| Making it easier to save for old age |
 |
 |
| Written by David Cuthbertson | |
| Saturday, 21 July 2007 | |
|
Troubling news from a Scottish Widows report
which says that almost half of all people over 30 and earning more than
£10,000 per year were not saving enough for their pensions. Moreover, a
quarter of people in that group were saving nothing at all. State pensions are shrinking compared to earnings and will continue to do so. Simply, there isn't enough money in the country to continue our current unfunded state pension. The problem is that people are living longer. When the state pension was established it was expected that people would live only a few years beyond the retirement age, today people may expect to live decades more. Also, people are retiring earlier and so the number of people working and paying into the pot is shrinking compared to the number of people drawing out of it. This is the major social crisis facing the country and it will reveal itself in the next 20-30 years. So one might expect that the government is carefully making provision for it. Not a bit of it. Instead, the government has actually made it harder to save for your own retirement. Gordon Brown's stealth taxes have raided private pension funds to the point that people are now actively discouraged from saving for their old age. To compound this, people expect that if they do save, they will lose any benefits that they might get from the state. And as if this wasn't enough, a tortuously complicated system of tax relief makes it difficult for people to understand the few ways that savings may benefit them. The new trend for people to change jobs several time in their career is making it difficult for company pension funds. Their costs are spiralling as they are forced to keep track of ever larger numbers of people, even if only to pay them a small amount. Ultimatly, changing demograpics mean the country will be forced to move from our current unfunded to a funded system and private savings and investements will be a big part of that. The government should be making it easier and simpler to save with straighforward top-ups instead of complex tax-relief. That way we will be able to reverse the decline in savings and save ourselves from much bigger problems later.
Bookmark
Comments (0)
 Write comment
This content has been locked. You can no longer post any comment.
|
Subscribe to this comment's feed
About the ASI
The Adam Smith Institute is the UK's leading innovator of free-market economic and social policies. Politically independent and non-profit, the Institute promotes its ideas through reports, briefings, events, media appearances, and its website and blog. For further information, click here.Join our email list
Keep up-to-date with the latest events, reports and information from the Adam Smith Institute by joining our fortnightly email list. It's free and you can unsubscribe at any point. Just enter your email address here:
