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THIS MONTH’S STAR LETTER ★

Boomand Bust

BOOMERS ARE NOT TO BLAME

Iread Lucian Camp and Rachel Lacey’s feature, ‘Are the baby boomers to blame for the mess we’re in?’ in the January edition of Moneywise with amusement. It appears both writers blame my generation, born between the late 1920s and the mid-1940s, for causing all of the present financial difficulties.

Let me say unashamedly that, yes, we had it good – full employment, generous final salary pension schemes, a stockmarket that grew overall during the period and, of course, the housing boom.

scam are the baby boomers to blame for the mess we’re in?

Britain’s finances are in a mess.But who’s to blame?The baby boomers,who enjoyed a golden age of prosperity or the free-spending generation born after

1964?We asked a representative of each generation if it is the boomers’ fault no

HumBug! Boomers Had it just as tougH By Lucian camp

The generation that followed mine is known as Generation X. I can imagine two possible reasons why: one, some of what my baby-boomer generation has to say about them is unfit for anyone aged below 18 to hear, or two, the spoilt brats owe us a great big kiss of gratitude.

For boomers like me (officially those born between 1946 and 1964), there were times when it all seemed to be going so well.We were in our prime in the 1960s, and, as far as we can remember anyway, it was a blast.

When we look wincingly back on the 1980s, we can’t deny it was fun in its bizarrely shoulder-padded way.

A few of us are just about managing to saddle up and ride off into the sunset with nice, fat index-linked finalsalary pensions before such things become the subject of myth and legend, like Camelot and unicorns.

But for most of us, boomerdom has become a tale of broken promises and unmet expectations – and in one final indignity a bunch of rapacious Gen Xers (born between 1965 and 1981) are waiting to rummage greedily through our pockets as soon as we are too weak to resist.

You see, it was actually the previous lot – that unnamed generation born between, say, the late 1920s and the mid

1940s – who really took advantage of the twin peaks of the post-war economy: a 30-plus-year bull run in stock and property markets, and a benign social climate in which the state and large employers showered benefits on them.

If you were born in, say, 1940 and retired in 2005, you enjoyed both in full measure.

enjoyed both in full measure.

My lot wasn’t and didn’t. Born in 1953, I calibrated my expectations against the previous generation – only to see the cup dashed from my lips. Final-salary pensions disappeared from my private

I calibrated my expectations against the previous generation – only to see the cup dashed from my lips. Final-salary pensions disappeared from my private-

sector world some years back. The FTSE has now failed to outperform cash savings over 20 years. Super-growth in the housing market is a distant memory.

sector world some years back. The FTSE has now failed to outperform cash savings over 20 years. Super-growth in the housing market is a distant memory.

While we’ve been caught out by unexpected events, Gen Xers have no such excuse. They could see the way unexpected events, Gen Xers have no such excuse. They could see the way things were going, but didn’t care. They were determined to enjoy the good life, even when they knew they couldn’t afford it.

These days, we boomers are burning through our money fast. Our lifestyle costs have been accelerating almost as quickly as our resources have been shrinking.

So don’t expect too much from us – the cup of prosperity has been dashed from our lips.You guys have been able to see the way things are going for most of your adult lives. If you’ve chosen to ignore the warning signs and mortgage

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your future for that Range Rover and those Bedales fees, don’t come to me for a bailout.

yes

BaBy Boomers – j’accuse By racHeL Lacey

Baby boomers don’t know how lucky they are. From where I’m standing, they’ve enjoyed a truly great Britain. They grew up in a nation that valued young people and supported them with everything from free milk to grants to see them through free university courses. Thanks to a largely strong economy over their working lives, many are now reaping the benefits of a 40-year housing boom and generous final-salary pensions.

The Britain my children were born into doesn’t feel nearly so great. The stratospheric house price growth that underpins much of the boomers’ wealth means the average house deposit has risen tenfold from £6,600

in 1990 to £66,000 in 2010, according to First Direct. It’s hardly surprising then that the typical first-time buyer is now 35, according to Post Office Mortgages.Who knows where prices will be when my two are old enough to buy?

I would love my children to go to university. But with universities poised to charge fees of £9,000 a year and the student grant now a quaint 20th century relic like the hula hoop, I am beginning to wonder if a university education is really worth racking up so much debt for, especially when more than a quarter of graduates remain unemployed three years after graduation.

I’m not naïve enough to think retiring in the current climate is going to be a breeze, but I reckon it’s going to become even harder for future generations.

Even though the amount of tax I pay is rising, what

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“Gen Xers are waiting to rummage greedily through our pockets”

I’m likely to get back in retirement is falling – and that retirement is an evermore distant reality as the boomers go on sucking the financial life out of the working population. I have no idea just how long I’ll have to work or what changes – almost certainly reductions –

will have been made to the state pension in that time. I’m pretty sure I won’t be getting a free bus pass or winter fuel allowance.

Putting it bluntly, the boomers are going to cost us. Older people are expensive and younger generations will have to work longer and pay more tax to fund boomers’ pensions and care. That means not only my husband and I but my infant children too

– someone retiring at 65 now on a fat index-linked finalsalary pension will be just 83 when my youngest begins work. Put like that, is it really so bad to ask people to pay for their care, even if it means selling their homes?

Families are picking up the tab for years of generosity to the boomers. Don’t get mewrong, poor pensioners should always be supported, but should the government really be helping wealthy retirees pay their heating bills?

At the rate we’re going, the baby boom is going to be followed by the baby bust.

Lucian Camp is owner of Lucian Camp Consulting. Rachel Lacey is group personal finance editor of Moneywise.

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However, to blame an entire generation for Britain’s financial problems is the same as blaming all bankers for the economic crisis. The majority of us worked hard, paid our way and saved what money we could. Isn’t that what we all strive for? And if the boom had continued, who would be complaining now?

Where I do agree with Rachel Lacey is in her questioning of giving winter fuel payments to wealthy pensioners. I would have no particular issue with declining the fuel subsidy if I felt this would help others. But we all know that means-testing such benefits would probably use up any money saved, so it is not likely to happen.

Most economic circumstances are cyclical and what goes around comes around. So it may be that young people today may not have to wait too long before they can retire early and

Blog of the month: WATCH OUT FOR THE PPI VULTURES

BY JOHANNA GORNITZKI BY

If you’ve found yourself watching daytime television recently, chances are you will have seen an advert on how you can claim compensation for mis-sold payment protection insurance.

And yes, if you’ve got a PPI policy you could well be eligible for compensation. In fact, millions of people have been mis-sold the product, as it was pushed by unqualified ‘bank advisers’ to many customers who would never have been able to make a claim.

But before you go ahead and make a claim, watch out for the vultures that are currently enjoying the compensation feast; the claims management companies.

They are the ones that are running all the ads on TV, sending you texts or calling you about your possible PPI compensation. And they are making a tidy profit in the process.

One called me recently about my potential PPI claim (funny, as I haven’t got a policy). I asked the sales rep on the phone how much commission the company would take if my claim was successful. He reluctantly revealed that it was in fact 30%!

Seeing that the average payout for PPI complaints is around £2,750 (according to the Financial Ombudsman Service) that means these firms would make £825 on each successful claim – not bad.

But do they have to put a lot of effort in? Not by the sounds of it. I had a meeting with the Financial Services Compensation Scheme (that deals with any PPI claims from insolvent firms) the other day, and it told me that any PPI claims made to it by claims management companies often lacked even the basic details. So, a big chunk of commission for hardly any work. Not surprising then that around FOUR IN FIVE of all PPI complaints the FOS and the FSCS receive are made by claims management companies, and not individual customers.

But there is no need for a consumer to use a third party to make a complaint – each case will follow the same (and very straightforward) process, regardless of who is bringing the complaint. Additionally, the Ombudsman service is free, and so is the FSCS.

PAYMENT PROTECTION INSURANCE MIS-SELLING CLAIMFORM

In the words of the Ombudsman:“Why pay someone else to do it for you – when you’re just as likely to win by doing it yourself for free?”

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THE NHS IS NOT A FREE-FOR-ALL

Iam writing with regards to your article on the pros and cons of emigrating in the November issue of Moneywise.

I would like to point out that the NHS is not free for most people. It is only free at the point of service – when you need treatment.

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In fact, most of us pay for it through our tax contributions – so essentially you pay in advance for any treatment you may need.

Maybe if everyone remembered this point about our health service, we would change the way we all use it.

This includes doctors and NHS managers – we pay their wages, no more indirectly or directly than shareholders whose investments pay the wages of a chief executive. So maybe doctors and nurses should be as accountable as chief executives

BOOK GIVEAWAY Markets Never Forget But People Do by Ken Fisher £19.99 In Markets Never Forget But People Do: How Your Memory Is Costing You Money and Why This Time Isn’t Different, Forbes columnist, CEO of Fisher Investments and bestselling author Ken Fisher shows that investors have a habit of repeating past mistakes and how costly that can be. More importantly, he shows the steps investors can take to learn from their mistakes and avoid them in the future. To win one of 10 copies, send a postcard with your name and address to Markets, Moneywise, Standon House, 21 Mansell Street, London, E1 8AA by 10 March.

when it comes to how they spend our money. HARJIT SANDHU/EMAIL

Moneywise replies: Of course, you are quite right in that the NHS is not free, rather free at the point of service – so when you need treatment you never have to worry about how you will pay for it.

We all pay our taxes and it’s tax revenue that supports the welfare state. And, yes, Moneywise agrees with your point that if patients and doctors alike thought about that a bit more often, maybe the colossal cost of care would fall.

However, we are hugely lucky in this country to have access to the NHS when we need it most and can do so without being handed a hefty bill – as is the case in so many other countries and most notably in the US.

When we’re ill and in need of treatment, thankfully, the NHS is there for us – no matter what the cost or our ability to pay.

PAYMENT PROTECTION INSURANCE MIS-SELLING CLAIMFORM

Web Poll: DOYOUTHINKYOURSUPERMARKETOFFERS GOODVALUE?

24% NO: Cheap products at inflated prices. I’d rather support local retailers

32% YES: It may not be perfect but it offers better value than the high street

6%YES:Inflation figures prove that it is dropping its prices

38% NO: I stick to my shopping list and ignore the false deals on offer

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Total votes: 407 Online from 6-14 December 2011

FEBRUARY 2012 | MONEYWISE 9