/ 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?


Who knows what the future will bring ? Those who have predicted the future have got things wrong many times .Some might have at times Mother Shipton for example ( she lived in cave in Knaresborough)

I have two pensions which are both controled through the civil service or the goverment, and they have been capped for the last three years or so at 1% however the cost of living has gone up much more than 3% over the last three years and it’s starting to hurt. after working all the years your pension should keep up with the cost of living other wise i will die in poverty

To increase transparency and stop the government constantly changing the rules for their political gain, it should scrap the NI tax and setup separate contribution schemes for the state pension, NHS and other benefits. The funds in each scheme would be ring fenced. That would concentrate everybody’s attention on “state benefits”, and therefore allow the electorate to understand the costs, and ultimetly decide the minimum level of contributions and benefits. The state schemes should apply to all citizens, including MPs. If citizens then wished to contribute more that would be their decision. Perhaps the corrupt bankers and “leaders” that got us into the currant mess, would like to make the initial contributions as part payment for their criminal actions?

I have privet pensions that i can not live off because the cost of living has gone up more then 3%. I have been retired five years now and trying to live off a Annuity i took out which pays out very little to live off and many people are in the same way. Annuity’s are a big rip off for over five million pensioners that are struggling to make ends meet, if i had my time over again i would not tolerate them. I guess people that are coming up to retirement should do the write thing and take there pension pot and not take to Annuity’s. People now in retirement should have the freedom to take the money out of there retirement to live off. The Governmount in 2015 said they would do that, they got people thinking that they were going to get a better living out of there pot’s, then in 2016 they did a U-TURN and stopped it, put many in poverty and much more i guess. I would like to see a campaign to get the Governmount to do a U-TURN and give us what we disserve and worked for over the years. I guess there must be a way for us in retirement for a better living, many people now do not take Annuity’s because of the low income they recive from providers. I also do not want my provider to keep my money after my death that i have worked for nearly fifty years.

Some people are forced into a retirement poverty trap. Imagine if you become long term ill during your working lifetime say 20 years or more, you won’t be able to contribute to your pension pot (if you had one) so will end up living on the state pension when you retire. If you have previously contributed to a works or private pension that may be just enough to take you over the threshold for Pension credit so you will loose out all round. That extra income, small as it may be, could cost you a lot in benefits you will no longer be entitled to. In other words you would be better off without the extra income. I know people in this position. The government need to take action here.

This comment was removed at the request of the user

Having retired just over 4 years ago, I can testify just how confusing it is for anyone approaching retirement age, and I was a senior manager of companies offering pensions and actually trained advisors as part of my remit.
Forget the products on offer, just look to the standard of knowledge within the industry nowadays. Which proved to be abysmal in my case, where the people that should know what they are on about (Pension Companies) proved to be lacking in knowledge of the products that I held. In one case dealing with a Section 32 pension plan, with one of the largest pension providers in the country, they dealt with it as if it were a modern product, offering me thousands less in a Tax Free Lump sum, and more than a thousand less per annum in an annuity. They did not even know what a Section 32 pension plan was.

I am confused by the whole pension thing. I have a Stakeholder which I still pay into. I have a teachers pension and an AVC. I think it is very unfair that through most of my working life I have thought i would get my old age pension at 60 and now it is not even 65, but 66. It is unfair to change it so late in the day. It really should revert to 60 and if not then to 65. I keep putting it off looking at my pension. I don’t understand it and agree it needs simplifying.

I am in receipt of a state pension. But because I worked a my life and paid into a occupational scheme. I don’t see a penny of that because I pay full rent and c/Tax. People that never worked get everything for nothing. Occupational pensions should NOT BE MEANS TESTED. ITS A JOKE

Must say I am a little surprised that the plight of the frozen pensioner, which could well affect individuals yet to retire and who may be planning to live abroad. Quite simply even though they have contributed to the NI scheme on the same conditions as everyone else when working ,the frozen pensıoner, living in such countries as Canada, Australia, South Africa and Thailand do not get index linking to their State Pension yet those who retire in an EEA country or for example, USA, the Philippines or Macedonia do. This irrational and illogical pension policy currently affects over 550,000 UK pensioners. A pensioner who retired in a frozen country on a full pension of £95.25 in 2009 is currently £1,300 per year worse off than his or her counterpart in the UK….having contributed on the same terms. With no index linking the gap only increases year by year so beware if thinking of going abroad to live and join the campaign for world wıde pensıon parity!

I am one of the unfortunate ladies who has been done wrong by the present government. I got to pension age and it suddenly changed from 60 to 66! I hope something is going to be done about this. Makes you want to give up.

I was sensible enough to take advice about contributing to a private pension but unfortunately chose Equitable Life. As a result I lost about £17k from my pension pot and do not expect this to be reimbursed though I did receive about £5k from an initial payout. I am 77 and now receive an annuity from Standard Life, less than it would have been if Equitable Life hadn’t been sent down the pan. I have been widowed for 30 years and because my husband died before October 2000 have had his contributions to his state pension allocated to me. My state pension pays more than my annuity so I hope the pension lock is not removed – even the extra percentage allocated at present because of the lock is worth having as is the yearly fuel allowance. Fortunately I have good health and am still working as an independent surveyor because I love what I do. If we are all to live longer, as has already been forecast, then it is essential that pensions are better managed. I couldn’t get my head round why pension drawdown was allowed, something I would never have considered doing anyway. What will be the government’s answer be to those who may fritter away their pension pots, will the rest of us have to contribute to looking after them as well as ourselves? I have already decided that I will never go to a care home as I will leave this world at a time of my choosing. My conscience would never allow me to be looked after by someone paid a pittance to do so nor could I ever agree that my house should be used to pay for care fees.

I’ve not had time to read all the comments – Sorry if I repeat a previous one:
I was made redundant from the NHS in 1993 after almost 20 years service. I believed as did many of my colleagues that it was a good scheme.
Because the pension plans in my subsequent jobs didn’t allow transfers in, my NHS pension remained deferred for 21 years and is now worth so little (relatively) that I will still need to work (63 at present) until I’m 68 or 70.
The reason for this is that the annual increase is capped at around 2% whilst inflation was running much higher during the 90s. What happened to the return on investment that my “pot” made above this 2%?
I assume it went to help pay Sir Robert Devereux’s pension, see the link (http://www.express.co.uk/news/uk/865327/Pension-Civil-service-Labour-Robert-Devereux-transport-UK-national-salary).

Jane says:
3 November 2017

I think it is wrong we have worked all are lives and paid into the system are pension has not been given to us we have worked for it and including the NHS

I think it stinks how the changes were sprung on many of us and it comes very hard on those of us who worked in heavey jobs at night time work and now are suffering with joint problems and still expected to find work when we should be retiring age.

tina says:
3 November 2017

I don’t think pensions should be taxed at source. If government wants everybody to be independent in their old times and be less of a burden on the system, then they should not tax the pensions when someone retired.
Also you should take your total pension without any reduction or taxes if you have contributed to s private one. Pension industry makes money on the capital in the funds every single day on interest. They do not loose but we do when we want to take it out

Gaynor Cobb says:
3 November 2017

Having been given a date and amount for my state pension, the government changed their mind and I have yet to receive a pension. I was born in October 1953. Now, I have no faith in government promises with regard to pensions, they are worthless.

As Tina said, if the government really want pensioners to be less of a burden on the state, then saving for ones retirement should be encouraged not penalised. Maybe the government should reverse the Gordon Brown theft from pension funds ( providing that windfall came to us and not the companies).

I feel the 50’s children have been given a raw deal. I also feel that during the course of our working life, we were not given enough advice on how the amount of Pension we will receive, whether it would be sufficient. I am 66 now, and my Pension hardly pays for my outgoings. I decided to look after my daughter , rather than work,until she went to school, but now I am penalised, due to my stamp not being paid. I feel that the Government should have been more helpful on this and given us guidance and help. It is too late now, so I will be working for ever just to survive, but then, I am taxed on any earnings, and also taxed on my State Pension, which I have already paid Tax on. It is disgusting.

Penny says:
3 November 2017

Even worse than the deal we’ve been dealt is that government has lied about it. My State pension date was raised OVER 5 years in July 2012, along with thousands of other women, when I was within 18 months of receiving it. At the same time it prevented widow(er)s without full NI contributions from using their late husband’s (or wives) payments to top up.

Colin says:
7 December 2017

Successive governments (worried about losing women’s votes) put off equalizing the state pension age for far too long, meaning that changes that should’ve been phased in gradually over several decades starting in the 1970s had to be introduced suddenly. But the reality is that, by having a retirement age of 60 (despite having a longer average life expectancy), women enjoyed an unfair advantage for many years. Governments should have acted much sooner, and been more open about the need for change. Nevertheless, change was entirely foreseeable, and shouldn’t have come as a shock to anyone.

It does not make it right to introduce a major change without giving women sufficient warning to plan for the change.

Having seen pensioners struggle when I was young, I joined a company Pension Scheme as soon as I could. When the Final Salary scheme ended to be replaced by a less generous defined contribution scheme, I took financial advice and increased the amount I was paying in. I was never a high earner but I considered the schemes a no-risk investment, we will never be rich but our pensions make life comfortable.