The Eye of the Tiger

I was watching Rocky III the other day – the greatest of all the Rocky films but that’s another debate. The whole film hinges on the concept of “The eye of the tiger.” Rocky’s trainer tells him he’s gone soft and subsequent to his trainer dying his old foe and new trainer Apollo Creed tells Rocky that he’s lost his edge and that he has to get mean and get the “eye of the tiger” back. His famous line in chastising Balboa is telling him that there is no tomorrow.

Tomorrow and retirement seems to be an awfully long way off if you are from Generation X (born between 1965 and 1980) or Generation Y (born between 1980 and 1994). Richard Butcher of Pitman Trustees recently said that Defined Contribution, the pension provision that many of these generations will have to rely on, in the UK isn’t working and that DC provision needs a proper regulatory framework given that millions of workers are set to be auto-enrolled into DC schemes this autumn and beyond.

The problem isn’t just a UK one however – it’s Europe-wide. Right across the continent Baby Boomers (born between 1946 and 1964) are edging towards retirement. There are millions of this cossetted generation. They benefited from free university education, low enough housing prices to get on the ladder and for many even in the private sector - defined benefit pension provisions. 

The problem governments have is as there are so many of them – how do you address Europe’s longevity issues without alienating this segment of the electorate?  The solution appears to have been to kick the can down the road.

Surely it is now time to ask Baby Boomers to share the burden. In the UK Generation X cannot get on the housing ladder and Generation Y finds itself in an even worse state because it has to contend with paying off university fees before it can even think of buying a house.

Expecting Generation Y and Generation X to carry this burden is just unrealistic. These generations will more than likely have to rely on a Defined Contribution pension and in the meantime will be paying the pension liabilities of Baby Boomers in their retirement.

As unpalatable as it may seem to government and while it may be a major vote loser, this problem has to be addressed now. When Rocky trains to fight the man that took his title - Clubber Lang, he reaches a point where he is training but he has no belief in himself and hasn’t dealt with the real problem. The real problem he is afraid and he is afraid to lose what he has. Once he has confronted that fear he steps into the ring and beats Lang.

At the moment European governments don’t want to confront their fear and reality. You may lose a few votes but the alternative if DC pensions are not reformed properly is generations on vastly inadequate pensions paying for the bumper pensions of the generation before. Unless this imbalance is corrected, Apollo Creed’s assertion will be proven correct and there really will be no tomorrow.

Graham Simons