Pension shock - can this be right?

Seabee42

It is kind of deliberate to encourage people to pay more so less burden on the state i.e. I cannot live on that I must save harder. I am sure it can be counter productive though.

[Deleted User]

The shocking part is that people can’t be bothered to read and understand the basis and assumptions for the estimates of their future financial security. Mind boggling.

Anonymous101

Seabee42 wrote: »

It is kind of deliberate to encourage people to pay more so less burden on the state i.e. I cannot live on that I must save harder. I am sure it can be counter productive though.

Its hugely counter productive.
I was having this conversation with a friend over the weekend whom was talking about taking the whole of their £50k pension pot out as soon as they reach 55 because the forecast is so low.


Most people do not understand how pensions or tax work at all.


The state of personal finance education in this country is appalling and in my eyes causes a huge amount of stress worry and misery not to mention waste and missed opportunity.

Anonymous101

dunstonh wrote: »

These projection assumptions are now so ridiculous that they are doing more damage than good nowadays and we are seeing almost daily posts. Providers have no choice but to follow them. IFAs don't. So, if you want independent verification of what we are saying on here, then check with a local IFA. That may well be worth it too as a 1999 SW pension with his fund value is likely to be improved upon with a modern pension. You could kill two birds with one stone.

I think its outrageous that pension providers aren't made to send a fact sheet with straightforward explanations of all the options available with each statement.


IMO most people are still clueless as to the fact they don't have to buy an annuity (if they even know what one is), let alone where to begin working out how much per year they could take if they opted for a drawdown.

dunstonh

I think its outrageous that pension providers aren't made to send a fact sheet with straightforward explanations of all the options available with each statement.

Yes, lets add another 30 pages to each quarterly statement. We already know people dont read the few pages they already receive.

Anonymous101

dunstonh wrote: »

Yes, lets add another 30 pages to each quarterly statement. We already know people dont read the few pages they already receive.

I was thinking more like one A4 side explaining that there are various options open to you once you reach the specified age. Rather than as it stands at the moment commenting that "Your pension could be would less than £10 a month" or whatever nonsense they strap to the bottom of it.


Even the blanket statement that there are various options open to you would be better than the current information.

Seabee42

Simplifying the information is much more likely to get it read. Just projecting the fund value should be enough these days with pension freedoms meaning people are not required to purchase an annuity. It is not like even the fund projection has any accuracy.

atush

What I dont understand is whey 90K over 20 years isnt worth more than 140k?

Our pensions are worth more than double what was put in, in some cases 4x.

Seabee42

From a projections point of view you put in a return figure of say 4% and then discount inflation of 2.5%, then charges (minimum deductions allowed is 1%) so yeah a return of 0.5% a year.

dunstonh

Anonymous101 wrote: »

I was thinking more like one A4 side explaining that there are various options open to you once you reach the specified age. Rather than as it stands at the moment commenting that "Your pension could be would less than £10 a month" or whatever nonsense they strap to the bottom of it.


Even the blanket statement that there are various options open to you would be better than the current information.

The current statements give less than a page to explaining the assumptions and often say there are other options and considerations. Still doesn't get read as people go straight to the figures.