Brian Henderson has featured a lot on this blog because he has spoken up for the member baffled by the lack of an obvious option for them, when they see their pots turning to income on the pension dashboard. Now he has gone further and not just argued for them but is providing a means that allows us to check our options and take sensible decisions and act on them. He asks people of a certain age
How’s your financial health?
and give us his conclusion
I don’t think it’s just about income. It’s about whether the resources you have can support the things you value, now and through the rest of your life.
The interesting question is: what will you value in retirement?
And will those values still be the same at 65, 75, 85 and later?
“Financial planning” is not something that everyone can do. A large proportion of people leaving the workplace do not have the resources to support the things that middle class people assume retirement’s about. I am not forsaking those of us who do not the means to do much more than pay the bills, use what little’s spare to have some time in the spun and get by. That is what retirement’s like for the people who Jeannie Drake stands up for. It’s what the pay rise coming from CDC is all important for. Not choices but the chance to do the basic things better.
Let’s put the need for income to one side and focus on those who have the means to manage their lives from drawdown from capital, what everyone calls the “pot”
pot
It’s mysterious not because it holds our money but because that money is invested and goes up and down. It can be accessed to meet the needs we have for it but we need to plan ahead to make sure that it’s there when we are “65, 75, 85 and later”. This is a very middle class way of dong pensions but one that the middle class have very little help with. Unless they go to advisers who charge more than many of us are prepared to pay , there is very little help to make the pension fit our lifestyles. I get it. This is from his conversation with Professional Pensions.
“PenFit came from a very simple question: before we talk about pension value, do we actually know what people value?
“Retirement systems are becoming more sophisticated, but the individual can still disappear inside the design process. PenFit is designed to help bring the population of individuals into retirement design more directly.
Penfit asks questions that help us take decisions but also helps those creating guides for retirement for large numbers of people in a pension scheme who are happy to have someone else decide how their money is paid back to them
“We already know a great deal about what members have and what they have done. What we often know much less about is what actually matters to them in retirement and the trade-offs they would accept. I don’t think PenFit solves every retirement problem, and it certainly cannot solve adequacy.
I like the way that Henderson uses his talent and experience to design questions that help us take decisions or that helps others take decisions for us (if we can’t).
Henderson is clear about what he’s about with Penfit
“What it can do is add a stronger human evidence base. If we say something has been designed around members, it would be useful to be able to show that we actually asked them. The idea is simple: ask first, fit second, product last.”
What Penfit can do will undoubtedly be adopted by the organisations providing us with pots, the DC master trusts , GPPs and sole company DC trusts. They will take up what Penfit pioneers and thank Brian for the inspiration to do it. I don’t think this is bad, Brian’s reward will be in heaven, or at least in Edinburgh , where he should be given freedom of the city (or whatever they have up there!).
Brian’s way of going about things fits with the Pensions Dashboard. It compliments work being called for by Richard Smith, there are others including Glyn Bradley asking questions about income and how we get people to understand what inflation does to buying power,
I don’t see a place for all this work to find a home unless its the pods of Nico and Darren or this blog (which is why I keep talking about the VFM podcast).
For me, there is another way forward. It is not a way of providing “financial planning” it’s simply a way of building on State Pension giving people a more decent wage in retirement.
Penfit and CDC do different things – Penfit makes DC relevant to those who won’t take advice on pots while CDC dispenses with pots and focuses on pension. Both are worthwhile and compliment each other