Are you paying too much to retire?

I overheard a chat at a wedding this weekend, it went something like this.

“Do you know what we pay those *^~#%*^$¥€ing bankers for our pensions?”

No, but it sucks.”


Ok, so I paraphrased a little. But they wouldn’t be far from the truth – the OFT has just published a damning report of pensions which charge too much. Modern pensions are (generally) fine, but there are thousands of older contracts out there, taken out by well meaning people, which are seen as nothing more than cash cows by the providers.  And that bugs me.

I am an Independent Financial Adviser, so I am obliged to choose from pensions from across the entire market and I see how much things have improved.  But the unfairness of the years which preceded my career in financial services and which prevails still bugs me.  Usually, it affects those in their 30s and 40s who have pension pots which are for all intents and purposes, dormant but still expensive.  And cost I’m afraid, unless you take it to task, never sleeps.

Strange then, that I’m going to say something that is probably controversial in light of all the negative press that pensions seem to be getting right now. Here goes. There is no such thing as a bad pension, just a badly managed pension (avoids incoming).

Sure, many people are in pensions that are plain unsuitable for them, they might be in pensions that are old and offer too much or too little functionality, or the pensions may be just simply old and therefore, likely to be too expensive. The funds might be inappropriate and there might be no strategy (would you like to plan to be retiring the week after the markets go pop and still be exposed to equities? Nope, me neither).  But the idea of planning ahead for retirement is something that should form the core of most clients future financial planning these days.  The state isn’t going to make life any easier, thats for sure.. we’ll never wake up to hear that George Osborne is going to reduce the State retirement age for instance.

So, when was the last time you gave your pension some TLC?  HSBC has just released details of a survey which claims that almost 20% of Brits see themselves as working indefinitely.  How sad is that? The problem is even worse within the military community where military partners move every 2-3 years and never get the chance to lay down professional roots and establish a pattern of occupational pension savings.

Pensions aren’t for everyone (always take properly qualified advice that you trust).  But by (seeming) default, why should military spouses in particular miss out on all that beautiful and juicy tax relief because they support those who protect the system that actually allows those in civvy street a better chance than them to retire?  “Military covenant”? Sure.

If you don’t start to consider your retirement and empower yourself, you’re going to run out of time.  Every day matters, and the prospect of retirement doesn’t sleep.  It doesn’t matter who you speak to about it.. your IFA, the guy in the bank or someone who has taken that first step.

But do something.


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