/ 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?

Tracey T says:
3 November 2017

The company I work for changed its pension a few years ago – safe to say it was a good pension .
the pension pot I had built up over 20 years was good – I have another 20 years to work and in spite of paying nearly twice as much into it now – I will not build up as much pension as I had in my first one

Michael Whittaker says:
3 November 2017

I think that it is disgraceful that people are not allowed, without a substantial tax penalty, to amass a person pot of over £1million. Although £1m is a large sum it will not generate a large income in retirement. Surely the Government should be encouraging us all to save into a pension to save retirees having to rely on the state. I am personally unaffected by this problem as my pension pot was already in place before the Government changed the rules. Best wishes Michael W

Oh, Michael, you must be so upset that the millions of UK workers cannot save more than a million pounds into their pensions. But wait you have managed in your outrage to a small gloat that you, in fact, did manage to before the rules changed. Luck, luck you hurrah, I think anyone who can save over a million in their pension, is in a very small minority and will not be suffering hardship in retirement if they are stopped from putting in more than a million.
But I forget you actually want the tax savings for your over 40% tax bracket friends by being allowed to put millions into pension pots rather than savings were you would be taxed.
From an unsympathetic reader.

Mike says:
4 November 2017

Not at all helpful !

I agree.

I did all the right things in paying into pension all my working life and should be quite comfortable BUT westminister did not honour its commitments and pay out a pension at 60, and of course because I have a private pension I am not eligible for any other assistance. So much for planning, more fool I.

Grumpy says:
3 November 2017

Its disgraceful that people who have worked hard and paid in for over 40 years are now getting less than if you had been scrounging off the system all these years, My retirement aged is now 67, and they are looking at extending this even later…..they want us to die off so they don’t have to pay out. If you die before pension age ALL of your entitlement should be paid to your spouse or family its your money not the governments, but continued misappropriation of funds from all sources have made this country a joke.
Now they are shifting the onus on the employer by making compulsory works pensions, but still creaming in your national pension money which they WILL NEVER PAY BACK, its legalised THEFT.

Women have always been short changed with regard to pensions. For instance, there was a joke called The State Secondary Pension For every £10 a man paid in he got £9 back per week. A woman got the old 6d. A woman got 15 years contributions less than a man. A woman either got none of her husband’s private pension or a much reduced rate if she became a widow. My point is that if she died first and the man was on his own, the private pension would remain the same. Why should a woman be expected to live on less than a man?

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It can still be hard to understand all the information on pensions, I invested in what I understand was a reasonable safe bet on investments But had to pull the plug losing 10% of my investment, you can never be sure of the future.i did not have a lot but thought it was a wise decision, those who have no pension have to rely on state.WHO is there to trust and what will Brexit do for us

Like Margaret above, I am Equitable Life victim. No point in going over the history; it is the current status that ticks me off and Which ? could try to help with this. As a With-Profits Annuitant, my policy was transferred with many others to the Prudential about 10 years ago along with a huge pot of money which was supposed to have been ring-fenced. Will the Prudential give me any meaningful detail about their management of that pot of money? No? Will the FCA make them ? No? Will anyone else make them? No? In this day and age when information can be made available at the press of a button, it is scandalous that we are kept in the dark yet supposed to be responsible for our pensions. Which? could usefully help by joining others to campaign for total transparency not least by requiring disclosure of all charges and costs.

Working hard saving hard and a pension what’s the point ? You get taxed to the hilt and if heaven forbid you end up in a nursing home you end up in a bed next door to someone who has never worked didn’t want to work had no intention of working – only difference being you with no “tax credits” will have to sell your home and hand over your savings – leaving the family with not a lot ! What kind of message is that ? In some 50 years of full time useful employment and never having claimed benefits I should be fully entitled to a break !! My pension !!

Pensions are just a big con! I paid substantial sums each month when I was younger into an Equitable Life pension fund. The company found they could not pay the bonuses they had said they would and eventually the fund became a closed fund – meaning you couldn’t pay in any more and effectively they went bust. Gordon Brown the worst chancellor this country ever had did nothing and just let it happen. I lost thousands when I had to transfer into another pension scheme. Also don’t forget that Gordon Brown raided the Pension companies during his time as Chancellor. There’s no guarantee the government – this one or the next, won’t do the same when it suits them. Remember to all those employees who paid into the BHS scheme and even further back Robert Maxwell owner of the Daily Mirror raided the pensions of his employees too. Companies don’t honour their commitments, they change their rules to suit themselves and it’s the employees who suffer. There are countless companies who have deprived their hard working employees of a decent retirement income. Finally what about all those companies who have gone bust or closed leaving their employees with nothing or in a worse scheme and are powerless to do anything about it. It’s absolutely disgraceful.

My advice if you have money in a pension pot and you’re retired – spend it before the government take it or there’s a financial crisis and you can’t get at it. If you spend it now they can’t take it away from you later if you are still saving and have built up a decent pot. If you are about to retire, annuity rates are a joke, you’ll never have enough to be ‘comfortable’ . And you never know what’s round the corner. If you’re really unlucky you could be dead in within 2-5 years of retirement and who gets the remainder of your pot, if you haven’t got a return of fund or your spouse doesn’t get it? Why the pension companies of course. No, Pensions are rubbish.

As the government continually extends the state pension age anyone who is lucky enough to be able to continue working to that later age is unlikely to be able to enjoy any meaningful retirement period, despite the act they say we are all living longer.

It is a minefield out there. I have a moderately large pension pot which I have built up over many years saving and going without, and I would like to retire in two years, taking out a pension drawdown, as annuity rates are dire, you could die a day after purchasing an annuity and lose the whole pot etc, etc.

I have possibly a little more than the average person’s financial knowledge of investments as I work in the Financial Services sector but even so there are so many decisions to be made – different types of drawdown products, growth or income funds, self select or selected for you, annual fund management charges. risk profile, tax implications etc etc. There is no help that I can see for the average person to inform your choices. Recently I searched for a website simply to compare fund management charges for drawdown products – I could find nothing, other than to approach each provider individually to request the information.

I did see an IFA who quoted a fee of £2500+ to arrange this (or deducted from the pension fund), either way it is a great deal of money.

I’ve always paid into a pension fund in fact 6 – over the years. When I came to consolidate them ( thankfully not all) Strand Capital went into liquidation. They have my money. It was more than an expensive venture
as I also paid them for the privilege of doing it. I think what I have I will enjoy.
If there’s anything left.

Actually Gordon Brown was not the worst Chancellor of the Exchequer he just pondered. Norman Lamont on the other hand just squandered and everything got worse.

Let’s face it, pensions both state and private, have seen the biggest rip-offs and scams this century.

Totally agree with Mike W. I’ve been right royally ripped off by the scammers who took advantage of the recession a decade ago. The FSA were totally inadequate and the government of the time was aware and did little but a mop up operation to years later.

Lucia says:
3 November 2017

We need to assess the scale of the problem with so much wealth concentrated on so few. We all know that a fairer distribution of wealth will sort out pension inequality, other injustices and fuel the wheels of the economy. I’m 58 and want to retire at 60 having survived life threatening illness, yet the govt says I must work for another decade. Why? To line the pockets of the rich just as I’ve done all my life by being forced to accept low wages and a high cost of living. We need a cultural revolution to regain an egalitarian sustainable society.

I am sorry but most people that have been scammed are their own worst enemies because of their greed, remember ‘ if it looks too good to be true’ then it usually is.
I am concerned that Peter heads up a organisation that says they are independent but then sells stuff on the back of their campaigns!
A bigger issue is that very soon consumers will not be able to check whether an adviser is registered or not so scammers will take advantage even more.

A dashboard? We must touch base and not put it on the back burner

Absolutely. Which? says “We’re calling on the government to publish a plan for the delivery of a fully-functioning pensions dashboard”. Obviously, a plan is what is needed. You can’t go wrong with a plan. Especially a plan for delivery (like a midwife). And what sort of pensions dashboard do we need delivered? Why, a fully-functioning dashboard of course. You get pensions mph, and rpm, and low savings warning lights, and goodness me, a pensions temperature indicator too. I’m hardly going to put my name to such a silly petition.

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Retirement age for women who were expecting to retire at 60, only to be told pension age goalpost moved and not giving women of a certain age, myself included, enough time to make up our pension pots which needed to last another 7 years! Compensation from the government for this catastrophe, of course not, they give not a damn for people that have worked all their life from the age of 15. Government jokers

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Penny says:
4 November 2017

So why wasn’t the (optional) pension age equalised at 60 as recommended by AgeUK? This would have released many hundreds of thousands of jobs for the jobless, not to mention volunteers now required to keep even our essential services going.

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We are all living much longer than when the OAP was introduced. As it comes from current taxation, not from an accumulated fund of savings, it already costs the taxpayers more. As ladies generally live longer than gentlemen it would have seemed logical to have their pensions at a later age in the first place – or at least at 65.

It is all a question of where our taxes should be distributed. Personally, I would not waste them on expensive defence projects, on rebuilding the H of P, on HS2, on foreign aid, on subsidising the EU…………I’d put some of them towards looking after older people who really need it – those on low incomes, those who need professional care that family cannot provide. But not changing the pension conditions for everyone; many with their own pension arrangements do not need taxpayer help.

I agree that the injustice was changing the pension age without any mitigation, giving no real opportunity for people to make alternative arrangements. It should have applied to younger people only – maybe up to 45.

I did save for my pension, but its not as big as expected,because every Labour government raids the pension funds as a matter of course.
However my advice to any and all, stick what ever you can into a pension fund, I know when one is in their twenties retirement seems far away, but it comes on with out you realising until its to late to do any thing about it.
I also suggest that you plonk for a stake holder pension scheme, I had a five year fight with my employer to get my funds transferred to one, and needed the help of the Financial Ombudsman.
So if you leave an employment get it transferred into your own stake holder account. The reason for this, is to stop an employer taking YOUR RETIREMENT FUNDS. Their management are the trustees who manage the fund. And the accountant declares an excess which they take, An example, we never got a statement for three years, and when we did my fund was down £36 k, but also what happened to the contributions paid in those three years ,so add on another £4 k. Some years later they did the same and took another £20 k.
I always paid the maximum amount,also additional contributions, that is the reason I transferred my fund.
So you can stop an employer from raiding it,unfortunately you can not stop any Labour Government from raiding it. As is their practise .

Thomas says:
4 November 2017

I pay tax on street lights schools roads etc. In my private pension and also council tax so why am I paying TWICE.

Where do the frozen Pensions of pensioners that live outside the EU & USA & a few other countries who have paid into the NI system all their working lives get a look in some are having to live on £20.00 per week & most live in commonwealth countries. So please include us when you write articles on fair British State pensions.

I worked for BT and have paid into the government pension all of my working life approximately 47 years.
As other contributors have stated where is the fairness that other people with only 30 years get more pension?
What happens to the pension money of people that die before retirement?
Why is the government encouraging large companies to stop the very low increases in pensions that do not happen every year anyway. BT made 600 million pound in the 3 months to September 2017 yet they are going to court to alter their pension scheme. I was proud to be British now I am not, it has become a country where the rich get richer on the backs of the poor, there is no fair play, if you take away any hope the working class has you will be encouraging civil war and there are more poor than rich, watch out.

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