Who wants to live forever
Who wants to live forever?
Ah the joys of returning from holiday to eleventy billion emails, press articles and government reports! The stresses of travelling with my nearest and dearest who both seem to believe that it is absolutely necessary to be at the gate 3 hours before take-off are replaced by the challenge of sorting the critical from the dross and the urgent from the important, accompanied by the energy-sapping jet-lag and mega-mounds of laundry. Truly holidays are wondrous things.
Among the insightful reading and expert comment was an article from the wonderful and never under-stated Abraham Okusanya. I am a huge fan of Abraham and generally support every enthusiastic word that comes out of his mouth, however I was recently put on a panel with him and the equally fabulous Alistair Cunningham, and everyone knows that a panel discussion must involve some controversy and (hopefully verbal) dispute if the audience are to stay awake, not least if it’s about pensions. I therefore made the point that although scientific cashflow planning is absolutely the bees-knees I was a bit concerned that people might be led by this into thinking it’s a “once and done” thing.
This was slightly controversial as I don’t think for one minute that Abraham was suggesting people do not need to revisit their cashflow during the course of their retirement. What really stirred him up though was my, admittedly attention-seeking, contention that there may be someone in the room who would live to 150. I did not say people should expect to live to 150, I said that it has been suggested that the first person to do so is alive now and in their 50s, which it has. Clearly this person will be somewhat exceptional and I did not mean to imply otherwise.
The point was not that we should set up 90 year cashflow plans, or that annuity companies should run screaming for the hills. I was simply trying to say that pensions are long term plans and over time things change. You cannot therefore rely on a plan that was made 5 or 10 years ago and expect it to work perfectly. Ultimately, however wonderful your cashflow model is there no chance it will turn out to be completely correct. Next time I will confine my out of context comments to lamborghinis.
On that subject, it seems that people are not cashing in their pension plans. What they are doing is putting them in the bank or putting it into a drawdown plan without taking advice. To tackle this the Pensions and Lifetime Savings Association (PLSA) have proposed a new at-retirement signposting process and automatic referral to the Single Financial Guidance Body (SFGB), which may in itself lead to greater numbers turning to advice. They have also proposed the adoption of Oz-style Retirement Income Targets to help people understand how much they need to save. While I still can’t fathom why they didn’t call themselves the Pensions Association (or other “A” word) for Lifetime Savings (PALS does sound much friendlier) these do seem like good ideas and the report is worth a read.