Pilot your Pot with Harriet
Every time Harriet Meyer runs a pension story in the Sun, my heart leaps. She has the knack of using snappy headlines and clear language to make the complex plain.
Harriet modestly tells us on Linked-in this was
“a challenging piece to write given just a page and a huge topic – hopefully it’ll help some people start their retirement planning!”
The idea here is that you can weigh up your retirement options and navigate the pension maze by shopping around for the best income options. Harriet stays away from phrases like “investment pathway” and sticks to the two income options we currently have “annuity” and “drawdown”. These words , like “pension” are anchors to the article.
It’s true, you can save a lot of money when you come to swap your pot for pension by getting the best annuity rate on the market. Even though there is no pension aisle in the Money Supermarket, you can get an “open market” option.
Pension Expert, Nico Aspinall, told listeners of his pension podcast that even with a pot as big as £10,000, you’d be unlikely to be able to shop around. Well I’ve got news for you, Mr. Institutional, Retirement Line, the retail annuity specialist can give you open market options for as little as £2,000! So anyone who wants a guaranteed income purchased by their pot, can get the best rate, with Retirement Line’s help.
Harriet’s right too about “drawdown dilemmas”, you are responsible for your money not running out and right now it’s best to do your drawdown with the help of an independent financial adviser. If you can’t find an independent adviser who will help you, then help may be on its way as the pension industry finally gets round to providing other ways to turn your pots to pensions.
Finally, Harriet looks at the state pension and has some guidance for people who haven’t “maxxed out” their state pension entitlement. There’ll always be opportunities to buy back years of pension entitlement you’ve missed, but you have till July 31st to plug gaps between the 2006 and 2016 tax years.
Pensions – income and the dashboard.
I’m doing a talk with Richard Smith on Wednesday at Ernst and Young fat a CIPP Public Sector Event. Richard is going to be explaining how Public Sector Schemes will need to interact with the dashboard and I’ll be doing a much simpler talk about what people want from dashboards. Simpler doesn’t mean easier and so I’m pleased to have Harriet’s help at hand.
Sure -people want to know how much cash they’ll get out of their pensions. But they aren’t so dumb as to know that most of their needs in retirement are about having enough income to have a happy retirement and having the means to meet the needs of declining health, as they get older.
Pensions are the income we need to be able to stop work or wind down. The final point Harriet makes is that like Mike Facherty in the article, we can all look for ways to supplement our retirement income with work we want to do.
Details of the CIPP Public Sector Dashboard Event
- Richard Smith will introduce the policy background: i.e. most working age people in the UK don’t know what pensions they’ve got (although that might be a smaller proportion of public sector employees)
- Overview of the core of “Find and View” pensions dashboards concept, i.e. multiple dashboards which all show the same information within banking apps, pension providers’ websites, and elsewhere.
- Key tool: PLSA 2-minute explainer video and introducing the topic of personal data matching by schemes, including and possible matches, and maybe referencing PensionFusion and LCP matching research
- Debate: Where do we think dashboard users will go with their queries after using a dashboard? Their schemes? (e.g. LGPS Funds, NHSPS, TPS, etc.) Or their employers? What about deferred members?
- Henry Tapper on what we think dashboards will mean for consumers
What do we think users of dashboards might want to do next after using a dashboard?
- Debate: Post-view services – what matters to different segments of the working age population? And how can those varying needs be serviced?
- Q&A: Open forum + we’re particularly interested in hearing what this audience would welcome hearing more about as the dashboards programme progresses.
Several comments on this piece…
First – In addition to annuity or drawdown a member could possibly use UFPLS. That can mean they pay less tax overall than using drawdown, but still having money invested. It depends on your personal tax situation.
Secondly – MoneyHelper has a whole of market annuity tool which lets a member shop around and play around with the options to see the effect. It too will start with very low pot values – https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities
Thirdly – Please everyone take care with topping up your state pension via VNIC’s. Paying extra for gaps or partial years may not actually increase your pension. You need to check with the pension service, particularly for years pre 2016.
Finally don’t forget the PensionWise service 0800 138 3944. That can be a big help in considering options for DC pension access and Money Helper 0800 011 3797 can help with all types of pensions.