For some time I’ve wondered if we give people their pensions at completely the wrong end of life?

Say a man retires at 65 and is lucky enough to survive until 85 years old, he’ll be drawing a pension for two decades. Currently the Government would like to pay him £140 a week (although we’re not there yet). That would be £140 x 52 weeks x 20 years. My calculator tells me that’s around £145,000 per pensioner at a fairly low living standard.

However, if for each new baby born £1000 is paid by the State into a Personal Pension Pot (PPP) each year, he or she will have a PPP of £15,000 plus by the age of 15.
That PPP will be ring-fenced for the individual and manage-invested by a Commission of independent experts spread over five to seven portfolios (from property, retail, technology etc.) A good spread.

Fifteen thousand pounds over 50 years, earning say just 2% interest, will be a PPP valued at £4.5 million at retirement. Money for all later health needs and left overs for shopping and private investment.

Over the pensioner’s working life, that person will only have to pay back the original £15,000 into the system through National Insurance. Adjustments will apply, obviously. I imagine it would have to be phased in over time.

Any experts out there are welcome to shoot the idea down – I’m sure they will. But I wouldn’t mind a few million smackers on my retirement, that’s for sure!