I wrote last week about why we need a national register of people’s pension pots (not a clearing house or a system of enforced transfers). Re-reading the post, I can see many people will be asking “what is the issue at stake”.
My friend and colleague Bill Whitehead wrote a great peice a couple of years ago after fishing out a pile of papers from his pension drawer. He reckoned he’d be buying pensions from about eight seperate pots and as far as he could see, hardly any of the company’s he’d contracted with were still around.
Bill’s a professional trustee and knows one end of a pension from another. I expect when he come to hang up his boots, he’ll do the right thing and get a proper annuity broker to bring all his pots together and buy him the right pension with the proceeds.
Many of us are not so knowledgeable or organised. Every year, many of the small pension pots go unclaimed and many more provide smaller pensions than they should have done because they haven’t been merged with other pots to get some buying power in the market.
We can’t do anything on our own to get a proper pensions register- but we can get the people who manage these pots- the insurers and the department for work and pensions to do something on our behalf.
When we joined these occupational pensions , we gave someone permission to handle our private data and to use our national insurance number, our date of birth and our full name to properly identify who we are. We have other unique identifiers these days like mobile telephone numbers and e-mail accounts but the oldies are the goodies!
There is already a national pensions register that records all of our entitlement to the state pension and to the earnings related state second pension. It also uses name , date of birth and national insurance number to record our details.
I am wondering whether there is space on this registry (database if you like) for information to be recorded about our other pensions so that when we as individuals ask the Government for a “combined pension forecast”, we don’t just get a statement of our various state pensions (graduated pension anyone?) but a statement of what we have privately with commercial organisations and in occupational pension schemes.
I’m also thinking that once we’ve worked out how to get the information in one place, we should aslo work out a simple system (not the complex one we have now) to allow people to access this information when and how they need it.
Building an application that allows us to check our progress towards a secure and permanent retirement may take a few years. But it sounds doable. It sounds a good use of public funds and I for one would give of my time for free if the DWP wanted help.
Back in the late 1990s, Jonathan Poll and I sat down in a darkened room for a few weeks and scoped what we wanted from Stakeholder Pensions.
- A National Pension that looked a bit like NEST
- A way of converting DC pots into extra state pension using “pension pounds” , a conversion rate advertised by GAD.
- A means of bringing together small pots using a system like the Australian “Super” model
With the exception of the final point, my thinking’s much the same today. The State needs to work with the private sector to make it easy for us to save.
However, no amount of help from the state can replace our need to organise our affairs as best we can and like Bill Whitehead , pay some attention to our pension affairs.