The 'P' Word

I read at the weekend that "Government spending on social security benefits has almost doubled over the last 30 years". This came from the Office for National Statistics in their annual Social trends report.
Allowing for inflation the amout rose from £69billion to £135billion. The item that caught my eye was that in 2008-09 almost half the bill went in pensions. Reading further it is plain to see that demographic changes including the increased size of the elderly population are a massive part of this. The so called baby boomer generation coming into retirement meant that over £50billion was spent on the basic state pension alone.

Of great interest to me, as a financial planner that has advised on pensions for over 15 years now, was the expressed views in the report from the public. Six out of ten people agreed that "the Government [IG: and remember this is not supposed to be political, it generally refers to whoever is in power at the time, rather than being aimed at a specific party] should be mainly responsible for ensuring that people have enough money to live on in retirement"

Personally I have no trouble agreeing with that statement. However, based on my professional experience and knowledge of the welfare system I am afraid I just don't see it happening. Whether or not certain elements come in to play, such as indexing state pensions to more realistic benchmarks, it is a fact that for many people, the state pension is just about subsistence level. There certainly isn't much room for the finer things in life (said tongue in cheek - I am not talking about having your own private jet, more like just running a new private car!) when living on around £5,000 a year [basic state pension-single person-£97.65 per week 2010-11]

Over the years I have come to grow more and more concerned over the P word - Pension. Generally I find clients and the population in general (if the papers are to be believed) have become fearful, mistrustful, bored, frustrated and fed up with Pensions. And no wonder. From the constantly changing rules and regulations in my world to the high profile failures of pension providers such as Equitable Life, the 'black hole' in company schemes such as ITV and British Airways, the 'fatcat' pensions for company directors and MPs whilst lower ranked staff and civil servants see benfits cut, the personal pension mis-selling of the past, the ever creeping increase in retirement ages, the list just goes on and on and on.
And don't even get me started on the unfairness of means tested benefits in retirement - there is a blogpost for another day...

So what to do? What to think?
Despite all these changes my view remains pretty much the same as it has for over a decade. That if one wants to have a reasonable level of income in retirement, commensurate with what one was used to whilst working, then the basic state pension will provide something, but probably not enough. And therefore it falls to us, the individual, to take responsibility for saving more, elsewhere, to 'top-up' our retirement income to the level we desire.
There are many ways to save for retirement in addition to pensions and I refer back to a previous posting I made. What I do for my clients is try to help them answer the question 'How much is enough?' What do I actually need to retire in the fashion I desire for me and my family? If you'd like help answering that question, I'd be delighted to assist. And remember, the answer does not need to include the P word.