The End of Pensions

I relied on my pension.

Being paid for doing nothing is a great job if you can get it. And for decades, millions of people did just that- by drawing a pension. Those halcyon days may at last be over.

The idea of the pension is an anachronistic one, born in a prehistoric era when the British civil service comprised a tiny number of bureaucrats. It was an easy burden at the time for society to support them after retirement.

The largest businesses, confident of their eternal financial might, took on similar paternalistic obligations to employees, from the date of their first paycheck to the day of their final internment.

How vain those notions now seem. Globalisation, competition and the creative destruction of modern capitalism have punished any corporation with the hubris to assume it can bear the cost of both current and past employees. The defined benefit plans of old have long been giving way to defined contribution plans, and the pace of their extinction is being hastened by the current crisis.

Barclays has realised the stark reality of pension fund deficits. RBS too is smelling the coffee. Costain is facing stark reality, and even the government is floating the first tentative hints of imminent reform to civil service nest eggs.

Pensions are a relic of a musty time long past. For today’s worker, the writing is on the wall: save for your own retirement, or you might wish you had.