Don't forget they will pay for your pension

Published on Friday 2 October 2009 21:03

BABY boomers are responsible for a lot – probably more than they care to admit. They represent that section of the population born in the orgy of copulation that followed the Second World War until 1967.

The boomers have since defined and dominated the cultural, political and economic landscape. They were the Easy Rider rebels and turned the world upside down.

They were responsible for economic runs on everything from nappies, school places and housing and arguably had a hand, or were used to justify, the irrational exuberance on the stock market in the 1990s.

They continue to leave their mark even today. They dominate politics in ways never thought possible, to the point that they urge the introduction of Anti Social Behaviour Orders which restrict the activities of the Easy Rider rebels of today. And while they sang "hope I die before I get old" , they had a Plan B, for their political clout means that any questioning of pension benefits by a political party is regarded as electoral suicide.

That's probably why there has been such a flurry of activity in tax breaks and benefits for pensioners, such as the increase in individual savings account (Isa) allowances, initially for the over-50s, at a time of fiscal tightening.

Given the economic background, it's perhaps no surprise that people are beginning to talk about cuts in benefits but, as with Isa allowances, baby-boomer tax breaks don't seem to be a soft target. Unfortunately the other end of the age spectrum is looking like increasingly easy money.

Urged on by the Liberal Democrats, and a deafening silence from the Conservatives, child trust funds (CTFs) look like they are in the firing line.

A number of statistics are regularly brought up to show that CTFs have failed. For example, the number of parents regularly contributing to a CTF and a small but persistent proportion of the population who don't bother to invest their CTF vouchers. But these statistics are perhaps missing the point of the CTF.

Right now, outside of a bank account, millions upon millions of people have no contact with financial services. Many millions more only connect through their employer's pension scheme. Indeed the situation is so bad that the government is proposing the de facto nationalisation of pensions through BritSaver.

CTFs are changing all that. In the space of a few years every child in the UK will own a financial product and around 70 per cent of these will be invested in the stock market. More importantly, it now means that teachers can discuss financial services in class with reference to the pupils' CTFs making financial capability lessons tangible and real.

CTFs won't turn out to be worth a fortune – they were never designed to be – but they may fundamentally alter the culture and attitude to financial services. We have to give them time to show their true value.

So come on, all you baby boomers, as you exploit your Isa allowance, spare a thought for the children, who in a few years will be paying the taxes that fund your basic state pensions, winter fuel allowances and any other benefits you choose to award yourselves.

&#149 Neil Lovatt is director of sales and marketing at Scottish Friendly.