IN THE BACK
Storing up problems
It has been a choppy old time in the pensions world , with inflation wreaking havoc on retirement plans , and the consumer price index rumoured to spiral up to 22 % in 2023 . Ouch ! There ’ s no doubt we are only just starting to feel the first winds of the oncoming storm and , although I ’ m no economist , the world still feels a little too fragile post-pandemic to be able to handle another fiscal shock . The point I ’ m getting at is , if belts need to be tightened , usually it ’ s the variable costs that get cut – and for many people , that means optional pension contributions . If your personal mathematics show that there ’ s more going out of your bank account than going in , something ’ s got to give .
A lot of younger people are living on the very edge of this equation , usually spending most of what they earn , particularly as housing stock and rent are sky-high at the moment . Add rising transport , fuel and household costs and other necessities , and millions of people will be eyeing up their personal balance sheets and wondering what they can cut to make ends meet . Many will be looking at their autoenrolment contributions as a source of cash they could do with now rather than in 35 years ’ time . It ’ s not just youngsters who are wearing furrowed brows . The selfemployed , of which there are millions , tend to add money to their pensions in the good times and skimp on payments in the bad . Many selfemployed people did not enjoy a good pandemic from an earnings point of view and may have eased back on the contributions they were going to make , only to find they are unlikely to catch up on those contributions because they need the money elsewhere . Meanwhile , the retired and soonto-be retired who thought they had enough money to get by on are having their dreams severely curtailed by the enormous hit to their spending power .
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