I like this picture from my Canadian/South African correspondent Johan Kriek. It represents the problems elder people face with managing their finances and the problems my seniors tell me they are having. It is difficult to managing retirement money or giving responsibility to a financial manager.  You’re depressed by taxes, fees, health issues, inflation and the things to happen to your money from the markets you’re in.

This is the governance problem. In a recent article , Alison Hatcher , has her fellow trustee, Kim Nash identifying this as a primary area for improvement. She says:

“One of the things that excites me the most with CDC is the opportunity to move complex decision making from members back to trustees”.

Here is an oddity of growing old. Instead of making money you are made of money which you have to live on.

I haven’t heard it put this way but I think it’s what Johan’s cartoon is telling us. This is a generational issue, older people as they move into retirement are advised by younger people who do not have to rely on the money they advise on.

Here is the problem for older folk, they find themselves in the hands of people for whom the concepts of investment, advice and financial services are answers, they are of course right for working people not those reliant on the money put by.

This is why simple expressions of security make sense to older people. Some people like to think of a pension as a wage in retirement or deferred pay, because it reminds them that  the pension  came from work. That was how pensions used to be and are still being paid to those with a defined benefit.

But then things changed . Stage one was a pot of money that purchased an annuity which you were supposed to buy from a broker but all too often found yourself in a poor value product linked to your “pension” provider. Then in 2014 the system of annuities, which was in such a mess was downgraded and in its place was the idea that a pot of money could pay for your retirement as you chose.

This has given the financial services industry an opportunity to offer the advice, investment services and tax assistance that has become part of retirement for richer older people. For many older folk it works very well and they are comfortable to work in partnership with a financial advisers/wealth managers- call  them what you will.

But for the majority of older people, there is not the money to afford all this and they are crushed by the responsibility of having to do it all themselves – what tends to happen when advisers don’t find them viable.

I think that pension freedom is irresponsible dereliction of duty by pension providers and I agree with the idea of Default retirement income from a default age with a way to keep the income going as long as the person drawing a state pension is alive.

I go further in my thinking for those people who default into a default contribution set by the employer, a default investment fund decided by a provider chosen by the employer and a default retirement age – the state retirement age.

Of course all of these things can be tweaked by the saver and sometimes more than tweaked.  But the statistics show that the majority of us do what we’re told is what everybody else is doing – the default.

If all of these things are done together, why are we giving everyone their plan that is personal and infinitely bespoke able? I can see it appeals to advisers and it appealed to me when I was young and thought I’d retire when  I wanted on what I needed.

But it really is irresponsible to suggest to people that this is the good fortune that is ahead. Instead we should be thinking very hard about a collective pension plan which employers can fund at a set rate (a defined contribution) but which pays people a set pension. By saying “set pension”, I don’t mean a guaranteed pension but the best pension that can be paid using the expertise of a group of experts controlled by trustees who act for us.

This may be dull and boring and relative to the personal pension plans advertised over the years to people as offering them the retirement plan they wanted. There will be people who will want to go it alone and they should have the right to operate but for the majority of people we should not be kidding, we need to be together, collectively putting money by to be paid a pension targeted at a certain amount day one increasing in line with inflation.

It will not be right to say that’s what we get, some years we’ll get a pay rise, some more less, some years there’ll bumper pay outs and in the worst (say once a worktime of 40 years) the retirement wage will even fall.

But going back to the picture at the top of this blog, the problems of markets going up and down, of inflation of regular and irregular payments are taken care with a regular income.

Getting into buying pension regularly from pay is a way to get rid of the problems of growing old and managing diminishing savings.