Not for nothing is this blog called brown girl OUTSIDE the ring – but even I am astonished at feeling so queasy-uneasy about the much lauded pension rule changes announced last week by Giddy Osborne.
Do we still not understand that ‘choice’ is the standard political euphemism for ‘we’re not going to fix the system so it’s everyone for themselves’?
It’s a classic vicious circle. The measure is brought in because annuity returns are crap. Annuities are crap because interest rates are crap. Interest rates are crap because of the financial mess caused by poor regulation of the financial industry. We are not out of the mess yet nor has ineffectual regulation been forced to cowboy up. Liberalism, however, is being applied to pension savings. In other words – we know the man-eating Lake Placid size crocodiles are out there untamed, hungrier than ever but we’re letting the wildebeest loose from their sanctuary anyway. WHAT CAN POSSIBLY GO WRONG?
Do we still pretend not to know that ‘we trust people to make the right decisions’ means ‘we wash our hands of this – and anyway we won’t be in power when the chickens come home to roost (and find they have to live in a hole in the ground)’.
Have we learnt nothing?
Do the government not listen to Money Box on Radio 4? I don’t just mean to the whinings of the Worried Wealthy but the other people; the ones who keep giving their 40 years’ savings to Nigerian princes, Ponsy schemes and non-existent plots of land on the moon?
Let’s just reel back a little.
What this government and previous incumbents have shown us is that they can’t or will not regulate the financial industry effectively. Add to that the voracious need of big ‘C’ capitalism for ever new sources of its life blood – easy money – and you have a subterranean monster eating away at the heart of society, a barely hidden insatiable parasite. We’ve administered some poultices, but it’s there and it’s insatiable.
(I know – the croc morphed into a sort of alien parasite – get over it)
What has choice meant in terms the NHS? We haven’t the will to sort the problems and anyway we are now doubled over with PPI (profit priority indigestion) so we’ll talk about choice – which, as has been said before in this blog – means those with the sharpest elbows can get themselves to where the service still works.
State schools are staggering and stumbling through a maze of half baked schemes – a warren of dead ends from academies to free schools, schools funded by businesses. Schools are demoralised, slated by offsted or overcrowded because they climbed the offsted ladder. Sometimes, it seems, the books are cooked or improvements made by selective offering of exam options. Is it too much to suggest that we simply need good teachers, classrooms that don’t leak and schools with playing fields that haven’t been sold off?
Back to pensions.
As the welfare state wobbles under the weight of ever increasing responsibility, never has there been a time when that precious provision needs to be so carefully tended. We are an old country and getting older. The welfare state was a vehicle meant to transport us from cradle to grave. With the journey getting longer, people who want a smooth ride may need more than one spare tyre.
And – with a flourish – Giddy Osborne announces that people will be free to spend their private pension pots how they like because people are to be trusted with their own money. No new fiscal safeguards. Tadah! And Westminster plus the majority of the media applaud this. And New Labour agrees. And it’s bollocks.
The answer to the pensions problem (as with banking and insurance and mortgages and investments) has always been to properly regulate the financial industry with real sanctions for misconduct. This announcement is a tacit admission of failure. It is also an admission that the big financial disaster that got us into this mess – where the world of money now revolves round the spenders not the savers - is here to stay for the foreseeable future.
This budget bonkersness is a boon for the con man. It’s Christmas all round all year for the Salmonella cruises and the manufacturers of silly cars. Listening to the commentators extolling the virtues of ‘ordinary working people’ spending their own money, one thing is clear – they have no idea, NO IDEA what it is like to have never had to deal with a serious amount of money. If you’ve always had a nice car and regular holidays it may be easy to see that you would never be tempted to choose that sort of quick fix over longer term comfort. If you have had plenty to do with money advisers throughout your life it’s not easy to see how someone would be conned by a smooth talking arse in a suit. But people are regularly conned and / or persuaded to make stupid decisions with their money. It happens all the time but, until now, not with their pensions.