Kezia Dugdale: Saving for a pension plan has gone to pot
LAST week I met with a group of Edinburgh ÂUniversity students to discuss the impact of Brexit. It was markedly different to the usual conversations I have about the devastating economic consequences '“ there was no talk about the falling pound, the potential for a house price crash, or the impact on pension pots.
Instead, the focus of the event was about the opportunities being taken away for the next generation.
A fortnight ago in this column, I recalled my own university days – queuing for the computer room to use dial-up internet and spending 12p to send a text to my mum from a brick-like Nokia phone.
Technology has advanced at breakneck speed in recent years. In fact, I’ve been told a story how one student was recently asked by a politician what the last CD he bought was – much to the amusement of the youngster, who considers owning physical music storage to be an alien concept.
It’s difficult to predict what advances will be made during the working lives of these young people and what new challenges they will face from the growth of automation and artificial intelligence.
As many as 3.6 million jobs in the UK could be replaced by machines by 2030 – job opportunities for young people today are clearly going to be harder to come by.
But, with advances in medical treatment and healthier lifestyles, it’s likely they will live long into old age. So while pensions were the last thing on the minds of the young students I met, as a country we must recognise that we face a pensions timebomb.
The poverty rate among Scots pensioners in retirement today is already higher than the UK average. Far too many are being forced to choose between heating and eating. That’s unacceptable in a rich country like ours and the crisis is likely to deepen.
Around half of all adults are not saving enough for retirement, despite the introduction of automatic enrolment in workplace schemes.
According to Scottish Widows, 17 per cent of people are making no financial preparations at all for old age. The state pension will make up only a fraction of the amount of money experts say is required for a comfortable retirement, and many current employees will be 68 or older before they qualify. Who knows what the retirement age will be for the students I met?
There is no simple solution, but governments and employers must do more to encourage people to put some money away.
The problem, of course, is that wages have been stagnating for years as a result of UK Government austerity. Asking workers who are already struggling to put food on the table to put more money into a pension pot is often simply unrealistic.
That’s why we need a real Living Wage, an end to zero hour contracts, and public sector pay rises, as a start.
For those who can afford to pay into a pension fund, we need to ensure they are not penalised as a result of recent changes to the tax system in Scotland.
One constituent in Edinburgh came to me to point out that while there is now an intermediate rate of income tax of 21 per cent in Scotland, compared to 20 per cent in the rest of the UK, tax relief on pension contributions is still given at only 20 per cent. Tens of thousands of people across the country are entitled to an additional 1 per cent of tax relief on pension contributions, but they must contact HMRC to make the claim. What a hassle.
I am writing to the Finance Secretary, Derek Mackay, for an explanation.
We don’t know what the future holds. But we do know that far too many people in our country – both those starting out on adulthood and those who have worked for decades – are facing financial hardship in their retirement.
Sponsorship puts a spoke in healthy living bike rollout
The Edinburgh bicycle hire scheme is up and running across the city and seems to have received a pretty positive response, not least because the first day was free.
BBC broadcaster Stephen Jardine was right yesterday though to question whether it was a smart move for the main sponsor of the bikes to be a leading takeaway delivery company.
The truth is that for as long as these bikes are run by a commercial entity, they will flog the money-making potential to death. Two hundred bikes across 19 separate box office locations across the capital is prime time advertising space. It’s hard to imagine what healthy living companies could afford to advertise in these spaces – and while they might be healthy we’d no doubt find a flaw with their employment practices or tax affairs.
There will never be a perfect advertising partner which is why, in an ideal world, these bikes would be owned and run by the city rather than corporate interests.
This is just phase one of the bike installation. I’m hopeful that we’ll get a set of bikes down by the Parliament. Not least because I like the idea of doing a free wheelie down the Royal Mile, but because it will link up more of the city’s assets.
The first site at the Parliament was rejected on the grounds it would have curtailed the protest or civic space, but perhaps something round the back by Our Dynamic Earth is a better option. There’s an idea for a sponsor – Our Dynamic Earth?
Appeal for Capital cancer charity puts my own worries into perspective
It’s fair to say I’ve had a torrid couple of weeks trying to work out how I’m going to defend a legal case for defamation brought against me by an internet blogger.
The sums involved are astronomical and it’s brought into stark focus how access to justice is driven almost entirely by financial means. I’m fortunate to have a very good salary and still I’m sick with worry. I can’t imagine how folk in less powerful and less well-paid positions would cope.
My own worries crumbled away though when I attended a business networking event for young mums in Fountainbridge last week. They come together once a month to support each other and make connections to advance their businesses. It’s such a brilliant idea. This meeting was different though. They were all there to raise money for an Edinburgh charity called Make 2nds Count. It’s a cancer charity founded by Lisa Fleming, who is living with secondary breast cancer. A condition for which there is no cure and scant hope.
She was too unwell to be there that day so her husband and mum went along instead to talk up the charity’s main goals – to promote understanding of secondary breast cancer, to raise money for research into it, and to provide financial support for those living with it.
I realised I recognised Lisa’s husband and it turned out we had started out at university together on the same course 19 years ago that month.
This family are an inspiration and what this young family are dealing with puts my worries very firmly into perspective.