Facing up to the pension crunch

By Ian Pollock
BBC News personal finance reporter

From around the country, young and old tell us what they think of being forced to save for their old age, working longer before getting a pension, and the chances of a better deal for women.

"National savings scheme is a "terrific" idea"

"It's hard convincing staff to join company pension scheme"

"Working longer is no solution to pensions crisis"

"I don't believe people will continue to live longer"

NATIONAL SAVINGS SCHEME? TERRIFIC IDEA

Kate Ray, in her 30s and from Southsea in Hampshire, now has small pension funds saved with four different employers.

If the Pensions Commission recommends a New Zealand-style national savings scheme (known there as Kiwisaver) it will certainly have her support.

"That sounds terrific, I can't see that anyone could object. If the money was guaranteed I think a lot of people would be very happy with that," she says.

The Kiwisaver will be a form of "soft compulsion" with workers automatically enrolled into a national savings and investment scheme - in addition to the current state pension.

It will give members a single account into which they can save money as they move from job to job.

That is just the ticket as far as Kate is concerned. She joined the pension schemes at each of the four companies she has worked for. But she's not sure it's been really worthwhile.

"I am glad to have them, but I would be much more appreciative if I could consolidate them into one. But the transfer values would cost about a third of the funds."

As for working longer before retiring, Kate is all in favour of that.

"Given that people are living much longer these days and are much healthier I think it is fair to let people work as long as they want to."

Even so, in her view compulsion should come with a carrot: "A decent contribution from the government or your company to help you. Companies should still have a big role in providing pensions."

Despite joining her employers' pension schemes, she still feels her pension provision is lacking, and for very common reasons.

"Given the options I had, I think I did the best I possibly could. I should have been saving more. But I've had a child, got married and the free cash I had in my 20s just isn't there anymore."

SOME STAFF DON'T WANT TO JOIN PENSION SCHEME

John Lindley, from Thatcham in Berkshire, runs a small computer consultancy.

The firm, Altis, offers its 20 staff membership of a group personal pension scheme, with the firm making contributions worth 5% of staff salaries. But he says he finds it hard to get some of his workers interested.

"We find it a real struggle. There are three reasons people put forward," he says.

"They say they are young and don't want to be thinking about this yet, it's all too far away to be worth worrying about. The second reason is that they say they can't afford it.

"The third argument is that they will leave it to the state to take care of them - they say 'I know that if the worst comes to the worst the state won't let me starve'."

"60% just don't seem to want to take this offer up in the first place. It frustrates me. They could be getting 5% extra salary effectively if they joined the pension scheme."

Compulsory pension saving has been floated as one way of forcing people to save for their old age. But John warns of an obvious problem.

"My personal view is that an element of compulsion is required. People are not willing to think far enough ahead. But any government that tried to introduce an element of compulsion would find it would be hugely unpopular with the electorate."

GUIDE TO UK PENSIONS Facts and figures outlining the depth of the UK pensions crisis At-a-glance

It seems the Pensions Commission might recommend adopting the New Zealand Kiwisaver scheme. John reckons this is quite an attractive idea.

"Something like that would have more chance of success in this country than a stark announcement of compulsion. Working longer is a very sensible idea. I know several people who are already still gainfully employed in their 70s and 80s. I think it's a good way forward."

Good idea or not, John thinks that many of his own staff will never be interested.

"I genuinely suspect that some, especially the younger ones, just let this wash over them. Young people all think that old age will never come. People across the whole country are just in denial about the whole issue."

"If there's only one thing, raise the retirement age and be bold about it. Don't shilly-shally, get on with it, make it 67 across the board for men and women, private sector and public sector."

ALREADY COMPELLED TO WORK LONGER

Harriet Courtney, a local government worker from Worcester, is busy saving for her retirement.

Harriet is 59 but has no intention of retiring in the next year or so. She can't afford to and will go on working until she is 65. Why? Because she spent 17 years at home looking after her children.

"I've done the best I can to provide for myself. I will have a pension but it won't be very big. I have a pension with a former employer, an AVC, and I'm in the council pension. I'm just hoping I get enough to live on," she says.

Despite the opportunity to work longer, she doesn't buy this as an idea for solving the so-called pensions crisis.

"Are we going to be living longer? Some people will be, but a lot of people die in their 60s and 70s. I think 65 is a reasonable time.

"It's all very well saying work till 67 but the companies don't want you. It's hard enough to get a job at 50-something. It's a bit silly to say you've got to work till you are 67, unless they provide work."

Harriet wants special attention paid to the problems of women, like her, who have spent time out of the workforce.

But she gives a big welcome to a change coming in next April, when the tax rules for all pension schemes change.

"I have been disadvantaged. One of the good things is that they are going to stop limiting how much people can put in a pension. When I started back at work, I had the money.

"I've been limited to 15% contributions when I could have paid a lot more 10 to 15 years ago; if I could have put a lot more money in the pension then, I'd be a lot better of now."

LONGER LIFE CLAIMS A MYTH

Melissa Adjei, 25 with a child, is an administrator with Camden Council in London.

Work until you are 65 or even 67? You must be joking. That's the view of Melissa, who harbours ambitions to retire in her 50s, and enjoy life, not see it out working until her late 60s.

"I'm not happy. I'm thinking of reneging on my contract with the [council] pension and investing in other things such as property. Then I can have an earlier retirement. I'm not working at 67," she says.

Why not? Aren't we all going to live longer? Melissa disagrees.

"People are stressing themselves out, working long hours, not having a regular lunch break. People who are 60 now were under much less pressure 40 years ago."

Melissa doesn't like the idea of copying the Kiwisaver national savings scheme either.

"We are already paying tax, national insurance and when you are contributing for your pension that is quite enough. It will be like another tax.

"I just can't rely on the state. If you do that you are doomed."

As for her colleagues, Melissa says she doesn't know anyone working beyond the age of 60.

"Most of the workforce are between their early 20s and late 40s."

It looks like the advocates of working longer have got a hard sell on their hands.