So, how are we getting on in saving for our pensions?
TOMORROW is Pensions Awareness Day, a veritable festival of finance that will doubtless feature dancing in the streets, bunting, and carnival processions in small villages.
Well, perhaps not. But as I've said before to those who think the subject of pensions is less than exciting, a pension means having a bob or two in your retirement – and money is never boring.
Pensions Awareness Day will see the rolling information centre known as the Pensions Bus visit various cities raising awareness of the importance of saving for a pension. It won't be showing up in Northern Ireland, so getting into the same spirit of pensions awareness, I'm asking the important question: how are those of us saving for our retirement actually getting on?
We may have a vague feeling that pension saving is a ‘good thing', but that and achieving something effective are two very different things.
The first step towards effective saving actually involves getting up and doing something about it.
Let's have a look at the situation now. This little ‘snapshot' takes into account total income from basic state pension and any other sources.
Scottish Widows (SW) has been looking specifically at Northern Ireland and in their Retirement Report for 2015 found that around two in five of us (38 per cent) are not saving into a private pension, and that nearly half of us (45 per cent) are not adequately preparing for retirement. As a result, a third of us (33 per cent) expect to be less comfortable in retirement than our parents did.
But do we know exactly how our parents did, or have done, with their pensions saving? There are figures specific to Northern Ireland on this, and they make for harrowing reading.
The fact is that one in five of our current pensioners (21 per cent) was in poverty in 2013/14. That means approximately 63,000 people – and it's getting worse: the figure is up from 20 per cent the previous year.
While there are many reasons why people are not devoting more to their pension, or have not put any private pension provision in place, another finding by SW was that 20 per cent say they wouldn't know where to go for information and advice about pensions. This is one need that is easily addressed, simply by pointing out that basic guidance is available from the government's ‘Pension Wise' scheme, while independent financial advisers can provide full pensions advice (as opposed to the simpler ‘guidance' option).
The fact is that so far, pensions have remained relatively unscathed in Chancellor George Osborne's swathing assault on the welfare system and general departmental funding for government.
However, industry experts know that George has his eye on pensions and, as ever, his eyes light up when somebody tells him: it's cheaper this way.
Lately, pensions company Aegon asked 200 of the UK's leading financial advisers how they thought the pensions' system could look in 30 years' time.
Almost every one of them (96 per cent) appear to expect it to be almost unrecognisable, compared to today. With specific reference to the state pension, for instance, they believe the current proposals for a new flat rate state pension, the value of which is protected, is likely to be scrapped.
This is because of the ‘protected value' aspect, as enshrined in a mechanism called ‘the pensions triple lock.'
The triple lock promises an annual increase in the state pension equal to growth in average earnings, inflation or 2.5 per cent – whichever is the greater.
Now, the UK will possibly clear its budget deficit and achieve an overall budget surplus in 2018-19 (source: Office for Budget Responsibility OBR), but the cost of increasing state pensions using the triple lock could well spoil George Osborne's moment of glory (if he's still Chancellor, of course).
Why? Older people are made of sterner stuff these days, and, with ever-increasing longevity, are pruning the daisies, rather than pushing them up, for longer than they used to.
From the Chancellor's point of view, the UK pensioner is buzzing around his head, like a wasp at a picnic, hanging around taking his state pension for longer, and refusing to finally “get off the books.”
In fact, the OBR says even if Britain achieves the surplus by 2019, the combined costs of the triple lock, healthcare and social care could see Britain fall back into deficit by 2023/24.
With that knowledge in his mind, we can only guess at what the Chancellor has in store for those of us saving for our retirement today.
As tomorrow's events will signify: it will pay to be ‘pensions aware'!
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005