Why don't we save? Because we don't have the money

The biggest reason for a failure to contribute to pension plans is not having the money to do so.

Aviva, the insurance firm, has released its second Working Lives report, analysing the sort of benefits businesses give their employees. One particular passage jumped out at me:

Almost half (45%) of employees who do not contribute to a scheme they are offered say they simply cannot afford it, 19% are repaying debts and 17% are saving for other things. Of interest, the number of workers who say they cannot afford to pay into a scheme has dropped 10 percentage points from 55% (Q2 2012) which suggests that while general finances remain tight, retirement saving is becoming more of a consideration.

The problem that Britons don't save for retirement plagues public policy, and novel solutions are forever being proposed. For instance, one of the responses to this report, from ILC-UK, called for Government and the pensions industry to "work together to develop and promote a savings rule of thumb similar to the ‘5-a-day’ healthy eating message."

But if Government needs to do one thing to boost the number of Brits saving for retirement, it's pretty clear that that one thing ought to be aiming to increase the incomes — or at least, the disposable income — of the poorest 45 per cent of the country. It's not a lack of responsibility that prevents them saving, it's a simple lack of funds.

(It's similarly not a lack of responsibility that a 19 per cent of employees decide to pay off debts rather than save in a pension; saving when you have interest-bearing debts is, as a rule of thumb, a stupid thing to do)

Those figures also only count for employees with a workplace pension scheme, an increasingly rare situation to be in. Such schemes typically involve employer matching of contributions, which makes it even more critical that employees feel they can afford to actually take the employer up on the offer. As with other in-kind compensation like healthcare or company cars, such benefits are usually a way for an employer to "top up" an otherwise-low salary. If it is disproportionately poorer employees aren't making the most of them, that hurts them twice over.

Of course, whether employees think they can afford to contribute into pensions is different from whether they can actually afford to. It may be that if the urgency of saving for retirement were properly impressed upon employees, they would be able to make savings in their daily lives elsewhere. But that's a very different proposition from merely reminding people that they ought to be saving more.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Grenfell survivors were promised no rent rises – so why have the authorities gone quiet?

The council now says it’s up to the government to match rent and services levels.

In the aftermath of the Grenfell disaster, the government made a pledge that survivors would be rehoused permanently on the same rent they were paying previously.

For families who were left with nothing after the fire, knowing that no one would be financially worse off after being rehoused would have provided a glimmer of hope for a stable future.

And this is a commitment that we’ve heard time and again. Just last week, the Department for Communities and Local Government (DCLG) reaffirmed in a statement, that the former tenants “will pay no more in rent and service charges for their permanent social housing than they were paying before”.

But less than six weeks since the tragedy struck, Kensington and Chelsea Council has made it perfectly clear that responsibility for honouring this lies solely with DCLG.

When it recently published its proposed policy for allocating permanent housing to survivors, the council washed its hands of the promise, saying that it’s up to the government to match rent and services levels:

“These commitments fall within the remit of the Government rather than the Council... It is anticipated that the Department for Communities and Local Government will make a public statement about commitments that fall within its remit, and provide details of the period of time over which any such commitments will apply.”

And the final version of the policy waters down the promise even further by downplaying the government’s promise to match rents on a permanent basis, while still making clear it’s nothing to do with the council:

It is anticipated that DCLG will make a public statement about its commitment to meeting the rent and/or service charge liabilities of households rehoused under this policy, including details of the period of time over which any such commitment will apply. Therefore, such commitments fall outside the remit of this policy.”

It seems Kensington and Chelsea council intends to do nothing itself to alter the rents of long-term homes on which survivors will soon be able to bid.

But if the council won’t take responsibility, how much power does central government actually have to do this? Beyond a statement of intent, it has said very little on how it can or will intervene. This could leave Grenfell survivors without any reassurance that they won’t be worse off than they were before the fire.

As the survivors begin to bid for permanent homes, it is vital they are aware of any financial commitments they are making – or families could find themselves signing up to permanent tenancies without knowing if they will be able to afford them after the 12 months they get rent free.

Strangely, the council’s public Q&A to residents on rehousing is more optimistic. It says that the government has confirmed that rents and service charges will be no greater than residents were paying at Grenfell Walk – but is still silent on the ambiguity as to how this will be achieved.

Urgent clarification is needed from the government on how it plans to make good on its promise to protect the people of Grenfell Tower from financial hardship and further heartache down the line.

Kate Webb is head of policy at the housing charity Shelter. Follow her @KateBWebb.