UK: A CURRENT ACCOUNT CONUNDRUM.

UK: A CURRENT ACCOUNT CONUNDRUM. - It wasn't the best of times - but on the other hand it wasn't the worst of times either. In fact, just recently, it was one of those unusual times when, by some accident or other, my income seemed to be in excess of my

by David Morton.
Last Updated: 31 Aug 2010

It wasn't the best of times - but on the other hand it wasn't the worst of times either. In fact, just recently, it was one of those unusual times when, by some accident or other, my income seemed to be in excess of my expenditure. Now, admittedly, the difference between what I was managing to earn and what I was managing to spend was not by any means large.

But, even so, we all know what happens to countries like Japan which start to run up a persistent current account surplus. As a result I was naturally anxious not to find myself destabilising that part of the global economy which has localised itself around my existence primarily as a consumer - and only occasionally as a provider - of goods and services.

Now, of course, it's easy enough if you're a country or even a major international company. You just cut taxes, push up the exchange rate and do something with the Base Lending Rate. Or, alternatively, you increase dividends or diversify the business into something exciting and loss-making like film studios.

But things aren't that simple when you're an individual. Try to pay over the odds for a packet of crisps in Sainsbury's and you find yourself getting some pretty odd looks from the girl at the check-out. Try to acquire some exciting money-spending friends and you discover the wife frowning at you with more than the usual amount of disapproval.

I was sharing this problem with a financial friend who in previous times has been more than helpful with a variety of roll-over-rescheduled-debt-repayment plans - but this time even he admitted himself baffled. 'It's a sort of problem where you've just got too much money coming in and not enough going out, isn't it?' he said after I'd explained my position.

'That just about sums it up,' I agreed. 'Do you think you can sort something out?' He smiled ruefully. 'Difficult to say, old man - haven't had a case like this for years. It's not really my line any more. You'll need to consult a pensions specialist or someone used to getting through lots of cash quickly.' But, as it turned out, even the pensions specialist seemed a bit dejected when I explained the problem and told him that my wife had wondered whether it mightn't be a good idea to put some money aside in a pension so that we could have a prosperous and comfortable old age.

He smiled ruefully. 'Would that it were so simple, my friend. The problem about your pension plan is that to have a prosperous and comfortable old age it's not actually enough to put some money aside. You will have to put more money aside than the other pensioners who will be competing with you for the retirement cottages in the country, winter cruises, home-help and terminal nursing facilities.

'I'm afraid the amount of money you could save is actually less than your contemporaries, so all that will happen when you retire is that they'll outbid you in the marketplace and, to all intents and purposes, you'll have just the same unprosperous, uncomfortable old age as you would have had if you hadn't saved.

'In fact', he added, 'the price of retirement cottages in the country, winter cruises, home-help and terminal nursing facilities will be higher than if you hadn't saved - so the younger people who work as estate agents and travel agents and home-helps and doctors and nurses and porters will be better paid than they would have been if you hadn't saved. So if you were to take a pension out you'd probably end up feeling relatively worse-off than you would have if you hadn't - if you follow me.'

The long and short of it was that he, as a pension provider, was not prepared to see me mess up the well-judged, finely-priced pension plans of his well-heeled clientele with my ill-considered trifles. And he was too honest simply to salt away my paltry savings in his considerable commissions, costs and overheads.

'Never mind,' he said in a friendly fashion as he showed me the door. 'Look on the bright side. Admittedly you seem to be destined to be one of the future poor in our society - but at least today you have more money than you need. I advise you to go out now and spend it before it can do any lasting harm.' Which pretty well explains why I shortly intend to be nursing the most expensive hangover at the most expensive hotel in Paris - after the best, if briefest, bash on record.

I want it to be a far, far better fest that I go to than I have ever known; a far, far better do than I have ever done.

Find this article useful?

Get more great articles like this in your inbox every lunchtime