Saturday, September 06, 2008

New ways of segmenting the older market

I would like a pound/dollar for every new segment name I have heard for the 50-plus market. There are zillions of them. Most of them are dreamt up in the offices of a PR company to ensure their press release gains its 5 mins of fame in the media.

Let me introduce two new names. Public sector employee and private sector employee.

They are not very memorable but will increasingly become meaningful ways of segmenting older people, who live on a pension.

A bit like sub-prime lending, credit card debt, housing bubbles, energy depletion and the other litany of problems that are creating such havoc at the moment, the costs of public sector pensions is a known disaster waiting to happen. None of our current nightmares are new, the facts have been known for ages but they festered on until turning malignant.

The disparity of the pensions of a public sector employee and one from the private sector is huge. That is bad enough, but to add insult to injury it is the private sector employee who is the one picking up the tab and having to work longer to ensure their public sector brother and sisters receive their bloated pensions.

Read my lips, this is a UK problem that will be as big as the credit crunch, housing bubble and any other disaster you care to mention.

Around four out of five private sector final salary schemes are closed to new members as companies consider them too expensive in an era of rising life expectancies. But around 5 million public sector workers still enjoy final salary pensions, many of them funded from general taxation.

In 2007/08 the average public sector worker accrued approximately £5,800 worth of pension benefits. Meanwhile the average earner in a private sector "defined contribution" scheme had a total annual pension contribution of £2,650.

OK, enough of the doom and gloom stuff. There is a positive side to this. In the middle to lower income range of employees we will see the correlation between their employment (public or private) increasingly determining their post retirement spending power.

Any smart marketer should start looking for data sources of ex-public sector employees. Dick Stroud

1 comment:

Anonymous said...

Perhaps you need to provide a slightly sharper focus to your critical beam? As a kind of public sector employee (I work for a group of GPs) I contribute 6½% of my salary. My employer contributes a further 14%. So the government retains 20½% of the funding it claims to spend on health as our contribution towards our NHS pension. such amounts aren't unreasonable in pension terms. It's what happens to that money after it leaves us.

As you said in an earlier article (I paraphrase):
! Everybody knew.
! Anybody could.
! Somebody should.
! Nobody did.