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Why I’ll join the silver stampede to cash in a pension

Plus: Business rates and the North/South divide, and Mark Carney’s new men at the Bank of England

29 March 2014

9:00 AM

29 March 2014

9:00 AM

At the beginning of the last decade, a young man who claimed to be my ‘premier banker’ paid me a visit. He was accompanied by his boss, evidently there to assess the junior’s performance. Once upon a time — at least in popular imagination — bank managers were kindly, cautious, long-term advisers, but by the turn of the new century they had become shameless product-pushers with targets to fill, and it was obvious from the body language of both visitors that this poor chap had to sell me something by the end of the call or his job was on the line. So I took his ‘advice’, signed for a stakeholder pension — and never saw either of them again. I’ve been making monthly contributions of £240 (grossed up by the taxman to £300) ever since, thereby accumulating a pot which now claims to be worth £60,000 and promises in due course to turn into a monthly pension, by way of an annuity, of £273.

That won’t pay the winter gas bill in a few years’ time, but the provider’s report tells me there has been lots of exciting switching of my money in and out of different collective funds, and that annual charges of £500 have been creamed off. Not a bad little earner for them, whoever they are, and a brief reprieve for that young banker before he was handed a black bin-bag. But apart from the tax break and the welcome discipline of regular saving, I’ve had a feeling all along that the deal is an absolute dog. So I shall almost certainly cash it in and use it as a holiday fund for my seventh decade, rather than watch inflation eat the monthly stipend to worthlessness in my eighth and (if I’m luckier in health than in investment choices) ninth and tenth.

Such is the collapse of faith in savings products of all kinds that I suspect I shall be part of a silver stampede. We’ll all feel grateful to George Osborne, at least for the duration of his Downing Street career, for multiplying the spending choices of the newly retired. We’ll probably fund our old age by trading down to smaller homes, which will have a useful dampening effect on future house prices. And we’ll only feel the teeniest bit sorry for investors in annuity providers such as Partnership Assurance and Just Retirement, whose shares crashed after the Budget.

Punitive rates


The Budget also contained eye-catching measures to stimulate business investment, which has been lagging badly behind the current recovery, and to encourage exporters, whose performance has trailed off after a promising mid-recession uptick when the pound weakened. But there was little to address the scandalous unfairness of business rates about which I regularly hold forth. These punitive charges — ‘£26 billion for George Osborne that… he might otherwise have to take direct from you and me,’ I wrote last year — on which businesses have no vote and for which they get so few services in return, are still based on pre-recessionary 2008 valuations of commercial property. The next revaluation has been deferred twice and won’t happen until 2017, supposedly to provide ‘stability’ but clearly also to avoid upsetting core segments of Tory business support before next year’s election.

What’s significant about the overdue revision is that it might erode the divide between London and the rest of the country. Research suggests that more than half the retailers in the north and Midlands would have had their business rates cut in a 2015 revaluation, while half the shops in London would have faced a significant rise. Tackling that imbalance would send a slice of prosperity up the line 20 years faster than HS2.

Upmarket choices

The Bank of England looks so different under Mark Carney that I’m concerned for the fate of my man in the pink tailcoat who has kept me informed all these years; will he find himself re-costumed and out of earshot of the parlours of power? This week’s Threadneedle Street appointments included a new chairman of the Court, Anthony Habgood, who takes over from veteran industrialist Sir David Lees. Though hardly a household name, Habgood has chaired three FTSE companies. The first was Bunzl, an outsourcing firm once nicknamed ‘Bungle’ which he’s said to have turned from ‘a ragbag into a silk purse’; the second was Whitbread, the former brewer which he helped refocus as the operator of Premier Inns and Costa coffee shops; and the third was Reed Elsevier, the publishing and exhibitions group. Colleagues say he’s cerebral, wise and dispassionate — and some say he shares with his kinsman John Habgood, former archbishop of York, the lack of a sense of humour. But my man in the pink coat has served his soup and says you just have to listen carefully for the jokes.

Not that jokes ever come high on the agenda in an institution whose very architecture speaks of serious purpose. The American contrarian Adam Posen used to recite rhyming ditties at Monetary Policy Committee meetings during the Mervyn King era, and the outspoken ‘Danny’ Blanchflower must have raised laughs by being so consistently wrong. But Carney prefers mainstream heavyweights like himself over mavericks: King’s free-range thinker and financial stability guru Andy Haldane, tipped for promotion here, is moving sideways to become chief economist, while two new deputy governors move in above him.

The first, from the Goldman Sachs stable that bred Carney and so many of today’s central-banking breed, is Ben Broadbent, whom the City will recognise as one of its own — a markets man whose father was a respected director of Schroders. My man with the soup ladle calls Broadbent Jr ‘extremely civilised’ — and is even more impressed by the second new deputy, Dr Nemat Shafik. I urged the Bank to find a job for Vicky Pryce when she came out of prison, on the grounds that a Greek-born woman of the world would bring valuable perspective; but the glamorous Egyptian-born ‘Minouche’ Shafik, with the IMF and the World Bank on her CV, is clearly the upmarket choice.


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