One of the things that comes out of being in a crowd is realising that decisions come collectively. Yesterday was like that. I’ve spent the past couple of days with my old friend John Hamilton and my young friend Sophie.
When your span of discussion is nearly 40 years you realise that we look at pensions in different ways, not just from experience but from the change that times bring. I have none of the skills of the young , they have none of my experience. There is a feeling that we are leaving a legacy of knowledge that will enable future generations to make choices.
I remember in the 1990s believing that my generation would be the first that took decisions about investments and it being made clear to me that young people (I was one then) could choose the geography of my investments and the manager and the mix of assets so that I had a pot in nearly 40 years time which would maximise the fun of getting a pension. It was left open what a pension would be, I was young and would figure that out. What mattered was that I was enabled to make use of choice.
When in 2012 I was joined by many more savers, things had changed. We had realised that forcing people to make their own choice of funds was a waste of time, most of us made bad decisions and we were defaulted into payroll saving and defaulted into a certain fund which a fiduciary had chosen for us. To use the classic example , over 98% of the 13 million who saved into Nest made no choice, they let the default be their fund (not their choice).
But we now utter the same joys of choice about the money we have built up and can spend (if we are over 55). Isn’t it great that we have investment pathways that give us the choice we need because none of us is like another. I am reminded of the 1990s when I was told just this and I suspect that many young people are excited by “pension freedom”. It is only when we get to our 50s, 60s and older that choice becomes a burden (for me and for my friends).
I say this because after a day of discussing fiduciary decision making taken for people to maximise their pensions, I joined a session at 5pm where members of the PLSA joined members of the insurance industry, a young man keen to tell us how complicated choices are for older people and a PLSA convenor.
Guess what, we heard that everyone would benefit from using an insurer’s decision making tool which would lead them to a decision about their savings that mirrored their diversity and would enable them to use retail products with an individual choice.
I looked down at the screen where I had instinctively been typing my thoughts
I am 63, I want a pension , one that pays me till I die and pays my partner if I die before she does. I was promised one of these – where is it?
It was such a silly question that it did not get put and we didn’t have a chance to ask questions by putting up our hands. Instead we had questions from members of the PLSA who had clearly a more important question to ask about the solutions put together by insurers.
I had hoped that the collective experience I have had by being in a default would be continued and that we would be discussing what I had hoped would be pensions, either guaranteed where my money would be invested to give me guarantees and some more on top if things go well – or CDC pensions where the amount I get is more based on market returns (but is still a pension).
No! No pension! No pension at all!
We were sent out with no questions answered, but those that met the needs of the panel of experts and no chance for the healthy crowd who had assembled to put their point.
We no longer refer to getting a pension, we refer to decumulation, as if decumulation means something to people.
I suspect that we are making the same mistake as we made when I was young and in the 1990s but now there is no time to get it wrong, people are making decisions about what to do with their money because no one is offering them a pension and they are not happy. I know this because I have union friends and pension managers and people who work for employers who hear the complaints.
Where is our pension from our DC pension schemes?
