Last month I looked at how retirement flourished in the 1980s and 1990s.

We now move on to the new millennium. As I indicated at the end of the article we had not taken into account changing social and economic needs. The most important change concerned the life of the final salary scheme. Poor stock-market  returns and the fact that Trustees could no longer claim back the tax deduced from dividend income within the scheme meant that many of the schemes went from being in surplus to being in deficit. The employer was responsible for making good this deficit and the situation was aggravated further when he was required to show any such deficit in the company balance sheet. As a result employers looked to ways to reduce their liabilities by reducing benefits, restricting entry and eventually closing these very attractive schemes.

Employers still offered occupational pension schemes, but the plans were based on a level of contribution and the resulting pension fund depended on investment performance. The employer was no longer guaranteeing the pension benefits, it was now the employee who was taking the investment risk.

The reduction in employer participation in retirement savings, led the Government to seek to encourage us to save through the introduction of Stakeholder pensions but this was a total flop as no employer contribution was required. A number of pension mis-selling scandals also had a huge effect on the public’s appetite to save for retirement – the 1990s – 2010 have been 20 fallow years for retirement saving and the results of this will be seen when those in their 40s and 50s start to consider how thy will fund their later years.

Those considering retirement now are the last of the favoured few. Many of the clients I see have still been members of final salary schemes for all or part of their working lives so the effect of moving to defined contribution is not fully felt. Those retiring now can still look forward to 10 years or so of travel and enjoyment before settling down to a more sedentary life. Many of those retiring now left school at 16 or 18 and went straight out to work – they are now enjoying the Gap years 40 years on!