Many people find it hard to plan their finances and to understand the changing pension and tax legislation and what it means for them personally.
Whilst some people do review their financial plans regularly, this is a still a woefully low number and for the vast majority of people, looking at a planning timeframe of what may be 80 years is a huge ask. But it is something that everyone will have to look at when planning for their financial security in retirement.
For those without the comfort of a defined benefit pension, which is now the majority of workers in the UK, this plan has to start from the first time of saving into a pension. Given increasing longevity, this could then mean a planning timeframe of 80 years; 40- 50 years in the savings phase and 30-40 years in the spending phase.
Pensions are designed for exactly these needs and timeframes. With tax relief, employer and employee contributions and the principle of compounding, even relatively small savings done regularly over a long period can build up significant pension pots.
To imagine a savings framework where pensions didn't exist would be a huge loss and a significant change to the current provision and to workplace benefits. It would also be at odds with the government's strategy of auto enrolment, pension freedoms and the weight of communications in recent years encouraging people to save into a pension.
A pension forms the keystone for financial security in retirement for the vast majority of people in the UK. This may be from different pension sources, including the state pension, and it may also be bolstered by other investments or continued income from working, but a pension is still the bedrock from which to fund a standard of living in retirement.
For some who have property investments or significant equity in their home, this may also form part of their funding for retirement. But this is not the vast majority of people in the UK.
Pensions remain the most significant and important part of most people's retirement plans now and for the immediately foreseeable future and they need careful planning and regular reviews when saving, at the point of retirement and throughout the retirement years.
In an interview given to the Sunday Times, Haldane was quizzed on the best way to save for retirement. His answer: “It ought to be pension but it’s almost certainly property. As long as we continue not to build anything like as many houses in this country as we need to meet demand, we will see what we’ve had for the better part of a generation, which is house prices relentlessly heading north.”This is shockingly short-sighted, ignoring the benefits of tax relief and employer contributions, not to mention the risks that people face by putting all their retirement funds in one asset class.