Pension saving must be made compulsory or the country is headed for chaos, writes Sheriar Bradbury
Official figures released last month revealed that, for the very first time, children born in England today can expect to reach the once-elusive 100-year milestone. Undoubtedly great news for our new generation, but an ever-increasing life expectancy does beg the question: how will the nation pay for it?
There's been much talk in recently about the prospect of compulsory pension saving to help tackle the retirement crisis we are already facing – one that will worsen as people live longer.
A report by think tank Policy Exchange, which called for pension saving to be made compulsory in much the same way taxes are levied, hit the nail on the head; without it, we're headed for a disaster.
Opting out should not be possible when it comes to pensions
However, there is a huge glaring reason why this has not happened yet and that is because it would be a political hot potato. Forcing a nation to do anything will always be an unpopular move – especially where it involves money.
It could toll the death knell for any party in power.
That said, we cannot get away from that fact that we are a country facing a huge amount of debt and allowing people to bury their heads in the sand cannot and must not be allowed to continue.
The government has a duty to ensure people are putting in place correct provisions rather than simply rely on state handouts – is it fair that people are taxed to the hilt to pay for those who were unwilling to save?
And do people really believe that the measly payouts will provide them with a comfortable existence in their later years?
Understandably, those on low incomes will question why they are being forced to save. But, as Tesco famously coined: "Every little helps", and not putting in provisions now will only lead to greater trouble further down the road.
Despite industry grumblings, the introduction of auto-enrolment was a step in the right direction and has enjoyed a much better take-up than the sceptics might have had us believe thanks to the initial contribution rates being so low.
I believe that once the final tranche is enrolled in 2017 – and once the general election is firmly behind us – the government should look to remove the opt-out feature, thereby making it compulsory for everyone.
The government must do everything in its power to educate people about the importance of pensions and warn them of the dangers of failing to save.
A public debate would certainly help turn the spotlight on a subject we cannot afford to ignore any longer. Implementing compulsory pension saving will be a little like ripping off a plaster – painful at first, but necessary if we are to avoid this country heading into chaos.
Sheriar Bradbury is managing director of Bradbury Hamilton
Joined as head of strategy, multi asset, in June
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