/ 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.

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.

Denise Shaw says:
17 September 2020

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.