IN HIS outstanding political diaries, Chris Mullin vents frustration at both the public perception of how MPs earn their corn and how that view is shaped by the naked self-interest of his colleagues.
He makes clear that those MPs who take their responsibilities seriously, especially in their constituencies, work long hours and make sacrifices. Mullin – a former Labour minister who once campaigned against a salary rise for MPs – is all too aware, however, that politicians are their own worst enemies when it comes to our somewhat jaundiced view of their worth.
The gold-plated pensions they continue to enjoy are, even post-expenses scandal, one very good reason for that resentment. Just 20 years of service is enough to earn an MP an annual pension pot of almost £33,000.
That privilege may now be under threat, with the independent parliamentary standards authority (IPSA) proposing an end to the generous final salary pensions that MPs receive. The IPSA shake-up would see MPs forced to wait until they’re 65 before getting their benefits and having to pay more into their pension.
The final salary scheme would be replaced by one based on career average earnings – as lined up for the public sector – or by a defined contribution scheme, the main option in the private sector (although they may get pay increases of up to 40 per cent to compensate).
But it’s too late to ward off accusations of hypocrisy. MPs could have done themselves a favour by reforming their pensions at the same time as they were gleefully setting out cuts to public sector pensions. That they didn’t make their case easier by taking an axe to their bloated pension scheme earlier illustrates the self-interest and greed of our political classes, for all the efforts of the conscientious minority.
SO IT’S no surprise that younger generations have little inclination to engage with politics. Or do they? The Edinburgh Agreement has, by giving 16 and 17-year-olds a say in the independence referendum, sparked new debate over the way in which institutions have left young people feeling disenfranchised. That applies both to politics and to financial services, and the solution needn’t be radical. A different angle can be taken by reframing the issue.
Are kids sick of self-serving politicians and utterly uninterested in the shenanigans of the Westminster village (not to mention Holyrood)? Yes, as are many of us. Have they rejected politics entirely? Well, no, they’re just not interested in party politics. Issues – from student fees and benefits to climate change and independence – are a different matter.
If you’re wondering what this has to do with finance, I admit it’s a bit tenuous. But from politics we can draw a comparison with the way in which younger generations now perceive and interact with the financial services industry.
Talk about pensions, tax, Isas and insurance turns most sane people cold, let alone those with their adult lives still in front of them. Does that mean they’re not interested in their own financial futures? Not a chance.
The industry can do so much more to get younger generations engaged with their own financial futures, as can government, by taking financial education more seriously. Right now, however, both the financial services industry and politicians have little to offer the customers and voters of tomorrow.
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Monday 20 May 2013
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