Shocks & Stares » Pensions http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 5 numbers that tell the story of why everyone’s getting a pension from Monday http://blogs.hillandknowlton.com/shocksandstares/2012/09/5-numbers-that-tell-the-story-of-why-everyones-getting-a-pension-from-monday/ http://blogs.hillandknowlton.com/shocksandstares/2012/09/5-numbers-that-tell-the-story-of-why-everyones-getting-a-pension-from-monday/#comments Fri, 28 Sep 2012 15:27:28 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=732 Pensions. I know, dull, dull and more dull right? Correct. Unfortunately, pensions are about to become like unwashed dishes in the sink – visually unavoidable, uncomfortable smelling and constantly in your face as you walk past them, nagging you to deal with them. Monday is the start of the much heralded and overly written about auto-enrolment. Starting a pension will no longer become a case of “yes please” if you want one but rather “no thanks” if you don’t.

I’ve already written about the challenge of selling this to 7m people, but it’s just worth considering why the Government is doing this. To round out the week, here’s a few numbers which hopefully tell the story behind auto-enrolment. Alternatively, you can watch the new promo adverts for auto-enrolment on YouTube:

8.2 million – that’s the number of people who have a workplace pension. That’s less than one in three adults

£20,000 – that’s what people want to live off each year in retirement

£11,000 – that’s what people think they’ll actually have each year in retirement. That’s a £9,000 gap

82.3 years – that’s the average life expectancy of a girl born today in the UK. It’s rising by nearly 3 years every decade

£400,000 – that’s how much money a woman needs to buy £20,000 a year of income in retirement

Just to reiterate that last one – £400,000. Or to put it another way, that’s the cost of this mansion in Northern Ireland.

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How do you PR pensions to 8m people? http://blogs.hillandknowlton.com/shocksandstares/2012/07/how-do-you-pr-pensions-to-8m-people/ http://blogs.hillandknowlton.com/shocksandstares/2012/07/how-do-you-pr-pensions-to-8m-people/#comments Fri, 27 Jul 2012 13:26:31 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=703 This little conundrum is the question facing the National Employment Savings Trust (NEST) over the next few months. On 1st October, a new era of retirement saving will begin as workers are automatically enrolled into company pension plans without fail. You can opt out if you wish, but the hope from the Government is that two thirds of people won’t.

Now let’s get to the crux of the issue shall we? “Pensions”, “Saving” and “Retirement Planning” are all very dull, very unsexy words that most people the young side of 50 have little interest in discussing or thinking about.

The number of reports, press releases and speeches from companies and politicians on the yawning savings gap in the UK is enough to form a paper road to the moon. But it still makes little difference to savings rates, as was highlighted this week.

So, back to the question: how is NEST enticing 8m potential new pension savers to stay in their pension plans and not opt-out as soon as they can? Well, hats off to them. With restricted budget, they’re going hell for leather with an upbeat message, emphasising the joys of a later life spent in relative comfort. This is neatly summed up with the hashtag

#worthsavingfor

What’s pleasing to see is that they’ve avoided the old-school approach of just producing reports, surveys and general doom and gloom. We have the classic PR tactics like these in the mix, but they’re supported by a strong social media programme. Together, for me, it makes quite a package.

Will it work? It’s too early to say and we won’t really know for two or three years when most people will be auto-enrolled. Expect the papers to jump on any data showing high opt-out rates in big companies from December onwards. NEST and the Government are also clearly a little nervous, with rumours of an additional TV advertising campaign in the mix. Still, at this point, fair play to them.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2012/03/fps-friday-fiver-34/ http://blogs.hillandknowlton.com/shocksandstares/2012/03/fps-friday-fiver-34/#comments Fri, 09 Mar 2012 17:38:53 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=588 Here’s your five for the weekend everyone – short, sharp and to the point:

1. We’re 12 days away from this year’s Budget and the noise has started already. This week’s focus has been all about the question of taxation – in particular, the proposed mansion tax, child benefit levels and how much relief on tax people paying into pensions should qualify for. Next week kicks off with the British Chambers of Commerce submitting their Budget wishlist – expect the hard economic debate from Mr Balls etc to follow.

2. Meanwhile, the Institute for Fiscal Studies provided plenty of ammunition for Labour with its latest figures on household spending which claimed to show that households are set to lose £370 from tax and benefits changes already in place.

3. Over in media land, Robert Peston drew the wrath of the Financial Times by latching onto an exclusive from George Parker last month and repackaging it into one of the stories of the week – Vince Cable’s now very public critique of Coalition policy.

4. Wrapping up the week, today finally saw the disclosure of pay figures for Barclays’ senior figures, including Bob Diamond. Suffice to say, the reaction has been predictable, decrying the vast sums while others have questioned the payout based on the company’s declining performance. Perhaps not such a bad day for Lloyds and RBS to reveal their figures at the same time then…

5. Finally, tonight sees the inaugural Financial & Professional Services ‘Cheese & Wine night’ – expect plenty of sore heads and full stomachs tomorrow!

Happy weekend all!

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2012/01/fps-friday-fiver-32/ http://blogs.hillandknowlton.com/shocksandstares/2012/01/fps-friday-fiver-32/#comments Fri, 27 Jan 2012 18:48:24 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=497 Hello All, and apologies for a late night Fiver – it’s been one of those weeks in financial and professional services. Still, below we have a trip through the week’s news highlights (sadly not including Tom Watson’s intern) as you head into the weekend. Thanks to Ed, Jonathan, Ross and our latest contributor, Josh Glendinning. Have a great weekend all.

UK VS THE WORLD…..While UK GDP figures dominated the headlines on Wednesday, members of the FPS team were given an insight into what lies ahead for global growth in 2012. At an event put on by British American Business we heard from, Alexis Karklins-Marchay of Ernst & Young that despite the woes of the Eurozone, the global economy can still expect growth of over 5% this year.

Much of this output will come from what Ernst & Young term Rapid-growth markets (RGMs), a set of 25 countries they expect will account for nearly half of global growth in the next ten years. Their report on RGMs and its micro-site are an excellent resource for anyone looking for facts and figures on the future shape of the world’s economy.

As an aside, one of the panellists, Stephen Castle of the International Herald Tribune, offered an anecdote from his time in the Brussels press corps. An unnamed member of the German press, brought up in the same region of the former East Germany as Angela Merkel offered Stephen an insight on Merkel’s approach to the Eurozone crisis. In the GDR, cars and appliances were never reliable, and the parts required to fix them were never available. As a result, citizens took to patching things up and making do until they broke again. The German journalist had decided Merkel was taking the same approach to the crisis…

EXECUTIVE PAY…..‘Responsible capitalism’ is the politician’s theme of choice at the moment: all three major party leaders, David Cameron, Ed Miliband and Nick Clegg, all claim to know what it looks like. It was with this in mind that Business Secretary Vince Cable announced a package of measures this week to rein in executive pay to put a stop to the culture of rewarding poor performance.

Although he has been a long-standing critic of excessive bonuses, before he could announce this week’s package he had the wind taken out of his sails. Cable’s opposite number, Chuka Umunna, pulled the rug from under his feet by getting a urgent question granted in the Commons on executive pay, thereby forcing Cable to make a statement a day earlier than planned. Rather than facing a Think Tank audience, where the statement on executive pay was scheduled for announcement, Cable was forced into presenting to a much tougher audience in the Commons, something he acknowledged was actually the right thing to do.

Once announced, the package fell short of calling for employees to sit on remuneration committees, which the unions predictably lambasted, instead entrusting greater powers to shareholders in the way executive pay it set. Cables hopes that through greater transparency, more shareholder power and the diversification of remuneration committees, a code of best practice on executive pay will be instilled across the business community. The response from the business community has been largely positive, but it remains to be seen whether they actually adopt measures of best practice.

With banker’s bonus season upon us – it was announced this week that RBS’ boss is set to receive a £963,000 bonus – one thing is for sure, this story is not finished yet. Cable’s package is by no-means the panacea to the excesses of capitalism, something he himself admitted, but it does go some way in addressing what ‘responsible capitalism’ may looks like.

LEADERSHIP PLEASE…..We noticed David Cameron grandstanding in Davos this week calling for Germany to show some leadership on the Eurozone crisis. Some of us think that Cameron would do well to follow the lead of his oft criticized, but internationally respected, predecessor Mr Tony Blair and show some leadership on the international stage. Poodle or not, it’s surely better to have a place at the table rather than a viewing platform on the sidelines. Although if a certain Monsieur Hollande gets his way, any attempt to scramble out of this drifty malaise, which sees us teetering on the brink, is utterly futile anyway.

IRANIAN OIL SANCTIONS…..The escalation of rhetoric between Iran and the West this week certainly spooked the oil markets. Iran threatened a blockade of the Strait of Hormuz after the EU agreed to a stronger sanctions regime on Iranian oil as a result of Tehran’s failure to comply with UN resolutions regarding its nuclear programme. While the West’s relationship with Iran has been nothing other than fractured since the 1979 Green Revolution, this isn’t the first time that Iran has felt the effects of an oil embargo.

During the rule of Shah Reza Khan and his son Mohammad Reza Pahlavi, the vast majority of Iran’s oil resources were controlled by the Anglo-Iranian Oil Company (AIOC – later to become BP). In 1951, the parliament voted to nationalise the AIOC, incensing the British, who lobbied to impose sanctionson the Iranians.

By 1952, the sanctions were beginning to bite and, more importantly, the United States was becoming concerned with the influence of the communist Tudeh party in the country. The British government had been toying with the idea of unseating the leadership and the election of Dwight Eisenhower allowed them to lobby successfully for CIA involvement. A coup ensued, followed by the lifting of the blockade, the AIOC back in British hands, and an authoritarian crackdown on dissent for the next 25 years.

The 1953 coup has often been cited as one of the crucial events which led to the rise of political Islam in Iran and eventual revolution of 1979. Whether the fresh round of international oil sanctions destabilises Ahmadinejad in the same way remains to be seen. However, one thing is for certain: the relationship of mistrust, animosity, and anger between Iran and the West goes a lot deeper than many people realise.

GOOD WEEK/BAD WEEK…..Counter-intuitively it’s been a good week for share dividends (and indeed a good start to the year generally) according to Anthony Hilton. As he notes, dividend payments increasingly make up the lion’s share of equity gains in pension fund tracker portfolios these days, so this is definitely good news for all of us saving for retirement. What’s less good news is the delays announced to the pensions auto-enrolment project by Steve Webb MP this week. This means employees in SMEs will face a longer wait before being made to save for retirement. While you can understand the argument that the additional cost is another burden during difficult times, that shouldn’t detract from the longer term problem this project is trying to solve – we’re not saving enough for retirement and the state faces a large bill in 30 years time unless we do.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-13/ http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-13/#comments Fri, 29 Jul 2011 17:27:30 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=226 We’re back, providing another round-up of some of the big stories from the world of financial services, the economy and Westminster this week. Contributors this week include Clare, Linzi, Jo and Ed, who bring us an overview of banking, pensions, retailers, and our new feature – Good Week/Bad Week.

Banking – fundamental flaws and failed customers…On Tuesday, Vince Cable held court at the Which? Banking Reform – An Agenda for Competition and Growth discussion at the Commonwealth Club, where he re-iterated his opinion that “banking is a structurally flawed industry that has fundamentally failed customers”.

Vince Cable - on the attack on banking once again (Image: Which.co.uk)

That the current system of banking is flawed is a no-brainer, but the harder question to answer is where exactly do the flaws lie? The conversation on Tuesday spanned the topics of increased competition, universal banking, ring-fencing, culture and behaviour along with new entrants into the banking market, but it seems that, nearly three years since the start of the global financial crisis, more questions continue to be posed than answered.

Is universal banking really the root of all banking evil? Do customers really feel their banks have failed them given so few of us have switched? With the array of initiatives, commissions, inquiries, and comite des sages taking place at the national, European and international levels, one has to hope that between them they will be able to identify and remedy the flaws that exist. However, there is the potential for all of these to come up with different flaws and different answers which complicate and confuse structures and customers alike!

Paying more for retirement…The spotlight returned to public sector pensions this week as figures leaked to The Daily Telegraph revealed exactly how much workers in the public sector will pay extra each month for their pensions.

Danny Alexander was asked how much more he personally would have to pay towards his pension this week (Image: Thesun.co.uk)

As expected, higher earners will take the brunt of the increases and the lowest paid workers, earning less than £15,000, will escape any increases at all.

Here are some of the figures from the proposals:

  • Those earning over £100,000 will pay £284 a month (£3,400 a year) more
  • Public sector workers in the £50,000 bracket will pay between £684 – £768  more
  • Those on a £35,000 salary face paying an extra £516 a year more

Despite the backlash, which was always going to happen, you can’t escape the welcome news that low paid public sector workers, some 750,000 people, will be exempt from any increase in contributions and those earning £21,000 will be out of pocket £108 a year, or just £9 a month. The fact remains that even with these increases, public sector pensions are still a valuable benefit.

We still aren’t buying much on the high street…Another worrying week for retailers as figures on Thursday showed that sales fell at their fastest pace for a year as consumers become increasingly reluctant to spend. This is brutal news for the already struggling retailers and may be a sign of further deterioration and shop closures to come.

Only one in three retailers claimed their sales volumes were up on a year ago, with food retailers being particularly hard hit – either we’ve all been hit by the rise in food costs and are watching the pennies like hawks or the nation is on a collective pre-holiday diet.

However, one retailer that isn’t afraid of the UK high street (or shall we say Oxford Street) is cut-price U.S. brand Forever 21, which opened its doors for us on Wednesday. Some critics state that we are not ready for ‘cheap, fast, American’ fashion’ but with the way things are going on the high street we may not have a choice.

George Soros - the latest financial veteran to retire

Good week/Bad week – George Soros & George Osborne…A tale of two George’s this week. For the first (the man who ‘broke the Bank of England’), the effective end of a remarkable 40 year investment career. While the manner of his retirement was a little sour, blaming US regulations, you can’t argue with his success over the years. He will likely be missed.

On the flip side, it was a less than stellar week for the younger George, who, as yet more vanilla growth figures rolled in, suddenly found himself the victim of attacks from several fronts. How he must be wishing for the summer break to roll around quickly.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/06/fps-friday-fiver-7/ http://blogs.hillandknowlton.com/shocksandstares/2011/06/fps-friday-fiver-7/#comments Fri, 17 Jun 2011 17:16:28 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=172 Hello again all. It’s been a frantically busy week here in the Financial & Professional Services team, but as ever we bring you the Friday Fiver which rounds up this week’s events. Thanks to contributors Mel, Nick, Jo and Jonathan this week.

Freedommmmmm…Braveheart bonds, kilt edged bonds, Connery bonds and Jonathan’s own personal suggestion of shortbread bond are just some of the names being used to describe new powers that will allow Scotland’s government to issue debt.

Mel's adopted country is about to issue its' own bonds

The Scotland Bill makes provision for the country to raise up to £2.2bn from markets to fund infrastructure projects. There had been calls to permit up to £5bn of borrowing but this idea has been dismissed and Treasury ministers are at pains to emphasise that this does not amount to writing a blank cheque. It remains to be seen what ratings agencies will make of Scotland’s credit worthiness.

However, this week also saw riots on the streets of Athens as the Greek government seeks to implement austerity measure s to cut spending and meet the nation’s debt commitments. The dangers of small economies borrowing big sums of money should be front of mind for Scottish ministers.

We hear all about the Economist…This week,we were lucky enough to meet Daniel Franklin at the FPS Big Bite. The well respeceted Business Affairs Editor has been at the Economist for a staggering 28 years and gave us an insight into the passion that journalists have for this successful newspaper. With a circulation of over 1.5million around the world and 200,000 in the UK you can imagine that the publication only attracts the best of the very best of journalists!

We learnt all about the 'weekly newspaper' this week

After making us promise that we wouldn’t bombard him with emails following our lunch (sorry in advance Daniel!!) he went on to explain the thinking and routine behind The Economist giving the team a useful inside look into the ‘fiercely independent’ newspaper.

A regulatory phoenix …On Thursday the Government published its financial regulation White Paper and draft Bill which will see the creation of the new Financial Conduct Authority and Prudential Conduct Authority, and split of regulatory supervision now been offered up to replace the FSA.

Those readers who are equally wizened as this writer (Mel) might have a sense of déjà vue, having witnessed at first hand – working as a fresh faced, hopeful graduate at the Bank of England when the BCCI crisis erupted in the 1980s setting off – the chain of events which ultimately culminated in Gordon Brown forcing the old lady to relinquish her jealously guarded control of the banks.

Fast forward to 2011 and, here we are again!, the previously lauded and internationally revered one-stop financial regulatory juggernaut of the FSA and the ambiguous tripartite structure between HMT, the Bank of England and FSA both now found failing in the aftermath of the latest – and let’s acknowledge – near Armageddon financial crisis.

So another brave new phoenix emerges from the ashes with strengthened and expanded statutory objectives around responsibilities for the insurance sector, an enhanced competition regime and a strengthened role for FOS.

Otto Thoresen, Director General, ABI endorsed these measures but pointed to unanswered questions about how the links between the different regulatory bodies – PRA and FCA – will work in practice and how exactly FOS will work with FCA. Indeed, yes it is important to avoid overlap and confusion. Sound familiar?

The battle for pension reform is about to begin…The pressure has slowly been building on this one, with strikes being pencilled in across the week. But Treasury Secretary Danny Alexander lit the touch paper this morning with an article in the Daily Telegraph outlining the government’s intention to force public sector workers to work longer and pay more for their retirement pots.

Saving for old age is a very hot political potato

Is it fair? Many in the private sector would say so. Will it happen? That’s still in the balance – Alexander certainly came in for a tough time at an IPPR event this afternoon where he outlined the government’s thinking. The key date is 27th June, when negotiations are likely to conclude.

Brand promises & customer experiences…It’s fair to say that financial institutions have endured something of a reputational rocky patch amongst consumers. Many customers have been disappointed with the service they’ve received, coupled with poor products and several miss-selling scandals – a fact highlighted by this week’s episode of Panorama.

Thankfully it seems the industry is finally beginning to wake up and adopt a much more consumer oriented approach. Nick was lucky enough to be able to attend an event at the Financial Services Forum examining the relationship between brand promises and customer experiences. One of the central themes that emerged from the discussion was that a brand is not represented by a new logo or slogan but by the 1000’s of gestures made by the business to its customers across the world every day.

Every interaction is a chance to reinforce the business’ brand values and this needs to be recognised throughout the entire customer journey. Managing expectations coupled with the odd piece of exceptional customer service can go a long way! It was refreshing to see such a detailed deep dive into the lives of the consumer and what struck me was the extent to which experiential brands such as Alton Towers, Emirates and Walt Disney are streets ahead.

Their whole proposition is built around the consumer experience and they understand the importance of recognising this at every level. With regulatory bodies also placing unprecedented levels of scrutiny on consumers rights, perhaps many of the UK’s biggest banks should take a leaf out of the books of Mickey Mouse and Pluto. A smile and a genuine belief in the brand you represent seem key.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-5/ http://blogs.hillandknowlton.com/shocksandstares/2011/05/fps-friday-fiver-5/#comments Fri, 27 May 2011 19:49:23 +0000 Edward Jones http://blogs.hillandknowlton.com/shocksandstares/?p=145 In case you missed it, President Obama was in the UK this week to talk essential relationships, cyber crime and have a barbeque in the Number 10 Rose Garden. In honour, of his visit this weeks’ fiver looks at the visit and the UK’s special essential relationship with the US.  Thanks to Dave, Clare, Rachel and Melanie for contributions.

Essentially …

Whilst Foreign Policy and the six point plan, were the main items on the agenda, surely the most interesting aspect of Obama’s visit was the upgrading of the UK’s ‘Special Relationship’ with America to an ‘Essential Relationship.’ Essential. Never mind our credit rating, we have an essential relationship with America! As Matthew D’Ancona pointed out earlier this week, it has a certain ring of indispensability to it. I’m less sure Obama’s deficit reduction plan can be described as Osbornian, as D’Ancona suggested, but you have to hand it to Cameron he pulled the rabbit out of the hat with that one.

Deficit indifference

Governments should “live within their means” but also sustain growth by investing in education, and the pace of deficit reduction “may end up being different”. Uncritical certainly from the President, but hardly the ringing endorsement David Cameron and George Osborne were hoping for with regards to their economic strategy.

They were probably also hoping for better revised Q1 GDP figures from the ONS than the ones that materialised this week at roughly the same time as the meat was cooking on the barbie. Traditionally, the revised figures show an increase in GDP for the quarter over the first, partial set of figures released. That didn’t happen this time, with growth remaining at 0.5%. More worryingly, household spending contracted 0.6% and business investment practically hid in the corner shivering, as it shrank 7.1%.

The Government remains committed to cutting hard and fast in order to shrink the deficit and get the country back on track without a large credit card bill hanging over it. Judging by the economic data and reaction to it, the jury is still out on whether this will work or not – which is perhaps why the President hedged his words to such effect.

Inspiring relationships

Michelle Obama re-affirmed her own ‘essential relationship’ with old friends during the visit when she was re-acquainted with girls from Elizabeth Garrett Anderson School. The EGA girls were visiting Oxford University as part of a programme to encourage them to aim high. Mrs Obama, herself a graduate of Princeton and Harvard, encouraged them to not “be afraid to take risks, ask questions, ask stupid questions, don’t be afraid to trip, fall and don’t be afraid to get back up.”

Wise words indeed from the First Lady and something all of us can take heart from. Media coverage of the meeting praised her as an inspiring role model for these young girls. But do our young people need to wait for a visit from a foreign leader’s wife to feel inspired? It strikes me that inspiration comes in all sorts of guises from dignitaries to teachers, to a school system and society that encourages successes achieved on merit. I cannot help thinking that more of our young girls would be inspired if the education system were fairer and society willed them on.

However, today’s announcement that under radical changes to admissions, some secondary schools will be able to select pupils on the basis of family income fills me with dread. If we want to inspire our young people, there has to be a better way than judging them on their parents’ finances.

Right all along?

Photo: Jacob Whittaker

There was a time when being British was all about keeping a stiff upper lip through adversity.  We were a bit stuffy, grumpy, and proud of it (with the exception of Ken Dodd). But if this week’s stats from the OECD are to be believed the old stereotype has been blown out of the water – we’re actually much happier than most of our European neighbours, including those where the weather is supposedly much nicer.

Of course our BFFs across the pond are way ahead, with the ‘pursuit of happiness’ in their constitution, but recent events have given them a run for their money (Will & Kate, less than a year to go to the Olympics, plus some cracking Aviva (client) sponsored ITV dramas on the telly).  Even Obama seemed to be using his visit to the UK to give a PR boost to the start of his election campaign, after all the yanks did seem to love the Royal Wedding more than we did.

Cheeriness is starting to look like part of a new national character, even a driver of government policy with the government launch of a new way of measuring it earlier this year.  Yet whilst the OECD’s figures do seem to suggest that money doesn’t necessarily make you happy, it will be interesting to see whether the next GDP figures show it can work the other way around.

Obama and the ostrich generation

When all the fanfare and noise from the military 41 gun salute to welcome Obama’s visit abates, we hope that the two leading western premiers might spare a thought for the lot of their respective domestic pensioners. They don’t need to look hard or delve deeply to find incontrovertible evidence of the pensions malaise and bleak future that faces many prospective pensioners in the UK and US and indeed across most Western economies.

The worrying statistics roll in on an almost daily basis. According to an international survey released by HSBC this week six in ten Britons have no financial plan for their retirement – due to a “cycle of dependency” and suffer from an equally self-deluded belief that they will enjoy a comfortable retirement.

Across the Atlantic, prospects are equally stark in the US. New findings from the American Association of Retired Persons (AARP) latest public policy institute report reveals that many older Americans, employed and unemployed, may never recover financially from this latest recession, although here, half of them do actually realise that they won’t have enough money to live on in retirement.

This dearth of planning contrasts with upcoming economies in the East, where a class of “prosperous pensioners” is merging. The respective expectations on annual growth showing  further downward revision for the UK economy (now a paltry 1.4%, with the US at only 2.6), is in stark contrast to buoyant growth rates in Asia’s flagship economies – China 9.2%, India 8.5%.

Worrying indeed.

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/04/fps-friday-fiver-2/ http://blogs.hillandknowlton.com/shocksandstares/2011/04/fps-friday-fiver-2/#comments Fri, 08 Apr 2011 14:49:27 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=26 Hello All and welcome to a very sunny Friday afternoon. Before you all rush out of the door to enjoy a much earned drink, here’s our recap of five of the top financial and political stories of the week. Thanks to Jonathan, Ed, Daisy and Ross for their contributions this week.

National destiny…Two weeks ago, Portugal’s outgoing prime minister ruled out the possibility of asking the European Union for financial assistance. On Wednesday, under mounting pressure, a bailout of €80 billion was however requested. What is telling about the run of events is that to a large extent it is not governments that have the ultimate say over their financial destiny but international debt markets, a feeling reflected by Portuguese media, with the newspaper Jornal de Noticias declaring “Yesterday our country succumbed not only to the pressure of the hated markets but to itself”.

Europe's tangled web - a snapshot by the NY Times

For an indication of just how grim things are, note that the sale of short term Portuguese debt issued on April first required a yield of almost six per cent compared to just over four per cent a month earlier. Also on the continent this week, the ECB increased interest rates by 0.25% to 1.25%. Fiscal tightening has begun and the Bank of England will need to consider whether the UK needs to take similar measures in the coming months.

A weak week in Westminster…Earlier in the week Ed opined:

Probably a fair summation of what was going on, and indeed, after Tuesday it only got worse. Nick Clegg, it transpired, had a former intern who was eager to but the boot in. Oliver Letwin, the Cabinet Office Minister no less, hot on the heels of saying he didn’t “want families from Sheffield flying away on cheap holidays” went one better by apparently confirming that the Government would “run out of ideas by 2012“.

Andrew Lansley meanwhile, diligently trying to regain momentum for NHS reform (which has undertaken a “natural pause“) was helped out in the shooting yourself (or colleague) in the foot stakes by Work and Pensions Secretary, Iain Duncan Smith, who admitted that NHS waiting times have soared under his Government.

Unable to keep the lid on IDS or use the brolly on Olly, SamCam appeared to have the blues…

Cheer up Cams - it can't possibly be as bad next week

The savings industry can breathe again…And so it’s over for another 12 months. The great savings rush ahead of the end of year tax deadline has now passed, which means financial advisers, accountants and business owners can afford to breathe a little easier. Many in the personal finance media will probably be looking forward to writing something a little different as well, after four weeks of ISA coverage.

The ISA rush is over for another year

The big issue on the table for savers remains though – the high rate of inflation, which erodes the value of money stored away. It’s proving a real problem, as the Standard argued on Tuesday, though as the Mail notes, there are still good products out there, being driven in part by the desire to retain as well as recruit savers according to some. One other problem remains however – take-up of ISAs remains low amongst the population; something that the newly relaunched Money Advice Service could help address.

What next for Andrew Lansley?…As we mentioned above, the government has taken a pause on NHS reform while it considers its next move. In a statement to the House of Commons, Health Secretary Andrew Lansley promised to “pause, listen and engage” rather than force through the health and social care bill at breakneck speed.

What this week’s climbdown demonstrates is that whenever an organisation tries to redefine, reorganise or change itself, it invariably encounters resistance. That resistance only dissipates when it can be proven beyond doubt that change will benefit those who protest. As Machiavelli said in The Prince “there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.”

The NHS is regularly praised, but also regularly damned, often in the same newspaper article. The challenge for Lansley and co will be to convince people how these changes will benefit them. Otherwise the result could be “pause, listen and disengage”.

The new state pension…Finally, a quick look at the plans unveiled this week by Pensions Minister Steve Webb. Even for those of us who work in this area, the state pension is a fiendishly complicated beast with different levels of benefit paid depending on your work history, level of other retirement income and marital status. In an effort to simplify things, the government has proposed a new, flat-rate pension of £155.

Or have they? Despite a lot of media coverage and hype in the build-up to the announcement, the government’s green paper actually lays out several potential options, only one of which would take this course. The proposal is now open to consultation – expect it to be feisty.

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