“We are witnessing an inter-generational pension land grab.” This is how Alan Pickering CBE began his address to the audience at Life Academy ’s Annual Lecture, held last night in London .
He went on to say: “Some of us of a certain age are insisting on extracting more from the pension system than did our parents or will our children. If we do not willingly agree to give something up, the consequences for the social cohesion of Britain could be dire.”
At Life Academy’s Annual General Meeting, which took place prior to their lecture, Alan was elected as their new Chairman, taking over from Bob Bridges.
His lecture, entitled “Are our Pensions Fit for Workers and our Workers Fit for Retirement?” made clear his views on how the pension’s landscape and labour market in the UK need to change to benefit our society.
On the subject of opportunities for the older worker, Alan commented “We need to create a labour market which is blind to age. Everyone who is able and willing to work should be given access to training and employment opportunities. We must find ways of persuading employers to look more favourably on those who are currently marginalised – this is no easy call given the supply of well-qualified, well turned-out and well-behaved wannabe workers from Eastern Europe. It is labour market reform and not pension reform which can help us deal with the effects of increased life expectancy”. He went on to say “We are pumping an increasing proportion of the nation’s education spend in the direction of young people. Older folk need a fair crack of the whip if they are to re-skill in later life.”
During the lecture, Alan pointed out that the most efficient and cost-effective way of ensuring that old people are protected against absolute poverty in old age is through the state pension system. “Sadly, although the Government has recognised the importance of the state pension system and made some brave announcements in relation to state pension age, it has failed to take the truly radical action which is needed and for which society is probably ready. If the state pension reforms go through as indicated, we will still have one of the most complicated state pension systems in the world and one of the most inadequate too.”
“There is a lot of money inefficiently slopping around the current state pension system. Means-testing is expensive to administer and counterproductive in its effects. There is a whole panoply of benefits to which older people are entitled. Many of these benefits are not subject to a means test and others are not taxable. Our retired population should be truly integrated within society and this means that those who are able should be called upon to pay their fair share of tax. If a greater proportion of state spending on the elderly was channelled through the state pension system, that system would be both more efficient and deal far more fairly on an inter-generational basis in respect of tax collection.”
Pickering described Personal Accounts as “no silver bullet” and that they “could do lethal damage to the rest of our pension and saving system.”
“If we can create a labour market which is blind to age, have a state pension which is truly fit for purpose and a regime for workplace pension provision which rewards employer participation rather than discourages it, personal accounts can be looked at as a gap filler. Without these pre-requisites, there is a real danger that personal accounts will become the universal norm since, superficially, it looks easy. Below the superficial level, however, personal accounts are anything but easy. Politicians cannot simply sign up to such an idea and then create a delivery authority whose task will be to design the products and build the infrastructure. Governments and their agents are not very good at designing products and, if past experience is a guide to the future, they are not very good at building infrastructure either.”
In concluding the lecture, Alan said “our citizens must have greater literacy about financial and physical survival than is the case today. A lot of the debate about financial literacy is focused at the wrong level. The real challenge is to help people understand the balance between spending and saving. ”
“It is never too early to learn the skills of achieving an appropriate work/life balance. At the heart of those skills are financial and physical literacy. We can begin with self-preservation and end up with self-fulfilment. This is meat and drink to Life Academy. Hopefully, within five years Life Academy will be a household name. As a result, members of those households will be in a much better position to make a contribution to society and to draw the dividend to which that contribution entitles them.”
