get onto the property ladder. This meant that although they wanted children they couldn’t because they both had to work hard for years to get their own place. Now that they have their own place they still can’t afford to have children because they both have to work to pay the high mortgage repayments. Catch 22! If my daughter got pregnant, she couldn’t afford the time off to look after the little one. Anyway, she is now at the age when having a baby could be dangerous, if not impossible.

    I had only one daughter (for enconomic reasons we couldn’t have more) and now with no grandchildren the family line will die out.

  6. I’m sorry to hear that Keith.

    But I think the problem lies not in all these various reasons Boris mentions, but in the government. The reason I won’t be saving up a pension, or really saving for anything, is that the government is so chaotic and unpredictable at the moment that I have no confidence that what I do now will have any impact on the situation I’m in in 45, 10, or even 5 years. I don’t trust the government to leave me or my plans alone, and even if the fear is irrational, I get the feeling I should always be looking over my shoulder in case Tony or Gordon is sneaking up to pick my pockets. Property is definitely something I would invest in (If I was several thousand pounds richer!!), as it is sure and safe. Even if they decide to destroy the value of the property, at least I myself will have somewhere to live! People will always need a roof over their heads, and nothing those two can do is going to stop that being the case.

    It’s also the reason I would be hesitant before having kids (aside from the fact that I’m 19 and single…), since I think a feeling of stability is an important comfort for such an important decision. When I don’t trust the government to stay out of my way for the next 5 years, I can’t be confident in any plans I make, and I’m certainly not going to have kids without being in a position of financial security.

    The problem is Blair and Brown’s constant meddling, they change things too frequently, and make people feel insecure.

  7. I love the absurdity of people thinking their houses are their pensions. Where are they going to live when they cash them in?

    Housing is a right, not a luxury. With 500,000 homeless people in the UK (figure taken from the “Shelter” website), and the birthrate continually dropping due to the unaffordability of nesting boxes (metaphorically speaking!), something needs to be sorted out – and fast.

    I appreciate that property ownership is what kick-started the industrial revolution, giving entrepreneurs something to borrow against. Unfortunately, times have moved on. The population has grown to record proportions, but we are a finite land. The countryside is dying, as the “workers” who have maintained it for centuries can no longer afford to do this or live in the area (you don’t really think hedgerows and woodland plant and maintain themselves, do you?).

    A solution must be found. Boris, you have my number…fancy putting property pensions in the bin where they belong? Un-Tory it may be, but the nations future is at stake!!

    ;o)

    Psi

  8. Furthermore Boris, if like me you recently checked the actual ‘re-build’ value of your ‘castle’, you should note with horror that to build such from the ground up could cost as little as 45% of the current Estate Agents’ suggested flogging price! Which means we are still paying antique art values for something as basic and essential as a home.
    The other missed redicularity is that today it is cheaper to buy a plot of land, commission an architect and engage a reputable builder to end up with your dream home! Madness!!
    Let’s all hope the artificial value bubble of property doesn’t burst before we’re 68, otherwise it’ll all be a bit of a tight fit down at the hostel!

  9. At the present rate of theheriff of Nottingham” -like leanings of the present Government, the only ones having a reasonable life’s twilight will be the People’s servants.

    Forget the “pension ” one might be expected to find innate in property ownership;the ownership of a house merely means that you, as a person possibly requiring the attention of a so called caring State, at a time when you are not particulrly at your best, will be compelled to sell that treasured piece of inheritance,for which you scrimped and slaved ,to pay for the care required in your dotage, whilst those who prodigalized their income, perhaps never even worked , receive the same care ;free gratis,and for nothing.

    Let’s all show our solidarity for this shower, by singing the Internationale, that stirring
    anthem of the left;the leaders of whom as they age,will live in the lap of luxury , whilst their beloved proletariat rots in poverty. “he working class can kiss my…., I’ve got a decent job at last”

  10. Once again, words of wisdom spread evenly around. I have a clever solution to the problems of house pricing: I am to move abroad! Having grown up and seen this country ruined by Labour – sky-high house prices, run-down N.H.S., taxes to the hilt, the honest working man turned into the criminal whilst the criminals are given shoulders to cry (laugh) upon – I have decided to move away whilst I am still young. Alas, I love my country to death, but it’s an absolute hell to live in at the moment, and with Bliar giving away our rebate and no pensions left by the time I retire, it is with reluctance that I soon depart for a (better, I hope) life.

  11. As a homeowner I should be rejoicing in the inflation of property prices but I’m not. To me doubling the price of my house is just a way of halving the value of the money — you only make money if the price of your house rises relative to everyone else’s. Since we all have to live somewhere then we can’t cash out the place, all we have to look forward to is stealthy rises in costs of ownership and various schemes to drain our apparent wealth due to means tests, capital gains and estate taxes.

    I feel very sorry for what we have done to our children. We’ve shortchanged their education, delivered them into what is seriously devalued jobs (relative to the costs of living) and given them few prospects to look forward to, just a life of toil with an ever-increasing retirement age. I’m probably going to be OK with my kids, but I suspect I’m the exception, not the rule, and I have to live the knowledge that sooner or later they’re going to be in the political driving seat….I just can’t see them working themselves into the ground to keep a generation of freeloaders.

  12. Well Done Boris!

    As a scouser I am not supposed to agree with your opinions, but I must admit you have SOOO hit the nail on the head in your latest housing article.

    It’s about time that someone in a media position spoke the truth and avoided the SPIN that is feed to us by Vested Interests and the BBC.

    We have been discussing these issues on http://www.housepricecrash.co.uk (delete URL if you wish – its not meant to be a cheap advert) for many years. The implications of this OUTRAGEOUS House Price Inflation are damaging this country beyond belief. There is no bright future when hard-working young adults cannot afford to buy even the tatties holes that this country has to offer.

    You would actually be better off financially, as a youngster, to get your 17 year old G/F pregnant – claim benefits and get on the housing list. Your quality of life is actually BETTER.
    How has it come to this? Why should people work when after taxes there is not enough money to buy the most basic of starter homes? It sends out the wrong message and something needs to be done – NOW!!!

    STOP Buy-To-Let and tax heavily people who are using the housing market as a money-spinner. How can some smug Landlord be allowed to have 20 properties with CHEAP MONEY when the future of this country cannot even afford to buy 1 to raise a family.

    I DESPAIR!

    Nonetheless, great article and keep making your voice heard. There are many people that have read this article and think “AT LAST – SOME HOME TRUTHS”

  13. Spot on Boris!

    Martin Usher
    “I just can’t see them working themselves into the ground to keep a generation of freeloaders.”

    As the currently screwed generation I can assure you you are correct.

    Teddy boy
    “It’s about time that someone in a media position spoke the truth and avoided the SPIN that is feed to us by Vested Interests and the BBC.”

    The nonsense the “dear old beeb” pours out rivals Chinese stations for government control.

    Keep up the good work Boris.

  14. We should be careful before attempting to intervene in the market – for example currently there is much debate about the effects of various anti-discrimination laws on small businesses and with good reason I think.

    However if we find that there are villages and small rural towns where a large amount of housing is for second homes, it is practically impossible for young working people to buy a modest home etc. etc. then there is a problem we ignore at our peril.

    How a government intervenes must be thought through – not always done in government! It might be useful to ask what would be the benefits and debits of rationing houses to 1 per adult. It is a curtailment of civil liberty to prevent soemone buying what they want but this is done in many areas. Would it be right to do so here?

    I don’t know and would be interested to see what my e-colleagues think.

  15. It also occurs to me that I have NEVER* had a landlord that declared any of the income they received from rents. They all seem to see it as a tax-free investment. Maybe it is, I don’t know.

    Now, if THAT income WAS taxed properly, how many houses would that provide the country?

    I seem to have a recollection that the Channel Islands have a seemingly good solution on house prices: There was a big tax on property sales, but this was refundable for “locals”…allowing locals to afford to stay local. Or maybe i just dreamt that!

    (almost) Finally, has anyone ever been given their deposit back on a rented property? Landlords, it’s NOT a tax-free present!!!

    (actually) Finally, I work hard for my tiny income. I would actually be

  16. As far as one’s house being one’s pension, it is more likely now to be at least a part of everyone else but your own pension, due to death duties, after your demise.

    There has always been trouble with the greed of absentee landlords, but there is no way that legislation would make a difference to the relativelty recent speculators, who are,(not entirely), the only ones to blame for the current problems.

    The waving of large amounts of money under the unbelieving, and eager, noses of the original owners of rural cottages began the so called ‘holiday home’ boom, with the results we now see, locals virtually homeless.

    The Welsh remedy forvthis perceived sickness is not to be recommended, but evokes a certain sympathy, nevertheless, even if a rather ‘dog in the manger’ attitude is seen to emerge.

    The base instinct of lust for a quick buck rules the market, driven by the motor which is the estate agents’ stock in trade, the promise of Nirvana for the vendor, and the heavenly affordable abode for the buyer.

    It would appear that the only way to get an affordable house is , as Teddyboy says , if you are a young girl , get pregnant, and go to the front of the queue for a rent and council tax free house. The impregnator should not be seen a living in the house, and all sorts of wonderful state benefits are yours for the taking. And , as an added bonus , now there are to be universal pensions, so you can sleep the sleep of the untroubled,(that is, if you ever had problems beforehand).

    Mirror Mirror on the wall.
    Who’s the luckiest of us all?

  17. Loved the article Boris (especially the “bucket of warm spit” – great phrase)

    When I was thinking of England I didn’t realise I was actually thinking of England!

  18. Whilst your are on the subject of house prices, pensions and demographics, you had all better factor in the latest research being undertaken by Scott Burgess on the Daily Ablution blog. If the authors of ‘The Project’ have their way we will all have to adjust our planning to prepare for our future under a somewhat modified pension plan (those of us that are left to ‘enjoy’ it):

    http://dailyablution.blogs.com/the_daily_ablution/2005/12/project_permali.html

  19. Great piece Boris thanks. Made me laugh and think. Important double act that. The Independent had a double-page spread of statistics this week and I’m sure it said that the average number of babies per woman was 2.1 not 1.7. My wife and I have done 2 but I’ll try and persuade them both to be more prolific than us.

  20. Of course its nice that on the same day we have to work a couple of extra years Mr Blair seems willing to pass £1-7bn (depending on what you read) extra to the EU to fill their coffers.

    Hey Boris, how abour an article on this…

    I suggest “To CAP it all” as the title.

  21. One lesson the British (especially, but not quite uniquely) could usefully learn, is that no one should buy a house until they are established in career and family. I had the benefit of mobility while I was young, then bought a house. When I thought about moving nearer to work I found that Stamp duty, legals and selling costs would be over

  22. Hello;

    I genuinely felt uplifted when I read this article. I really had all but given up on anyone with influence in my country giving a dam about the situation that I (and people older than I) feel at this time. I am a person who would love to buy a home but I am also young. I am 27, I have worked hard all my life to date. I will share my experience not because I expect the world owes me or anything like that, just becasue almost everyone I know is in the same position. I also think that the current government do not want to acknowledge the issues younger people are facing in the future.

    I have worked hard all my life. I couldn’t afford the best start in life, my parents are oridinary working people but I made the best I could. I have always worked hard, never claimed benefits, always paid my debts. I even worked fulltime while I studied for five to get qualifications to improve my job prospects. I have saved and saved and saved for years, living modestly and every year it has just become clearer that I will never be even able to afford home ever. House prices go up more and more every year. How I will ever afford a pension, I just don’t know. And I think there is no possibilty of ever planning a faimly. Why is this?

    I know other places in the world are not as excessive as this. I know people of a similar age in other countries and while, sure, they have to struggle a bit, it is possible to make plans for future life like a modest home, a pension, a faimly. Why has the mismangement of a vital resource, housing, broke down so spectacularly in Britain?

    My parents were comfortably able to buy a small house on a single wage 25 years ago. The population wasn’t really any bigger back then. The only people I see around me who can buy is if their parents pay half the cost or they massively lie about earnings on certain mortgage applications for debts they then can’t payoff. And I have personally seen friends go bankrupt and one even had an appartment repocessed because of the ridiculous costs of even the most basic housing. And these are not people who are spending their wages on luxuries and binge drinking and Ibiza holidays. Just people trying to do the right thing and drowing in debts trying to keep a roof over their head and food on the table.

    I am not a quitter. I am a fighter but I don’t hold much optimism that anything will change in the near future. That saddens me. I just have to keep working and saving and hope something comes along. The fact that someone in your position – one of the very few involved with politics and the media – could devote some words to acknowledge the issues and feelings of people like me so accurately, really lifts my spirits. Thank you.

  23. I spoke with a special needs teacher today, and we got to discussing the pensions crisis, and in particular from the standpoint of a public sector worker .

    She informed me , that the majority of the people with whom she had spoken on this subject were against the special treatment in regards to pensions / retirement age.

    Her point was, that those public sector workers could not , or at least should not, be seen as special ,despite earlier agreements , because of the emerging imbalance between earners to pensioners.

    The demographic implications inherent in the falling birth rate ,(which apart from certain minority religious groups, was universal), was a further argument for the equalising of pensionable age in all sections of society, including politicians.

    I was very much surprised by her views , since the unions seem to be intent on industrial action to ensure the early retirement of their members , contrary to the good of the country, despite the contrary views of a goodly proportion of their members.

  24. Super artical and, as all these comments attest, one that people are longing to have discussed in the media.

  25. Many years ago I came to the conclusion that for pensions to be sustainable, we have to pay for them as we earn, not expect others to pay for ours after we retire. And then I have been continually been dismayed by the short-termism of politicians in not addressing the problem at least a decade ago. I had hoped New Labour would do something and once again rhetoric was not backed up by substance.

    So I am planning on there being no effective state pension when I eventually retire in a few decades time. I accept that this generation will have to pay for their own pensions and pay for those of the exisitng pensioners.

    What should be done? Put *all* pensions onto money purchase schemes. Remove the hostage to fortune that is payment of final salary public sector pensions out of taxation by gradually building up the funds to pay for them now. Remove the taxation on pension fund income, and ensure that occupational pension funds are not linked to the company whose employees pay into it (so that bancruptcy will not result in the employees losing their pension funds.)

    A basic state pension should not be means tested. Perhaps it is time to again return to the link between retirement age and mean life expectancy?

    For people like me, this will mean paying more tax over the near future but knowing that my pension, and the pension of my children is secure. It will take at least a generation to restore the pensions sytem to a workable model such that workers get back what they put in.

  26. David M:
    You appear to be the first latter day realist to make his mark on this thread. One cannot ,at least, from any bank of which I am aware , expect to receive more than the amount paid in ,( plus of course accrued interest), and the same applies to pension funds ,ergo , more needs to be paid in, in order that more might be taken out.. This equals raised direct taxation , no matter how unwelcome that might be.

    By raising direct taxes , by a small amount, it should be possible to lower indirect taxation, thus killing rwo birds with one stone.

    Micawber’s easily learned financial probity is second to none . Do not spend more than one has.. Prudence might learn something from the old Dickensian sage.

    This country , in common with many other Western countries, needs to tackle the problem of the aging populations , and the resultant shortfalls in pensions availability , before it gets completely out of hand. Difficult problems require hard solutions.

  27. With regard to property prices, most of the current problems (which in turn cause the pension problems because the money people would normally be saving into a pension goes on the mortgage) are caused by parasitic property developers, and can therefore be solved with a simple solution: anyone who sells on a house within 18 months of buying it must pay 40% of the sale price in tax. That way people buying second homes aren’t penalised, but the people causing the price inflation are.

  28. David Russell:

    With 500,000 homeless people in this country, should people REALLY have “second homes”?

    Good idea on the quick-sale tax…i’ll have to do some sums.

    As I mentioned earlier, i’d also like to see a tax that “locals” could be exempted from. This should help stabilise house prices in rural communities, and allow locals to stay and work locally.

    Although i do have a difficulty with calling for more taxes!!!

    :o)

  29. Psimon

    I agree that the homelessness problem is pretty much a scandal. When John Locke talked about the state of nature it was one where, from memory, each could take as much as he wanted as long as he left enough so that others could do so. Clearly we’re running out of supplies so the good doctor might feel that something needs to be done.

    However every time we wnat to restrict something to a section of the population it threatens to create a lawyers paradise unless the criterion is fairly simple – e.g. age. How do you define a ‘local’? What happens to young workers who want to move into a new area where their skills are desperately needed?

    The left of the Labour Party won’t be too worried about that of course. As long as there is plenty of work for lawyers, a chance to increase the payroll vote with new officials and there is a chance of doing down the bloated capitalists, then let class war rage!

    But perhaps this is an opportunity for the Conservative Party to show how, whilst maintaining a general free market position, they are unideological enough to flexibly respond to problems affecting our fellow citizens with a view to minimising suffering (in Karl Popper’s words – well not all of them, just the last two!).

  30. Dear Boris,
    Hope this Email finds you fit and well.
    Just read your essay on House Prices and Pensions. Did you consider the residents of Henley on Thames before writing this? You quite rightly consider the youth and their attitude to pensions but have you considered the masses of people who did plan only to be sorely disappointed by government and employer.You neglected to mention Equitable Life (and the FSA) as a huge deterrent to anybody thinking of giving their hard earned cash to a Pension Company. Not only did this bunch of incompetent liars (who probably live in Henley on Thames) take our money under false pretenses they were aided and assisted by the legislation which said they could dock what they like in penalty fees for those disgruntled enough to want their money back before it was spirited away. The Law Lords (who probably live in Henley on Thames) gave their simplistic judgment saying they could rob Peter (non GAR policy holders) to pay Paul (GAR Policy Holders) without actually considering whether Peter had enough money to give to Paul which he hadn’t. So not only did my savings go down the pan , my pension went with it.
    As long as I have to relinquish control of what is left of my hard earned cash if I “invest” it in a pension which is to be returned to me as an annuity then
    F O R G E T I T!.

    Now getting back to house prices.
    Am I thick or something cos I just cannot comprehend what Gordon Brown has in mind in allowing anybody to have a property based pension fund. I thought Norman Lamont (don’t know where he lives) was bad (VAT on heating) but this is insanity and is judged so by all those except those who intend to take full advantage of it. It will divert tons and tons of cash away from economic investment and distort the property market beyond recognition. Maybe he is relying on the increase in Stamp Duty and Inheritance Tax this will bring which should be considerable from the residents of Henley on Thames.

    Did you go to Georgie Best’s funeral?

    best regards,
    Richard Hughes.

    P.S. Hope you get a position in David Cameron’s Shadow Cabinet (maybe Shadow Chancellor) !!!!!!

  31. Well done, Boris. How refreshing to see a politician prepared to go ‘off message’ once in a while.

    One factor you didn’t mention about the unwillingness of the English to save for their old age other than through their houses is the fees charged by the pension industry. An article in the FT (Reduced pension costs can encourage savings >By James Sefton and Martin Weale, Published: August 19 2005) shows that “[the sum of the previous figures] implies our male pensioner has lost almost 40 per cent of his savings in charges.”

  32. Thanks Mac. As a scientist, it is blindingly obvious that if you put x in, you can only get more than x (in real terms) out if something happens to either make x grow or by taking something from others.

    I have a pension scheme thought my employment (though not an occupational pension). Fortunately most of the people who are part of the scheme are suitably intelligent that they can keep a reasonable control on costs and benefits, and understand the payback principle.

    If I want to live on half my annual salary for 20 years, then I have to put aside a quarter of my salary every year for 40 years. It is not rocket science. One hopes the income from the investments will be more than the devaluation through inflation and management costs over the years. I consider the management costs to be what I have to pay to have someone take prudent financial decisions on my behalf with how that money should be most productive. Letting it work (providing the service of capital availability) is an appropriate mechanism for socially responsible investment, and I am not keen to have to actively manage a small (relatively) amount myself when there are other things to enjoy in life.

    Then again, I was brought up to believe that living in debt is to be avoided where possible, so would rather do without the ‘latest and greatest’ than run up debts that would haunt me. I pity the current generation. They will be leaving school/university with few distinctive skills, into an overcrowded labour market for the skills they do have, and a great debt hanging round their necks. The housing market is now unaffordable as we create a new underclass who we will later be relying on to support us in our dotage. It used to be generation X, those born to families with no aspiration who themselves have no aspiration or hope, prozac’ed into docility in sink estates. Now we have a generation who cannot afford to leave home, who are dependent on welfare, whether it be from the family or from the state, and it becomes impossible for the young person in the street to be self sufficient, to have any form of self-esteem, to feel that they can do anything.

    Life could almost get too depressing.

  33. So, when do you reckon They are they going to admit that National Insurance has absolutely nothing to do with our pensions or healthcare, then?

    :o?

    Psi

  34. Psimon:If you are prepared to wait until the Barents Sea freezes permanently again , perhaps you may have a chance of hearing someone from ANY Government admit that they are scare witless to enforce a reasonable N.I. contribution which would enable a non-penurious pension.

    A potless pension scheme is no good to anyone, specially when there is always the unfortunate few to consider as well.

  35. This is completely unrelated to housing. But if you want women to punch out more babies you have to get rid of a number of barriers to women having children. Housing is an important hurdle.
    But partnering is also difficult. In the past Social pressure and the church ensured people married etc. Without that social pressure and with choice its not surprising that many men don’t wish to go down this path or not during the time when their female counterparts are fertile. Most women want babies but many don’t find they are in the circumstances that would allow them to have them. Government should make it easier for single women to have children.
    There is a huge raft of fit elderly people who could be coopted to help with looking after the next generation.
    Nay sayers would argue that children of single parents traditionally don’t do very well. Part of that must be due to the fact that they are the poorest in society and perhaps these children also face social exclusion due to taboos.
    Still with large amounts of women tipped not to marry or have children at all I think opening up opportunities for single women might be in the nations best interest.

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