The wage we expect when we stop work.



“So what sort of money would I be talking if I did this till I was 65?”

I remember the question and the chap who asked me it. It was 1984 and I was in West Ham sitting in his front room with a picture of Winston Churchill the memorable feature of the room. The man was a builder and he was considering putting £20 or £25 pm into a retirement annuity contract with Albany Life (whose products I was selling at that time).

He was in his thirties, I was ten years his junior, I can’t remember my answer , but he signed up. There was no guaranteed annuity rate, only a demand for a string of around 400 payments and whatever the fund (managed by Warburgs) would give him. I never saw him or spoke to the man again, I earned five times the initial premium and got it paid at the end of the month.

That man will be in his seventies now, I wonder if his pot got lost or if he cashed it in or transferred it. Maybe he built on it so it gave him the capital reservoir I promised him in his front room. The one thing he didn’t get was any more financial advice from me (I changed company) or the firm I was employed in, that became a tied agent to another insurer.

But that money was meaningful to him then and £20 in 1984 means a lot more 38 years later. Today I would have been able to answer his question using a financial modeller and with reference to the PLSA’s retirement living standards , showing him the advantages of linking his contributions to his increasing earnings, talking to him about investment pathways he could follow and blinding him with the science of de-risking. But I doubt any of that would have satisfied his question then or now, “what sort of money would I be talking?”

He was asking me for a best estimate, not “a relatively good income” or an “income that might be sufficient if you sign up for this package of nudges” but a straight answer in pounds shillings and pence (we were only a decade into decimalisation then!)

I know that if I phone up my friend Mark Ormston at Retirement line he can give me an annuity quote based on my age and the type of annuity I want to buy, I know I will probably get a better deal by haggling over my (lack of) health. But if I want to drawdown, I have to rely on some rule of thumb (4% if you are American, 2.8% if you are British). No certainty how long the income will last , plenty of gardening to do to maintain the drawdown in good order and a worrying sense that I am on my own.

That man in his front-room had his own house, his own family, he was trying to insure him and his wife against them living longer than he could work. He deserved better than what I gave him and he still deserves more than what we offer him today.

I want to help create the kind of pension that the man in his front room expected, one that he could rely on and that – for an affordable amount, gave him good value. People – whether it is £20pm or their full annual allowance, are looking to pensions for the security they crave in later age and we must focus on that need. It is what we are here to satisfy

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to The wage we expect when we stop work.

  1. John Mather says:

    Why not follow the writings of Andrew Smithers. Target a dynamic inflation related outcome such as providing a living wage, (or multiples of) Don’t try to have a fund Forever but in 5-year chunks Set the policy for the 60 month periods Retire at 75
    Lobby to remove debt funded share buy backs and you may have to look beyond the baby boomers as there are not enough taxpayers to fund them. Unless we resolve productivity, the State Pension will not be sustainable (nor is the NHS, which might reduce life span to help you with your pension problem. Look to the Pacific rim for performance. Move to a lower cost base jurisdiction

  2. K M Jeary says:

    I am still working in my mid sixties.. I will retire next year (the University of Cambridge’s default retirement age). I could continue for longer but not unless I have a couple of knee operations, which if I went private would cost me c £30000. Before retiring to the Pacific rim or talking about the death of the state pension I would try looking at people (like me) who would work longer if we could but do not have access to the relevant treatment. People keep wailing about the disappearance of a million from the work force. I wonder why. Is it seven million now waiting for treatment?

  3. BenefitJack says:

    Sounds like you feel he should have some kind of a guarantee, in exchange for his defined contribution scheme, £20 or £25 pm. Anyone can provide an estimate – not worth much, though. Periodic monthly contributions = typical defined contribution scheme … not a purchase of guaranteed income.

    To provide a guarantee, that’s a role for an insurance company or a government entity (taxpayers).

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