I would think 99.99% of the UK population missed the significance of the main topic that President Bush talked about in his State of the Union address on Wednesday night. No it wasn’t anything to do with Iraq, Iran, North Korea, international relations, world poverty …………………… it was Private accounts. Yawn. If you live in the UK and expect to get a pension from the state then I suggest you make a note of the name because my bet is you are going to hear a lot more about them.
The US press is full of discussion, have a look at Google News. This article in Forbes gives a good summary.
Love him or hate him President Bush does grasp a problem by the throat and try and do something about it. The problem in this instance is the crisis of the government trying to fund pensions from taxes. More older people means more pensions means more tax means problems.
The US idea is to privatise its social security, in the UK this means privatise the state pension. In the US model, individuals are expected to pay into their own (private) accounts that are then invested for them. The more you pay the more you get. The beauty of this for the individual is that the money belongs to them, not the state. For the state it means it caps how much it has to pay on pensions.
Europe has an even bigger problem than the US but has so far shown little appetite to do much about it. I suspect that the UK might be the first country to try a similar scheme. Doing nothing is not an option.
What’s this got do with marketing? It will reduce the amount of money in consumers’ pockets as they have to pay more into funding their retirement. Already the signs of this are appearing. In the US the level of clothes expenditure is in decline. Part of the explanation is people paying off student debt and funding private pensions. The marketing world had better start taking note of what is happening to the finances of their customers and how they are affected by pensions. Dick Stroud www.20plus30.com
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