Pension potty

Retirement. There's an emotive word for you. So emotive, multitudes of teachers, filing clerks and other assorted Civil Servants have thrown off their cardigans and taken to the streets of London to protest against plans to make them work until at least 65 like the great mass of the population.
In the old days, Civil Servants used to justify their generous retirement packages by comparing their salaries with what they would earn in the Private Sector. N.B. For Private Sector read The City of London; none of them ever really considered bashing metal or flipping burgers for a living. Not for them the continuous lusting after wealth and privilege. What drove them was nobility of purpose and an unselfish desire to burn themselves out in the service of the Nation (even if the salaries on offer were pitiful.) All they asked in return was the right to retire at 60 - or even earlier - on an index-linked, final salary pension.
Even though they now, with the odd exceptions, make 7% more on average than their equivalents in the private sector they are still playing the same old song. While the rest of us are having to accept the need to work until 67, or 68 or whatever figure the next right wing Think Tank arrives at, they demand the right to call it a day at 60.
Now, I remember when I first returned to the UK having lived in the US for a number of years, the newspapers were full of stories about how much the EU - or at least various of its member states - wanted to get their claws into British private pensions; rightly regarded at the time as the gold standard. A significant proportion of the workforce was the beneficiary of final salary pensions. Encouraged by government, not a few of them fattened their pots with AVCs (additional voluntary contributions). The future looked, if not rosy, at least predictable and relatively safe.
Then Gordon Brown, encouraged by that beacon of economic literacy, Ed Balls, ended the tax relief private pension schemes had traditionally enjoyed. This garnered him lots of extra dosh to lavish on his favoured client groups. What it also did was explode a grenade under the whole edifice of private pensions and, at a stroke, destroyed the retirement plans of millions who, up to that point, were quietly confident that they had everything covered.
14 years later, apart from the CEOs and CFOs of large corporations for whom a feater-bedded pension is an essential element in any contract negotitations, few in the private sector will enjoy the type of index-linked final salary pension scheme that was common prior to 1997. The only people guaranteed an index-linked pension when they eventually hit retirement are those in the public sector
Here, I have to put my hand up and say that I am one of the fortunate few. I will receive a private pension based on my final salary built up over the 14 years I have worked for my current employer. In fact, don't tell anybody but it was the principal reason I stayed with them for so long. In itself not particularly munificent, it is still considerably better than other pension schemes I have subscribed to at various times in my working life.
Now approaching retirement, I have started to review my options and, quite frankly, they are not that uplifting. Having paid income taxes and National Insurance contributions for 48 years I will recieve a State pension of around £5000 p.a. Munificent!
Of course, I have my work pension but 14 years is not that long when it comes to building a pension pot.
What of the other years, you ask. Were you in prison, hospitalised or simply bone idle?None of the above.
I was self-employed. In fact, I ran a small business and thus also provided a number of other people with gainful employement. During these years, encouraged and incentivised by various governments, I paid fairly large sums into a private pension plan. At the time, interest rates in the UK were in the high teens and the returns the pension company were promising conjured up visions of a retirement spent travelling between a house on the South Coast and a villa in the South of France in a stretch limo.
Once I moved to the States , I no longer paidUK tax and had to leave my pension scheme.
When I returned I tried without success to resurrect the scheme. It was disallowed because one of the perks of my new job was a generous pension provision . So, my private pension went back into a state of suspended animation. As I am rapidly approaching retirement, I have been showing more interest in its health in recent years.
The scheme grew rapidly in the early stages, fuelled by interest rates of 12% and more per annum. At that time, anyone could grow money simply by sticking it in a Post Office savings account. However, when the markets tightened and then the recession bit, the people managing the funds had to work reallyhard and intellligently to keep the pot bubbling. This they signally failed to do . In fact, so comprehensive was their failure that not a single farthing has been added to my pot for the last seven years.
Villas and stretch limousines are now out of the question. What my cherished scheme will provide is so reduced that it will struggle to pay the fuel bill for a small house and car.
At least that sheme did show some growth. Another occupational pension that I had almost forgotten about I subscribed to in my twenties, forty years ago, When I left the company I also left the scheme. Nonetheless, after forty years I thought it might be worth enquiring about. After all, forty years on, inflation should have grown the admittedly pitiful sum I invested quite considerably. The pension company was very helpful. They had my policy and confirmed that they would be paying a pension. Then they sent me a lavish pack, full of images of sailing boats on sun-dappled lakes and hearty elderly people cycling, mountaineering and gorging themselves on nouvelle cuisine and detailed instructions on how to apply for my rightful share of this cornucopia.
Excitedly, I turned to the last page of the pack, to the illustration of benefits. £478. I looked again. £478 a month would come in useful, no doubt.
One drawback. The £478 wasn't a monthly amount. It was an annual payment. Since the company I had worked for had not set the plan up on a With-Profits basis, the funds had not grown at all. . The pension company might just as well have put the money under a mattress for all the good they had done in the intervening forty-odd years.
So, there you have it. I followed government advice, made what I thought would be adeqaute provison for my old age and a combination of ideological economic chicanery, financial ineptitude and sheer highway robbery has blown all my plans apart.
Anyone who joined the Civil Service at the same time as I started work, has probably already been retired for the last four years. Unlike me, they are enjoying an index-linked pension dependent not on the vagaries of the money markets or the whims of inefficient fund managers but guaranteed by the British Government and paid for out of the taxes taken from me for nearly half a century.