Richard Smith is at the centre of any conversation about Pensions Dashboard(s).
You don’t have to click through to see the video. The Pensions Dashboard doesn’t answer the kind of questions people should have. It shouldn’t use delusional simplicity.
Five things I didn’t know!
- That I might have to wait up to 10 days for what I thought was online information
- That MaPS are the sole support advertised for those who have a question.
- That you’ll need to contact your provider if it’s not sure you are who you say you are
- That can take your pension as lump sum or regular pension (see video 41 seconds in).
- That I’d need to watch a commercial advert to see a Government video on YouTube!
This screen contains the most contentious points.
Your pension over time. Your pension over time will not change if your “estimated retirement income” is from a DC pot. It will be level income that means each year we get inflation (every year) your income buys less. Your pension in real terms will go down. By comparison a DB pension or a CDC pension will link your income to inflation. The DB pension will in the private sector normally be capped at 5%, in the public sector will be fully inflation linked. Comparing apples with pears if you ask me! The difference is even greater if you consider you DB and CDC pension will offer spouse’s pensions which won’t be built into the projection of you DC pot’s estimate of retirement income.
When can you take your pension? Well you can take your money out of a DC pot from 55, rising to 57 soon. CDC will pay pensions from 55 , rising to 57 soon. The state pension will pay in future 67 and 68 in a few years. But taking your money from a DC pot is not taking a pension. This statement is contentious because right now DC pots do not pay pensions, you have to choose to buy an annuity.
How you take your pension, lump sum or regular income. We have got to stop being so sloppy. Taking a lump sum is not the same as taking a regular income and neither can be called a pension unless the regular income is paid for as long as you live (and preferably your surviving spouse lives). It is time we stopped confusing people about what a pension is. Cashing in a pot is not taking a pension.
First time wording.
For the most part, I am happy with the video which makes sense to everyone. But the “pension” issue has not yet been solved and has been captured by those providing DC who would like us to think that DC , CDC , DB and State Pension can be easily compared.
What happens to your income in retirement differs massively between pensions and cannot be compared by DC providers quoting a level pension and others quoting something quite different.
We aren’t getting a pension when we’re not. With DC we’re getting the freedom of choice which works well if you are a financial adviser or sophisticated and knowledgeable person approaching retirement. But it is not good enough for ordinary people who are going to be confused by what a pension is.
Calling “cashing out” a pot a way of getting a pension is just not right and encourages what is happening the country over. Cashing out is what a pension isn’t.
Let’s please get a second version of the pensions dashboard soon. One that does not confuse ordinary people about what a proper pension is.