IÂ sometimes think that I go to conferences and seminars and forums and suchlike for only two reasons – one, to show off when I’m speaking, and two, for the networking.Â But actually there’s a third reason that applies more often than I might imagine, which is that I do get to hear some cracking presentations.
My old friend Malcolm Small, for example, was in magnificent form at an event last Friday, making our blood run cold at the horror and hopelessness of our retirement planning efforts in the post-final-salary-pensions era.Â Chart after chart, statistic after statistic, added up to a conclusion thatÂ was pure Private Fraser:Â “We’re all doomed, Captain Mainwaring.”Â Doomed, I tell you. Doomed.Â To describe our pathetic attempts to save for our retirement as a fart in a hurricane would be an insult to farts.Â The handful of coppers we will receive from our wretchedly underfunded annuities won’t even stretch to a weekly tin of catfood – and I don’t mean for the cat.
We all accept this dire prognosis so unquestioningly that the contrarian in me assumes it must very likely be wrong.Â
It’s certainly slightly exaggerated, at least as far as its imminence and universality are concerned.Â Although most final salary pension schemes are now closed to new members, there are still millions of existing members, and not just in the State sector – and most are still able to make contributions.Â But that’s not really the point: Armageddon Postponed is only relatively good news.
What I wonder more fundamentally, though, is whether everything else is going to get quite as much worse as we all think it is.Â There are a few reasons why it might not.Â
First – as Malcolm emphatically recognises – these days people hate pensions, and one of the consequences is that they put their money into other forms of retirement saving.Â These, as we all know, include things like property and ISAs.Â They also include those huge cash savings balances, often derided by investment experts as the evidence of “reckless conservatism” but actually at the moment not so stupid when the rate of return on risk-free savings is better than most risk-based alternatives.
Second, despite wobbling and probably tumbling property prices, I wonder whether those who calculate these things have fully worked out the consequences of inheritance.Â When elderly people of very modest means have homes worth hundreds of thousands of pounds, the key questions for the offspring are a) how long willÂ mum and dad live, and b) how manyÂ siblings do I have.Â At the very least, for millions of people with few siblings, their inheritances are likely to add up to a good deal more than theirÂ personal pension savings.
And third – I couldÂ add fourth, fifth and maybe even sixth, but this piece is too long already – we may just have to live with the difficult and disturbing fact that most people have never had all that much money in retirement.Â Even in that “golden” final salary pension generation, most people’s final salaries weren’t anything to write home about. We imagine them desperately trying to burn through huge piles of cash, sailingÂ yachts around the South Pacific and racing vintage Jaguars.Â But you have to be a failed FTSE-100 Chief Executive to get a pension like that.Â Â Most people live on pretty low incomes inÂ retirement – and although some are horribly poor, the majority aren’t unhappy with their standard of living.Â Â Â
This is all sounding rather patronising and unsympathetic, which wasn’t at all my intention.Â And of course I know there’s a big and real problem here.Â I do just wonder, though, whether it’s quite as big and quite as real as the doom-mongers would have us believe.