Should You be Forced to Save for Retirement?
Saving for retirement is something that is high on most people’s to do list, but do you actually do it? New recommendations from the policy exchange seem to suggest that we don’t and it’s believed that if we are going to avoid poverty in our retirement then most people should be saving at least 6 times more than they do! They also said that around 11 million people in the UK are at risk of pension poverty. One of the recommendations they have made is that people should be forced to save for their retirement by removing the opt-out option that currently exists to auto enrolment. They also said that as people’s incomes rise, so should their compulsory pension contributions. But is compulsory pension saving right for everyone and would you be happy if you were being forced to start saving for retirement?
The benefits of compulsory pension saving are pretty obvious in that they relieve the burden on the state and ensure people have enough money to retire on. What about the possible negatives though? Here are just a few possible downsides to consider.
You can’t afford it
As much as compulsory pension saving seems like a great idea, you can’t just ignore the fact that a large part of the population are not saving for retirement because they simply can’t afford to. By forcing people to avoid pension poverty, will we instead be sending them into current poverty? There is of course another side to the argument that would say that we all live to our means, so if we were forced to save for retirement then we would eventually get used to having less money and adjust our spending accordingly. While this might be true for some people, I genuinely think that some genuinely don’t have much disposable income as it is and if the little they do have was to be taken away then it could make for some pretty poor living conditions.
You want to invest in something else
What if you feel that your money would be better off invested somewhere else, like a self- managed share portfolio or investment in property? If you were forced in some way to place a portion of your income into a standard pension plan then this would certainly hinder your ability to plan sensibly for your own retirement in a way that you see fit.
You are expecting an inheritance
Now I know that this option is far from gaurenteed as anyone can lose a fortune at any time. What though if you are currently struggling to meet your daily commitments but you know that retirement living is unlikely to be an issue because you are expecting an inheritance of some sort well before retirement age. Should you still be forced to save more than you can really afford at present?
Does it infringe on your rights?
These are just three of what I would assume are a variety of reasons as to why compulsory pension contributions might not be right for you. So what do you think? Should pension contributions be made compulsory and the opt-out option removed, or should personal circumstances and investment goals be taken into consideration? Further to that, is it a personal right to use your money as you see fit or is it right that we be forced to save for retirement?