Money for Numpties: It's Every Pension for Itself; It's Not All Bad News on the Retirement Planning Front, Whatever Happens the Tax-Free Benefits Are Well Worth Cashing in On
Byline: BY ALAN STEEL
IT'S hardly surprising so many of us are throwing in the towel when it comes to saving for retirement.There's not a week goes by without somebody telling us we're not saving enough and, at the same time, knocking the savings industry.
Last week I was lucky enough to be invited to a dinner and presentation held by a leading Scottish investment group.
Two of the fund managers spoke glowingly about the prospects for excellent investment growth from European and the UK stockmarkets.
They drew parallels with previous periods in history and they focussed on opportunities to make money over the next few years.
The main speaker of the evening was the former leader of the Conservative Party, William Hague.
He started off being very amusing with one or two interesting anecdotes, especially about President Bush.
But the politician in him soon emerged. He talked about the terrible demographic problem in Europe and doubled it up by slating us for not saving enough.
Like so many before him he went on about the savings ratio, how it is plummeting and why this means we're not putting enough away for our retirement.
Hague is only the latest person to warn us about this savings ratio.
Now when I went to school, a ratio was something where one number was divided by another.
So what is a savings ratio? Well when I ask experts to explain what this is, they can't tell me.
What I can tell you is the ratio does not include any capital gains made by those clever enough to make the right investments. It also doesn't include any contribution made towards a mortgage which in most instances gives us the opportunity to make profits from rising house prices. Most of us see mortgages as investments.
In the US, the situation apparently is worse. Experts tell us the US savings ratio is zero. Now the funny thing is despite that, Americans saw their net wealth increase last year by over 16 per cent. So the Yanks are very clever aren't they? Apparently they don't save at all, but their wealth increases by one sixth in a 12-month period. How's that?
Well the savings ratio in the US doesn't include capital gains either. And if you don't have a mortgage in the US they pretend you're paying rent to somebody to make up for that, and that's shown as a debt not an investment. …