Grasp the pension nettle now and reap the benefits later on
WHEN you’re younger, it’s hard to imagine what will happen when you become old. It seems like such a long time away.
We all realise we’re ageing at some point. It might be the first few grey hairs, or a few health issues, or the moment when you don’t know any songs in the top ten. But when the realisation creeps up on you that time is not on your side, it can be pretty scary.
I recently asked more than 10,000 of Resolver’s users what they felt about retiring, and the results were startling. Half of the respondents were worried that they weren’t saving enough for retirement and half of those were not saving anything at all.
A large part of these concerns come from having to find more money to cover the gap in retirement planning. But the other major sticking point is the sheer complexity of pensions.
More than 40% of people taking the survey said they understood little or nothing about how pensions worked.
I don’t blame them. For too long, the pensions industry has been complicated and intimidating. What’s worse, many pension providers charge huge fees and commission payments for managing pensions. In one awful case, I saw, a man’s entire pension fund was whittled away over 20 years by the fees that were being applied to it.
I spoke to Michelle Cracknell, the chief executive at The Pensions Advisory Service to ask her why she thought people struggled with pension and retirement issues. She told me people often put decisions about their pension in the ‘too hard’ box.
While pension providers are trying to improve their communications, the volume of paper received is very offputting and people often don’t know how to get started. In addition, there are many different types of pensions with different rules applying, depending on when they were taken out. It can therefore be difficult for people to understand how their pension works.
So I believe we need a pensions revolution in this country. We need to stop being afraid and ask how our pensions are working in simple terms. We need to take good financial advice and transfer our savings to providers who don’t charge ridiculous sums of money. We need to complain if we’ve been misled.
So why not get started today? Here are a few tips.
GET UP TO SPEED
FIND out more about your existing pensions and encourage pension providers to explain in simple terms how pension pots work. My ultra-simple guide to pensions is now on the Resolver website
DON’T PUT UP WITH IT
MAKE a complaint if you’re unhappy with the way your pension has been sold administered or mis-managed. Don’t forget to ask how much your pension is worth and how much is taken in charges.
THE PAS IS YOUR FRIEND
SPEAK to The Pensions Advisory Service for everything from help finding a missing pension scheme to finding out how much you can save each year tax-free.
RETIRING SOON? HAVE A PLAN
SPEAK to Pensionwise if you’re approaching retirement age with a defined contribution pension pot and want to know about your retirement options
Whatever happens, seize control of your retirement funds and you’ll feel much better.