Pensions need to be sold for the sausage not the sizzle.


A great observation from Steve Groves, CEO of partnership this morning.

By “buying” Steve means “buying annuities”.

If you are filling in your self-assessment forms this month, you’ll have come to the section on whether you are in receipt of a pension. I would like to know what percentage of this year’s over 50’s are still receiving income from employment while enjoying a pension, I imagine it is quite high.

You could look at the number with a hopeful or a jaundiced eye. Those who adopt a hopeful attitude might see these people as “winding down”, those adopting a jaundiced perspective might see them as the losers who smelt the sizzle but ignored the sausage.


The sizzle

I remember the easiest way to sell a personal pension was to offer the prospect of putting up one’s feet at 55 or even 50.

“When are you planning to retire?”

“Oh I dunno- 50 would be nice”

“Well put 50 in the box and we’ll talk about how you’re getting on when we meet this time next year….”

Of course most of these “clients” were never seen again, either the adviser moved on or the employee changed jobs, locations or just forgot to renew the discussion.

The expectation had been set, the saving process begun but the result – as has been shown by what is happening at retirement – is that we save enough to buy a lifetime annuity at 55 of around £1000 pa.

Sid’s been mis-sold a lifestyle Sausage!

Steve Groves reckons this is a “Big Government” mis-selling scandal.

The capacity to take your personal pension at 50 , brought in with the pension reforms that established personal pensions in 1987, was founded in a genuine belief that standards of living would continue to improve, that the stock markets would continue to flourish and that technology would enable us to retire how we liked – when we liked. We were in a period where personal financial empowerment was the mantra.

Tell Sid- he can make a bomb buying BT shares, he can buy his council house- Sid can retire at 50.

Well Sid is probably not earning enough to need a self-assessment form.

He may be on a zero-hour contract, he may be technically self-employed, he may be an eligible job-holder, but one thing that Sid is not – is pensions rich!

Has Sid been mis-sold a pension? Sid’s been mis-sold a lifestyle! He bought the sizzle and forgot about the sausage.


No one to blame but ourselves

Those of us who earn enough to warrant being asked to self-assess, are likely looking at that “are you in receipt of a pension” with a rueful eye. Like WASPI, we are disappointed, mystified and probably angry. We are looking for someone to blame.

The reality is there is no-one to blame. We voted in the Governments who told us what we wanted to hear. We believed them because it was pleasant – it got us through, even if we knew that we were building sand castles that would be washed away if the tide came in.

13% pa growth rates, annuity rates converting ten pounds into a pound’s worth of lifetime income, early retirement at 50 – it was all part of the package of delight dished out throughout the final quarter of the 20th century.


Now for the hard landing

The reason that WASPI is so important – the reason I write these blogs – is because the generation currently at or approaching retirement are waking up to the difference between a hope and an expectation.

We have no hope of retiring for 30 years after working 40.

The average person is cashing in or buying a pension far too early

These things should have been said in 1986 and repeated for the next 30! But they weren’t.

And for the next generation?

If you have a WASPI Mum, you might be asking yourself just how dumb you’d have to be to get that distraught about losing a couple of years of the state pension.

But you wait! When the realisation crystallises that you are  “old” enough to retire but can’t. then what will you do?

There are two answers to that..

The first is that a sensible youngster won’t fall for false promises and won’t create unreasonable expectations.

The second is that through current pension policies, particularly through auto-enrolment, we are building false expectations for another generation who are no more likely to retire on their “Workie” than we were on our

“get rich- retire quick – personal pensions”.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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