The bee side - Gambling away your pension
A survey's just come out that claims one in seven Yorkshiremen have built winning the lottery into their financial planning. I mean, how good's that? Even if it was a one-in-seven shot that'd be a pretty dumb thing to do, but winning the lottery is a bit further out than that; basically you've got a chance of about one in 14 million of pulling it off. Fabulous stuff really, and a pretty good insight into the mountain that this new Pathfinder Project (that's trying to establish a national money guidance service) is going to have to climb.
The Pathfinder Project is a two-year pilot to see if generic guidance on financial matters can be made available to all. It was borne out of the work of the Thoresen review that started out looking to crack the problem of how to provide free generic advice to one and all, particularly for pensions, but eventually settled on building a national money guidance service instead. I'm sure the academics involved in the review saw the main issue as being that so many consumers these days are not properly equipped to make informed decisions about their finances. That's true enough I guess, as it is equally true that such lack of knowledge almost certainly means many will fall victim to the consequences of having made those poor choices.
But maybe the problems go deeper than that? The concept of financial guidance seems to me to assume that people are on some kind of journey; going somewhere even. But what if most of us are just drifting along rather than struggling earnestly in search of direction? We seem far more likely these days to see adverts on the telly about new online bingo games than we are to see stuff about managing our finances. Indeed, the financial adverts on the mainstream commercial channels seem to be aimed more at explaining debt- consolidation products than savings and investment products. People worry about getting out of the red, not about getting into the black.
Fortunately, there are plenty of urban myths around these buzz-word days to keep people from thinking too deeply about all this sort of hard stuff. 'My house is my pension' is one of them that appears to be widely held, even though the average house is worth just GBP200,000 and downsizing to a cardboard box in the street wouldn't release enough capital to provide an income of GBP200 a week. 'One day I'll win the lottery' is another powerful one, as I've already said. Hopefully someone putting together the money guidance service will knock out a factsheet to show that buying 20 lottery tickets increases your chances of winning from practically zero to practically zero. Or maybe they could do it by giving an idea of what a 14 million to one shot is really all about?
Some actuaries told me once that it's about the same chance as placing a bet that a particular 30-year-old man with no previous health problems and no family history of heart disease would drop dead between seven o' clock and eight o' clock on a Saturday night while the lottery is being drawn. As I said, you could pick the right guy and get it right, but it's a long shot.
But will anybody listen? I suppose the thing is, when everything's taken into account and we've dotted all the is and crossed all the ts at this moment in time; at the end of the day, it's dark.
First published in Pensions Management, April 2008