Gina Davidson: Pension pot of gold is elusive

Victor and Jack from Still Game play typical OAPs. Picture: BBC Scotland

Without rehashing all the arguments about just what might or might not have happened to private and state pensions in the light of a Yes vote, one fact is very true: pensions are terrifying.

Who really understands them apart from people in the financial sector? Whom over the age of 40 and earns an average salary isn’t frightened by the prospect of retirement and being forced to live on either just the state pension or one supplemented slightly by any work pension that has  possibly, if they’re lucky, accrued to a four-figure annual sum?

Whom – apart from those at the top of their professions – has the spare cash to pay any extra into a pension pot, which is ultimately just another financial gamble on the stock exchange? High living costs, childcare, student debt, low wage increases – it has all placed massive pressure on money to save in any capacity, never mind pensions.

Especially frightened at the moment, though, are the people not yet drawing their pension but who will need to do so in the near future. The rules have changed – yet again – and in six months’ time, people who retire can get their whole pension pot in one go rather than being paid an annuity for the rest of their lives.

How tempting that sounds. No matter how much, or little, you’ve maybe managed to save for retirement the idea that you could get it all, immediately, and pay off debts, or get that new kitchen, or a new car, or go on the trip of a lifetime . . . well who wouldn’t consider it?

What should also be considered, as a pensions specialist was telling me last week – while we were very appropriately watching the old codgers of Still Game on the Hydro stage eking out their state pension to pay for pints in The Clansman – is what happens if you do cash in and then it’s all gone?

For while, the change to pensions has been done apparently to give people the responsibility of their own finances, freeing them from the nanny financial sector, but the reality is that for many a windfall will be hard to resist. Once it’s disappeared then what? Well you sell your house if you have one and downsize. And when any profit money runs out, you sell again, and so on and so on until, if this was the United States, you’d be living in a trailer park.

To that end, Edinburgh firm Scottish Widows today has launched a new website, www.scottishwidows.co.uk/retirementexplained/ to show what may or may not happen should you cash in your pension pot, as well as sending out “wake-up” packages to those for whom retirement is imminent. It knows that too many of its customers just don’t understand pensions and it certainly doesn’t want them all rushing in next April to cash them in.

There have also been moves afoot to change the lexicon of pensions to try to make them less scary. Retirement savings or lifetime savings have been suggested by Saga as a way of removing the terror – and the association with failed schemes – from pensions.

But for many it’s not the prospect of a pension scheme failing that is scary, but of how much needs to be invested to ensure any reasonable pay-out. And when research suggests that savers need to pay around £9000 more in than just five years ago to make a £100 return, then many people would say what’s the point and continue to ignore the whole subject.

I’ve got 20 years before I’m pensioned off – in fact probably more given the increasing age of retirement.

And of course I’ve paid nothing into it for years – relying on a work pension scheme which has been through so many changes – SERPS or not to SERPS and changed hands through different financial companies that I have no faith in it except it will pay me pennies.

I hope you’ve been more fiscally responsible. You might have to buy me a drink in the Clansman.

Eric’s got his head in the sand over drink

COUNCILLOR Eric Milligan, the city’s licensing chief, has his head in the sand given his relentless refusal to believe that the greater the number of places selling alcohol, the greater the problems resulting from drinking.

New research this week shows that alcohol-related deaths and illnesses are significantly higher in areas with more licensed premises and that in Edinburgh the number of alcohol-related deaths more than doubles in areas with high numbers of bars and off-licences.

It comes after Edinburgh police raised concerns about alcohol-related crime and antisocial behaviour in areas where there are many shops and pubs selling drink.

Yet Cllr Milligan, who was once photographed swigging Buckie from the bottle after a Hearts Scottish Cup win, still refuses to see any link. Perhaps his head is somewhere rather than in the sand.

Pro-choice is the only way ahead

THERE is nothing more bone-chilling than reading that a pro-life group welcomes the idea that abortion law could be devolved as Scotland has a more “conservative” view on terminations. This on top of the knowledge that our current Health Minister Alex Neil, pictured left, believes that the 24-week limit for abortions should be reduced.

Without a doubt any difference in the legislation between Scotland and England would lead to a Northern Irish situation where women are forced to go elsewhere to receive the medical treatment they need and have to pay upwards of £900 to receive it.

Let’s hope that with female MSPs currently riding high in Holyrood any suggestion of restricting the medical rights of women in a further-devolved Scotland is thrown out immediately.

Bridge budget is a cheap trick

THE cost of the Queensferry Crossing has fallen by £50m. The Scottish Government has obviously discovered that the best way to finance public works is to start high and work down, rather than, as in the case of the parliament building starting ridiculously low and ending up ten times over.

If only the tram line had been budgeted at £1bn, now we’d be saying it’s a bargain.