No featherbed
Editorial: Happy Chinese new year! The year of the fire rooster has begun – the first of its kind in 60 years, so is there anything we can predict from looking at the last one?
1957 was a year of big power shifts: the first former British colonies finally became independent; the UK’s political stability and influence was rattled in the aftermath of the Suez crisis; and the first female peers entered the House of Lords.
In the same year, Conservative Prime Minister Harold Macmillan famously said that “most of our people have never had it so good”.
Looking at 2017 so far, shifts in power seem to be a big theme as well – think Brexit, artificial intelligence, or China’s growing global ambitions. But whether people today have also never had it ‘so good’ is a question perhaps less easily answered.
Illustration by Ben Jennings
Figures from the Office for National Statistics show wage growth is slowing, while inflation is on the rise. The Institute for Fiscal Studies last year said median pensioner incomes after housing costs have now overtaken those of non-pensioners.
While the first trend might continue, the second is expected to reverse over years to come, due to poorer pension provision and people living longer.
Defined benefit pensions helped change the seemingly inevitable old-age poverty that previous generations faced, but the impending closure to accrual of the British Steel Pension Scheme in many ways marks the end of an era. The Society of Pension Professionals’ Hugh Nolan sums it up when he says that DB is dead in the private sector.
What replaces old-age provision for the young is a much less certain offer; we can’t say for sure if the amounts saved are likely to be sufficient (to find out why read the latest Data Crunch).
And whether the lifetime Isa this year will be the start of a new age – that of the retail saver – or dead on arrival is yet to be seen. Regardless, many in the industry have said better risk warnings are needed.
With such fundamental changes sure to ruffle a few feathers, you can’t overstate the importance of ensuring that the next generation gets a nest egg together.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWK and the team @pensions_expert.