The right wing politicians and their journalists have ignored the most important part of the Pension Schemes Act and the introduction of workplace collective pensions. What this Government has introduced is an opportunity for every one of the 17m savers into workplace pension to get a pension. 

The Times has started a campaign suggesting that people who choose not to do what they like with their pension pot will have guided retirement into a pension. That is because most people who do not know what to do with their pension pot want some guidance and most people never wanted a pension pot in the first place. They wanted the pension that this barmy campaign is fighting against.

I like Ros Altmann, Steve Webb and Guy Opperman and am sorry that they have been herded into this campaign when they have been pension ministers and not pension pot ministers. I certainly wouldn’t call them “potty” so I’m surprised they’re against 17m pot-holders being denied a pension.

This second article bookends our weekend’s pension reading . It can be read here.

It kicks off with a contention that is wrong

The radical changes will push 17 million private sector workers to give up their pension savings in return for an income that attempts to keep pace with inflation and lasts until the day they die.

This needs challenging as the Government’s MoneyHelper has spelled out the situation that has been in place since the introduction of Pension Freedoms in April 2015

This is not changing, you will be able to take your money from 55 till April 2028 after which from 57. Most people don’t start taking a pension from then, they take their pot as a cash sum and they can still do that. Nothing in this explanation below is changing, there is no freedom lost for taking your pension pot so long as you have one.

What people are getting is a guarantee that when they get to a certain age, set by the pension provider or its trustees, people will get their money paid to them as a pension.

The reforms, announced by pensions minister Torsten Bell last week, have been presented as a way to protect savers from making poor decisions with their pension pots and risk running out of money in later life.

There are many ways to pay a pension and people can choose for their pension to be paid as a guaranteed annuity which doesn’t go up or goes up at a fixed amount or in line with inflation. This kind of annuity pays out till death do us part.

People can choose to have the CDC pension paid by trustees selected by their employer, this will “aim” to pay out a pension in line with inflation and sometimes they’ll pay more of sometime less than inflation. In extreme circumstances they will pay less than the year before but they’ll always pay a pension till death do us part.

People can choose to drawdown their pot(s) as they need the money which may not be at all. Going this way means funds may not be there  to spend until death do us part.

And people can choose not to make their own choice in which case they will get a pension paid to them which will aim to keep being paid in line with increases in the cost of living (inflation). Not doing anything will mean that your money will last until death do us part.

It’s this last choice that the Times claims is pushing people from pot to pension. That is so wrong and it is irresponsible of this campaign to misrepresent CDC and guided retirement as threatening people’s freedom. People still have all their choices and the freedom to walk away from pensions.

With Collective (CDC) Pensions, Annuities, and the State Pension, you are locked in to the pension and cannot take your pension as you like. With DC pensions, the ones you get from Guided Retirement, you will have freedom to override the pension being paid and take more or less than the pension promise.

Nest has already said that it will pay a DC pension (that lasts as long as you do) from your pot and people will get that DC pension unless they choose another destination for their money.

Lifesight ( a master trust run by WTW) has said that it will transfer people into a Collective (CDC) pension unless somebody chooses something else.

Millions of British people get their pensions paid to them either by the Government as a public (or occasionally private) Defined Benefit pension. CDC pensions will be paid in the same way to Royal Mail collective pension members and to all the other people in CDC pensions. Everyone in these pensions can choose to transfer to a pot if they choose to until they start getting their pension being paid to them.

So what does this campaign want to happen?

This is even more barmy. The campaigners say

We want to see the reforms face a proper vote in parliament, savers to be told if they could get a better deal elsewhere, and pensioners to be given ample time to change their mind and get their money back.

This is already in place.

People who go the DC pension will not lose their right to pension freedom until an annuity or similar kicks in. Nest say that is when people get to 85 when a pension for life becomes more important than a pot that could run out.

People retiring into a Retirement Collective Pension Scheme (RCPS) will have a year’s cooling off period in which they can choose to get their pot back.

People who choose to take other choices such as drawdown (without the pension) or an annuity – a guaranteed pension, will have made up their mind to go that way.

And for millions, the pension will be paid from a defined benefit scheme still have the choice to transfer to a pot though (unlike CDC) , people in DB need to take advice so long as the value offered to the pot is more than £30k).

Those in the largest defined benefit scheme of all (the State Pension) will get no choices other than to delay taking pension later than the State Pension Age.

Pension Ministers aren’t stupid but they can be made out to be..

Steve Webb , Ros Altmann and Guy Opperman are purported to be saying we are losing our freedoms. They aren’t stupid and nor are we.

The majority of us 17m savers want a pension not a pot.  We’ll continue to take a tax-free pot as cash. A minority of us will choose our own way , the rest of us will get the pension we’ve been guaranteed (one way or another!).

There is a new way of doing thing, but the pension freedoms aren’t being taken away. It’s not like compulsory annuities used to be. The Times is scaremongering – dragging good pension ministers into a quarrel  we need not have. I hope that the ordinary people in this country will avoid this scurrilous campaign.