We like to feel good about ourselves. We like to know that our investments and assets are rising in value. From pension funds to equities, from ISAs to our homes, we rest easy in the knowledge that we have invested in assets that will appreciate and provide a pot of cash for our old age.
Perhaps that is just my generation. The 50-somethings who bought into the line that property was always a good long-term bet and growth funds would always outperform the Footsie 100. I for one have placed my faith in this mantra, but it would appear the young ones do not share our optimism and faith.
Getting one’s foot on the property ladder was always a marker that stated you had grown up. You were standing on your own two feet, or four feet if you bought with your partner, and had branched out. I recall buying my first house and setting up a mortgage. It felt good and I knew that something had changed in my life – forever. But it appears this is no longer the path that young people wish to tread.
Whether mortgages, mortgage fees, stamp duty, utilities costs and large deposits are putting them off, I’m not so sure. It appears that “an Englishman’s home is his castle” no longer rings true with the millennial generation. Add to this the ownership of a pension and the picture becomes even more vivid. When I joined “the polis”, I recall my late father telling me that it was a job for life with a gold-plated pension. He was right. Thirty years in this final salary scheme has provided fabulous pensions for many coppers.
But, the new pension scheme for recruits signing up now has been – well, let’s say – watered down a bit. The good old days are gone and the younger generation knows it. I recently tried to get my frozen pension out of the Police Pension Scheme, but was told a big “no”. It seems to me it is skint and needs all the cash it can keep in the fund.
Yes, the pensions bonanza is over as the younger generation shun long-term saving into anonymous funds that may – only may – provide a return over the next 30 to40 years. Let’s be honest, the retirement ages are creeping up as we live longer, so younger folks see no imminent joy. Only a big “maybe” in the future with no final salary option to comfort them.
So as we can see, houses hold no intrinsic value for millennials and pensions offer nothing that grabs their attention. As we know, their attention is difficult to hold. Add to this the uncertainty of the markets and I can see why they have no real interest in investing money for the long term.
Carillion is all over the business pages right now as it dies in liquidation. But, it was dying for months and no one had the gumption or willingness to conduct a pre-mortem. And this is where I believe that the millennial generation have no faith and trust in us to get it right for them.
Despite the good work of the markets and big investment firms, it seems we do not like the term “proactivity” when it comes to due diligence. It’s a bit reactive as we now look at this specific post-mortem with job losses, massive pension shortfalls and missed or ignored profit warnings.
Whether it’s buying a house or saving for retirement, which is more important than ever, or putting some money into a savings vehicle, the younger generations have lost confidence in the future. With a 30-year bull run seemingly coming to an end, pensions that pay out measly amounts when they are 70 (maybe), and more barriers put in the way to owning a home and moving up the ladder, it is plain to see why the new wealth generators are sceptical about the next 50 years.
Maybe it is time to bring back the old with-profits endowment that instilled some confidence in saving for the future with some hope of a return that had a guarantee. Something is missing and if we do not enlighten and motivate these young people to save more, it will all end in tears – for us and them.
l Jim Duffy is co-founder of Moonshot Academy and author of Create Special