Clare Logie is Strategic Director at Independent Women, a company providing straightforward, independent financial advice that is tailored towards the nuanced needs and preferences of women. Clare developed and ran the HBOS Women in Business programme for 6 years and was also Head of Corporate Sponsorship & Events at Bank of Scotland Corporate, having previously run a small business and worked as Global Internal Communications Manager for an FMCG company. We are delighted that Clare has agreed to share her knowledge and experience with the3rdi magazine.
There is much heated debate raging in the UK presently about pensions provision – and specifically, a suspicion, whether well or ill founded, that the public sector in general is enjoying the prospect of much fatter, healthier pensions that the recently beleaguered private sector.
Recent ‘attacks’ from politicians and bodies such as the CBI, IoD and Taxpayers’ Alliance say that public sector workers are unfairly rewarded and benefitting from “gold plated” pay and pensions. They rightly identify a growing gap between public and private sector pensions, caused by employers retreating from private sector pension schemes, particularly final salary schemes and say that the public sector should “share the pain” of such retreats by having their schemes cut and adjusted too.
Arguments in response claim that there have already been many reforms to public sector pensions over recent years, point out that public sector scheme members contribute between 3.5% and 11% of their salary annually to their own schemes and that many public sector employees are actually low paid workers, already on quite low pensions and that headlines refer only to those ‘fat cats’ at the top of the ladder. But isn’t this latter comment just the same for the private sector and, for example, the hundreds of thousands of low paid workers within Banks who are now tarred with the slander that we readily now apply, broad-brush, to the ‘greedy bankers’ ?
Other criticisms levelled claim that the private sector ‘props up’ the public sector, but are we comparing apples with oranges if we say this? As the TUC’s recent paper ‘Speak up for Public Services’ points out, it is not a one-way street, but a complex relationship where in short, the private sector could not function without the public sector and vice versa. Few people would argue with this as a concept and no one wants to see public services cut to the detriment of society in terms of impact on quality of life. But the necessary reality checks we have all had to face this past few years bite hard when we look to review anything right now and there does tend to remain a sense that, as Vince Cable has commented, spending on public sector pensions is “completely out of control” .
The coalition government, estimated to be facing total public pension costs of well over 1 trillion pounds, has appointed former cabinet minister John Hutton to lead a review of public retirement provision, due to be published next spring.
Pension reform is likely to be a flashpoint for unions, which have already promised coordinated strikes if the government goes ahead with plans to slash public spending to tackle a budget deficit running at 11 percent of output.
“The statements from the coalition government suggest that working people can expect significant attacks on pension rights over coming months,” unions meeting at the annual Trades Union Congress (TUC), said, rejecting statements by Deputy Prime Minister Nick Clegg that public sector pensions are “gold plated”.
Delegates unanimously backed a motion to collaborate to resist proposed changes by lobbying the government and organising public campaigns, demonstrations, and coordinated industrial action where necessary. Switching the basis for pension increases from the retail price index (RPI) to the consumer price index measure of inflation, which tends to be lower, would mean current and future pensioners losing out on thousands of pounds – but this is as true of the private sector as it is of the public.
The real fact we absolutely and incontrovertibly need to focus on is that so many of us are woefully under-provisioned when it comes to our future income – and the story is exacerbated even further for women by having had a working life affected to varying degrees by career breaks for child-rearing, part time work for reasons of dependent care (whether children, the elderly or the infirm) or perhaps the oft-quoted, hotly debated gender pay gap issues. Some things are boring but true, and the fact that it’s never too early to start planning for a pension, or that you can never put too much aside for the future, are just those kinds of irritating things.
It is absolutely crucial that women take responsibility and action, as early as possible, for their futures. And, unpleasant as it may be to consider, but where you are now may not be where you will be when you are 65. Divorce, bereavement, redundancy or illness all impact enormously on your financial position and having a robust financial plan in place just makes sense when it comes to trying to manage and influence some of these situations.
Independent Women is an IFA firm tailored to work with the nuanced relationship between women and money and are experts in pensions and long term planning. Lesley Collins, CEO says “Whether women want to get immersed in all the technicalities of pension options, or would simply prefer to hand over the responsibility to a trusted adviser, they MUST address the issue of planning for their future. Pensions planning is one of the most complex, time-consuming, unpleasant to think about and absolutely essential aspects of everyone’s long term plan and too many of us overlook it altogether. The right, flexible, tailored advice is essential for everyone.”