/ Money

Update: it’s time to future-proof pensions

Pensions savings

What should be done to ensure pensions really do support a comfortable retirement?

I have given evidence to the Work and Pensions Select Committee as part of its inquiry on the pension freedoms. Drawing on Which? research and insight looking at the impact of the reforms, I’ll be making the case for greater safeguards for consumers who haven’t engaged with their pensions, improved services to help consumers make informed choices and the need for better value pension products.

Pension problems

For too long the complexity of pensions, high (and often opaque) fees and charges and low engagement levels across the sector have meant that people are often not financially prepared for a comfortable retirement.

We know that while the pension freedoms have given savers more control over how they access their pension, but more choice can also mean greater risk for individuals. The sheer scale of potential harm that consumers face if they make a bad retirement decision or fall victim to a pension scam underlines the urgency of the problem.

That’s why we are launching our new pensions campaign. We want the government and regulator to ensure we have a system that gives savers the right tools, products and information to help them make the right decisions for their retirement.

The pensions dashboard

The government has already committed to the delivery of the pensions dashboard, but it remains unclear exactly how we are going to get there by the 2019 deadline while making sure it works for savers.

A fully functioning dashboard needs to provide consumers with transparent, consistent information about all of their pension pots in one place. Savers should be able to see charges, projections of values, services offered and benefits associated with each pension pot to help them make informed decisions and comparisons.

If the average consumer is expected to have 11 pension pots in their lifetime, a dashboard is only useful if all 11 are visible via the dashboard. The government needs to mandate participation of all pension schemes and recommend that the Financial Conduct Authority consults on regulating pensions dashboard providers.

Better products

However, getting the right outcomes for savers is not just about the pensions dashboard. As well as help when planning for the future, savers need to have access to better products when it comes to making those key decisions at retirement.

Part of the FCA’s review of retirement outcomes is looking at the costs and charges associated with income drawdown products. That’s why we want the FCA to introduce measures to protect savers when they take money out of their pension this way.

In a sector that already suffers from low engagement and trust, it is especially important that we address these high fees now, particularly for those who have not made an active choice in the matter. That’s why we want the FCA to introduce better safeguards for disengaged consumers at the point of retirement.

Update: 21 November 2017

Ahead of the Autumn Budget (22 November), we have called on the Chancellor Philip Hammond to set out a clear timetable for the delivery of the new pension dashboard by 2019.

How do you feel about your pension? Do you have all the information you need to save for a comfortable retirement?

Kalina says:
3 March 2019

Women who did not get their State Pension at age 60 and had to wrongly wait over 2 years because of the vindictiveness of the unelected Conservative incompetent government, should get what was lost backdated. The EU has got away with stealing billions of Sterling whilst women who have worked all their lives have been short changed and this must be rectified. Nothing is done about fraud committed by the EU criminals, they are allowed to do as they please and get away with it because they are all part of the Freemason Cult. All we get is mind games from the government about Brexit because the EU are toxic parasites addicted to easy money that they have no entitlement to whatsoever.

The Pensions Act 1995 provided for the State Pension age (SPA) for women to increase from 60 to 65 over the period April 2010 to 2020. The Coalition Government legislated in the Pensions Act 2011 to accelerate the latter part of this timetable, starting in April 2016 when women’s SPA was 63 so that it would reach 65 in November 2018. The equalised SPA would then rise to 66 by October 2020. The reason was increases in life expectancy since the timetable was last revised.

Successive governments have had the opportunity to change this but chose not to.

Mandy says:
9 April 2019

So women born in the 50’s Had to work for a percentage of the pay of their male counterparts…still do. We’re and are and we’re the main providers of emotional, physical and practical care for our children. We now face being penalised yet again by having our dignity and pensions robbed from us. It’s callous and inhuman, women are living in poverty having worked and paid for their pensions all their lives, some so hard hit they choose suicide. Disgusting politicians.

barry says:
9 April 2019

why do mps collect there pension with smaller time frames than the people they represent and is it true?

because they think they are better than everybody else,,who can lose their job and get £30,000 as an end of employment payoff,, because they were BAD at their job ,,,,,,,,????????

Jill says:
13 April 2019

I work as a temp and therefore have breaks in my employment as one assignment ends and another hopefully begins, this results in very patchy workplace pension contributions, especially since enrolment begins only after 3 months continuous employment. The company providing the scheme that I have been enrolled into (without notice and with no investment details) was extremely late with their introduction letter, so I had no idea where the contributions were going. There is a discrepancy between contributions which my payslips show to have been paid, and their record of my enrolment with them. My employer of the time, usually very helpful and knowledgeable, seemed clueless as to how to put this right and felt it was my responsibility to do the chasing. I had be advised to the contrary. The pension provider have not sent any statements possibly because their records probably show there is no need. So now I am tasked with the choice of expensive, time consuming phone calls, or a letter or letters of enquiry, which judging by past behaviours, are unlikely to be answered. I feel that I am paying into a black-hole. that, by its nature, will not give back. So who is to be answerable for this potential theft. My guess is, not that super massive black hole that came up with the idea of this wondrous aid to my postponed retirement. Never-the-less the fight for my teeny tiny pension fund begins…Wish me luck, watch your pay-slips and keep them safe.

This is an absolute disgrace Jill, Not only have Governments past and present made a complete mess of our State Pension entitlements they are now forcing the public into private pensions that are notoriously high risk from a reliability perspective. Thank you for sharing your awful experience with us. I strongly believe that you should make your local MSP aware of your situation and ask him or her for help and improvements to the present mess you find yourself in.Contact your local CAB for help and advice . Please let us know how you get on. Going forward I wish you all the best.

Angela Gadsdon says:
3 July 2019

I lost out as had to work 2.5 years longer than planned but also because I get pension at old rate and not the new one. This leaves millions of us on lower incomes than our counterparts who are younger. This huge discrepancy does not seem to get mentioned but is one of pensioner poverty in the more elderly.

Victor says:
23 December 2019

The New State Pension – Suddenly you have a basic state pension and then depending on whether you have 35 years full paid stamp you will get a Full state pension. Now very few people will get a full state pension because the company you worked for got a tax benefit of taking you out of the Fully Paid up stamp. How many people understood this would get them a reduced state pension ? Before 2016 you needed 30 years full paid stamp now you need an additional 5 years.
Are we getting what we signed up for ?
Day Light Robbery and it’s getting worse.

I have to live on 134.25 @a week

John Ains says:
2 September 2020

I am now 66 and live alone, suffer disabiltys

With help from my local services I was able to get my state pension after 1 year not receiving when iI qualified 65 . Good result thanks to local care help services .

The problem has arisen with a company pension I am unable to receive because of the Aviva Pension Company putting obstacles in the way, along with this covid problem I am still not able to get the small ammount I am Due… from the Aviva company .

We all should be able to stop work at 60. Most people have had enough by that age and have diligently paid taxes beyond 35 years. At 60, your memory isn’t what it was and you can’t function at your jib as well. Also it would free up jobs for the younger generations.

Su – I am not sure it is fair to generalise about people’s capacity when they reach a certain age. Many people are fully functioning well into their late sixties and beyond; it largely depends on what sort of job they have. Employers often value highly the knowledge and experience of older staff, and firms probably have fewer capability, attendance and discipline problems than with some employees in the younger age group.

Some people who have sufficient income can stop work at 60 [or earlier] and live reasonably well until their state pension starts paying out later on, but to fund the state pension from 60 would require a significant increase in National Insurance contributions and taxation. The pension age is being pushed back because, in general, people are living longer. The cost of the state pension is met by current workers and taxpayers so it does not depend on the payments made by each pensioner. We need to bear in mind also that many people nowadays do not start work until they are 21 or older so are not making much contribution through taxes or NI to the state’s funds and their opportunity to achieve a full contribution record of 35 years is therefore more limited.

John Ward I worked from age 15 yet my contributions were only recognised when I reached age 19 .I was looking forward to retiring at age 60 I missed this opportunity by 3 months and was forced to wait till I was 65. I have not been able to enjoy my retirement because of a serious heart condition.
John you asked Su not to generalise about people’s capacity to work beyond a certain age yet you have just made an unfair generalisation about and younger ones, intimating that they lack discipline and are poor time keepers.
You then go on to say that most young don’t start working until they are 21, this is probably because they were in further education until then. Perhaps even holding down a part time job to fund their educational expenses.
So as a rule we should not generalise about anything or anyone.
I strongly believe that we should not be forced to continue working beyond 60.
Our being forced to carry on working beyond 60 has been caused by Governments mismanagement of the State Pension fund and a complete lack of positive action to ensure State Pensions would available for all at a reasonable pension age. Not only are we being forced to work longer we remain the poorest paid pensioners in Europe. This is unfair!

When the age at which State Pension could be claimed was set, expected lifetimes were probably up to 20 years less than now, so most peoples capacity to work longer has greatly improved. As women generally lived – and live – longer than men that disparity in state pension age seems odd in hindsight.

But we now also have a greater proportion of pensioners to wage earners than when the pension was introduced. There is no state pension fund; pensions are paid out of the current taxes that are paid by others so the fewer of them proportionately the more pressure the state pension provision exerts on the economy.

Our pensioners who need it receive supplementary payments, so simply comparing the basic pension with that in other countries is not valid.

Much as I would like to see people able to retire early, I do not see this as an entitlement when most are quite capable of continuing to work for considerably longer than when the state pension was introduced. It would be a luxury for when our economy is in better shape. But for those who can spend less earlier in their lives and save for retirement the option is there.

Inglis – I agree with Malcolm’s response above.

My comment about the reliability of older and younger employees was based on many years of managerial experience and I believe was a fair generalisation.

I appreciate that the postponement of the start of work is due to people pursuing further and higher education – which is generally in the national interest as well as in students’ long-term career interests, but it has consequences, and it defers the point at which they can complete a full contribution record and draw the full state pension.

It has been found in previous Conversations on the UK’s state retirement pension scheme that it is impossible to make fair comparisons with other countries because no two systems are alike and there are various reliefs and benefits outside the basic pension which need to be taken into account [such as concessionary travel, winter fuel payments, etc] and also the contribution rates and eligibility criteria including levels of tax relief on pension contributions. Since its inception, the state pension has been seen as a supplement to personal financial provision for later life, not the other way round.

The state retirement pension has actually been rising faster than average earnings and the consumer prices index for some years recently. The Coronavirus emergency has reduced average earnings and the inflation rate is very low so some correction to pension payment levels is now likely unless the country can afford to hold onto the 2.5% minimum increase guarantee [part of the triple lock]. That will be a political hot potato.

Lost my job at 63 after working for same company for 18 years. I have no work and no income at all. Living off my savings which wont last another 2.5 years. Cannot claim a thing yet i know quite a few people who claim all sorts of benefits which they should not have. I also look after my 94 year father but cannot get carer allowance because he does not get any benefits. Worked all my life from 15 years old expected to retire at 60 with some savings. This is appalling the way people who have contributed to N.I and tax for over 48 years cannot get a pension let alone a decent one.

Dear Denise,Your dad needs care which you are providing therefore your dad should be entitled to claim Attendance Allowance call the helpline on 0800 731 0122 you can download a claim form from the Gov.uk website.You can also get benefits advice from Age UK http://www.ageuk.org.uk The lower rate is £59.70 and the higher rate is £89.15 I would suggest you get advice and help from Age UK Or make an appointment to speak with a benefit advisor at your local Citizens Advice. As soon as your dad get’s AA you as his carer will be entitled to claim Carers Allowance which will also entitle you to a credit towards your State Pension.
All the best Denise take care and stay safe.

Personal Private Pensions are confusing to manage unless you are very good at figures. We loose money in the pot that we can’t afford (me in Equitable Life and another duff company ill-managed; plus Covid and Financial Banking Crisis). My earnings are low-medium and I’ve saved into it what I could. By contrast, Public Sector pensions – education, health, government are incredibly generous paid for by those in the private sector whose own pension provision is often poor. Surely there could be some levelling up?

Alberto Knox says:
29 October 2020

As someone who has managed to save a small ish pot of money in my pension fund I’m appalled by the rip off charges that so called “financial advisers” want to charge. 2% of my fund value with absolutely NO guarantees they will earn you any money, in fact they even say it might go down! Then another 0.64% per annum to “manage” what cash they’ve left me. Great. Thanks very much, I’ll pay you thousands to lose me money! I also have a contracted out of SERPS fund that is with Royal London which they tell me I cannot manage without an advisor as it has a GAR. Such is the generosity of the GAR I will have to live until I’m 104 just to get back the capital let alone any interest. Whilst I do understand the reasons for raising the pension age as someone who has lost out by12 months it might have been a reasonable gesture to have my advice costs underwritten by H.M Goverment.

Edith says:
17 November 2020

I am a Pensioner. I fear for my grandchildren. All Governments should set systems in place to ensure that all workers are 1:Paid a decent living wage 2: Affordable long term housing should be a right for all 3:Retirement should be something to look forward to. Ensuring people will have a State Pension that will cover all basic needs with enough left over for a holiday and to save 4: The Pension age should be set at 60 and not increased.It’s cruel to expect workers to carry on until they are no longer fit to enjoy their retirement. 5: Our young need to have a hope for the future zero contract hours should be banned and flexible hours should replace them. The longer people are forced to work the less chance our young have of securing a job.6: The Benefit System should not come with sanctions it’s cruel to punish people by withholding payments as this leads to starvation.People who need long term help because they can never work due to disability should be supported and given enough financial help to get good support.

Interesting ideas, Edith. I would go along with some of them if it was a requirement for all people in work to set aside 15-20% of all their earnings to fund personal pensions payable from their date of retirement for the rest of their lives. Taxation and National Insurance Contributions could then be reallocated to meet your other proposals and to provide support for those who are entirely dependent on the state. All this depends on a healthy and prosperous economy, of course.

Daphne Wallis says:
3 December 2020

All pensions should be exempt from tax. All pensions have previously been under pay as you earn and many pensioners find it difficult to make ends meet. There is no way to increase pensions after retirement and interest on any savings is practically nil. House bills take a large amount every month which leaves only a small amount for groceries and luxury items such as holidays are frequently out of the equation.

Daphne – People with only a state retirement pension do not pay tax because it is below the level of the personal tax allowance. They may also be eligible for supplementary payments and/or an additional state pension.

In most cases, people who have an additional pension, such as an occupational pension or a personal pension plan, do have to pay tax on the extra pension income because their pension contributions were allowed against tax when they were paid into their pension pot. When they draw them out as a pension, income tax is due – but pensioners generally do not have to pay national insurance contributions. Pensioners are also entitled to a number of untaxed benefits and allowances.

Since all citizens, including pensioners, pay other taxes, such as VAT and various excise duties, it would not be fair for taxation to be used to provide luxuries for some.

It is inevitable that the basic state pension will not provide for more than the basic necessities so it is necessary for people to save up, invest, or boost their pension pot while they are working in order to support themselves in later life.

The state retirement pension has been going up faster than the rate of inflation or average wages for some years now.

I think pensions need a major upgrade the basic state pension is a disgrace government give themselves pay rises which it would take me years to get the Percentage rises do not work on our small amount these peoplé don’t know what a struggle it is for most pensioners with there gold plated pensions we have had no help with civic no hand outs for me

Angela – All retired people would like a bigger state pension but it was never intended to be sufficient to live on entirely for the much longer lives that now prevail. State pensions are paid for out of the income tax and National Insurance contributions of people currently working and by everyone who pays VAT and other taxes. To increase state pensions would mean raising taxes.

The State Retirement Pension has in fact been raised by more than increases in the average working wage and the cost of living for several years now so generally it has kept up with inflation. People with ‘gold-plated pensions’ have paid separately – and usually considerably more – for those benefits, although it is true that the public service pension schemes [which are heavily subsidised by the employers] tend to be more generous than private company schemes but it is argued that the better pension compensates for lower remuneration during their employment. I am not convinced myself and feel that most public service workers have better conditions of service overall than their private sector equivalents and greater job security.

This is an argument that will run and run and the best way for people to secure a decent income in later life is to make independent personal provision during their working life, if necessary at the expense of reduced cost of holidays, motoring and lifestyle enhancements.

andrew john parffrey says:
18 January 2021

Our State Pension should be ours like a private pension – if we die it goes to our estate –
Also tax free if you rely on State pension to maintain a Min £25000 income per annum

Andrew – Why would the pensioner’s estate require a payment from the deceased’s pension fund? The beneficiary of the fund is dead [and the estate might well have considerable assets that can be realised].

A private pension or occupational pension does not automatically go to your estate when you die – and sometimes the estate has to pay back any overpayments made before the date of death, as is the case with the state retirement pension. Some occupational or private pensions include provision for survivor’s benefits but these cost considerably more to fund.

By definition, no tax is payable on state pension contributions from national insurance and taxation. The personal tax allowance also means that the basic state pension is tax-free when paid out.

If you want a minimum income of £25,000 a year after stopping work then you have to pay for it when in work through an occupational pension, additional voluntary contributions, an additional personal pension, or a bespoke life assurance policy. You would need to build up a very large pension pot to fund such an income for the best part of thirty years.

I am not clear whether the inference is that the state pension comes from a personal pot of money and the residue should go to the estate. It is not such an asset – as John says the state pension comes out of NI and income tax, paid by current earners for the benefit of existing retirees. Those contributions are not taxed and until the state pension exceeds the tax free allowance, no income tax will be paid. Pension contributions made privately are given the benefit of tax relief when made; income tax will be payable upon retirement once earnings exceed the threshold; you cannot have tax relief twice over.

We must recognise that the SRP will remain a basic payment, but it is supplemented by other state benefits for those in financial need. Making separate provision if you want a more comfortable retirement is essential.

I understand that if you have a SIPP – self invested personal pension – on which you would pay income tax if you drawdown an income, if you can avoid doing that and preserve the “pot” it will not be subject to inheritance tax when you die. So if for example, you have managed to save in an ISA, which is subject to IHT, better use that capital or income which is tax free.

That is an aside, but relevant to those maybe prudent enough to set money aside throughout their working life for their retirement rather than maybe using it as discretionary spending.

I should have added to my final sentence (above) that to protect the spending power of £25,000 a year on retirement for the following thirty years would require an even bigger pension pot, probably unaffordable for most people.

Harry says:
23 January 2021

Everybody out there, this is a very importance matter to discussed,
Reading member’s comments really surprised me.80% of those members comments I find difficult to stomach, I am now turning to pension age, I have been working since 1973 straight from school.
But I do not want to go into the history of my life.
First. some of the members do not realiser that all of us we were promised that we will receives good pension when you retired. at the age of 55 then 60 then 65 you get where am going
When Some one saying that you do this or that having saving at side to help your pension, you are talking a lot of nonsense what government are doing with our pensions is unthinkable because if private pension do what the state pension minister of all parties are doing by increased your pensionable age This would be a big story talking about it in parliament on Tv, papers.
Would you believe that I am paying TAX on my Private pension? YES I pay Tax
So when you trying to do the right things for yourself and families some idols’ M.P’S will come up with some to deep into your saving, taxable

Member of which say,
It is inevitable that the basic state pension will not provide for more than the basic necessities so it is necessary for people to save up, invest, or boost their pension pot while they are working in order to support themselves in later life


The state retirement pension has been going up faster than the rate of inflation or average wages for some years now.

Sorry for carrying on on and on,,,

Karen Malin says:
2 February 2021

Pensions are unnecessarily complex and so off-putting and the archaic rules, tech & practices of pension providers are barriers, disincentives & frustrations when it come to anything pension. From ferocious charges to the ridiculous time taken to process a payment. Poor regulation on top and you have the broken system that we see. Go well with the petition Which?!