If this is “pension freedom” – I’m a banana!

People look at their workplace pensions and ask themselves how they have done. This lady’s only benchmark is a comparison with contributions.

The tweet tells me how utterly alone we are when it comes to understanding what is happening to our money.

What follows is some curiosity from Dave Penny, an attempt at an answer from Sian and some kind and considerate help from Dave.

This  act of kindness from David , solicits a response from Sian

and more help from Claire Walsh (who you can hear on Money Box this week)

David has gone so far as to work out that this lifestyling approach is designed to land Sian in an annuity in 2025 (presumably by the 1960 in her handle, Sian’s 65th birthday).

Assuming Sian is ignorant of the finer points of workplace pensions, (which she has every right to be), she might be thinking this

  1. Why am I being set up to retire at 65 when my state pension is 67
  2. Why am I invested in long dated gilts?
  3. Why am I in a fund that assumes I will buy an annuity?
  4. Why am I getting no return on my money?
  5. Where is my employer in all this?
  6. What is Aegon doing about all this?

And I don’t have any answers for her, though thank goodness that good Samaritans like Dave Penny are there to help out Sian and others.

There is in financial services a long standing duty of care, which  to continue the biblical theme, amounts to “do unto others as you would have done to you“.  It is also called the “new consumer duty” though there is nothing new about the common decency shown by Dave and Clare.

The sad facts of this case are that Sian is in a stakeholder pension that doesn’t look like anyone’s paid it any attention for 20 odd years. She’s got a retirement date that doesn’t relate to anything and she’s in a fund that assumes she’s buying an annuity. She is consequently missing out on a great deal of market growth and having to resort to twitter to understand what is going on.

Somewhere in the dim and distant, there was an adviser who arranged the group stakeholder pension she is in and if it was with Aegon, he or she was probably paid commission  – because that was still available in the pre 2012 world of stakeholder pensions. Where is that adviser today? What advice is Sian getting? Who cares? Who has the consumer duty?

This is a little vignette of what is happening all over Britain. People are looking at their finances in the light of the grim financial news they are hearing about and they are asking questions. But they are not getting answers because the advisers have left and Aegon regards Sian as a legacy customer and her employer hasn’t reviewed the scheme. In short, Sian is left to sort herself out.

I wonder if Sian has been to Pension Wise? I wonder if they could have told her what Dave Penny told her (which was spot on) and I wonder if anyone who has responsibility for the mess her policy is in , this….

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to If this is “pension freedom” – I’m a banana!

  1. Peter Tompkins says:

    Well shared with us Henry. Very difficult to comment on things like this. If you have been in a protective fund that has done what it says on the can and delivered protection then it’s not helpful to look at what other risk-takers have been rewarded with for taking their risks.

    But as you say, the nub of this is how to see that people like her understand and can influence their risk management. I’m imagining she has been defaulted into the funds she was in and that is almost certainly better than putting it in cash and inviting her to choose a fund for herself.

    By the way, I have a chunk of my own pension monies held in bonds for diversification/risk control and I am struck by the capital hit that part has taken – but of course I know that I can get significantly better annuities if i choose to lock in some of my funds to a pension at some stage. So turning it on its head, the person you quote today is probably looking at an improved DC pension annuity now.

  2. John Mather says:

    Bonds and inflation do not go well together. Watch next months RPI, probably at 10%

    If you look at the FTSE100 this century it has only tracked sideways, at least trackers are cheap.

    The DAX on the other hand has doubled.

    Presumably the managers realised by last October that the next phase would benefit commodities and that even with oil issues that the routing would be longer and therefore shipping would be a sector that would benefit. But is that the dry or wet trade?

    Where is property in this portfolio?

    Why the need for 100% liquidity in a fund designed to last a lifetime? I am sure the fuds are compliant and considered “value for money” but are they useful?

    Beam me up Scotty there is no intelligent life down here

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