Pension shock - can this be right?

LHW99

dunstonh wrote: »

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.

Same minset as those people who don't ever bother to read the instructions for gadgets, and then wonder why they can't work them!

Brains64

LHW99 wrote: »

Same minset as those people who don't ever bother to read the instructions for gadgets, and then wonder why they can't work them!

In fairness though, maybe it's because the instructions are sometimes written in a way that it looks like a load of bamboozling gobbledygook and maybe the same can be sometimes said for the small print on pension policies, insurance, etc, often made purposely unreadable I'm sure, but oh well, never mind, let's just keep blaming customers for being "thick" and "lazy" rather than companies for not being as transparent as they easily could be if the will was there to shall we?

shinytop

LHW99 wrote: »

Same minset as those people who don't ever bo. ther to read the instructions for gadgets, and then wonder why they can't work them!

in-struc-tions. What is this thing you speak of?

shinytop

AnotherJoe wrote: »

You've got to wonder how many people close their pensions and just take the money out taking a tax hit, as a direct result of these wholly misleading garbage projections.

I was one of the lucky ones who took the other path. When I saw the projections 7 or 8 years ago I though, "oh !!!!, I'd better contribute more" and kept doing so. Then a year or so ago I came on here, learned a bit about how it could work and am retiring in August

Malthusian

Brains64 wrote: »

In fairness though, maybe it's because the instructions are sometimes written in a way that it looks like a load of bamboozling gobbledygook and maybe the same can be sometimes said for the small print on pension policies, insurance, etc, often made purposely unreadable I'm sure, but oh well, never mind, let's just keep blaming customers for being "thick" and "lazy" rather than companies for not being as transparent as they easily could be if the will was there to shall we?

An example of the kind of "gobbledygook" you get in the standard text of a pension illustration is as follows:

We have also assumed that when you retire:• You will buy a pension income (an annuity) that will be paid at the start of each month, for the rest of your life and for no less than five years;• Your pension income payments will remain the same each year;• When you die, no income will be paid to any surviving spouse or registered civil partner

How could this be made more "transparent" without losing any meaning? Replace "income" with "money you done get paid and you buy stuff and then next month we give more money"?

They can't say "and this would be really crap value so you probably shouldn't actually do this, so look into how much you could sustainably draw via drawdown" because that's advice.

Also no-one is accusing anyone of being thick and lazy. If you think something is wrong because you have misunderstood it, you should ask more knowledgeable people to explain how it actually works and that's what the OP did. That's what this forum is for.

On the other hand, if you did something drastic like cashing in the entire pension and putting it in your bank account, that would be thick. Because now you've screwed yourself and made your life significantly worse for no reason. The first person improves their knowledge, so they're not thick. The second person bones themself and their family through lack of knowledge, so they're very thick. And educating themselves would have taken about five minutes of Googling for a forum, asking a question and reading the answers, or ringing PensionWise or any one in the phone book under "IFA", so they're lazy as well.

Number75

Why would a spouse only get 50% of a DC pot?
That doesn’t make sense.
Do you mean, if the DC pot was used to purchase a joint lives annuity then eventually a spouse might only get 50%? (if that was the terms of the product)
In which case - don’t but that product.

Triumph13

atush wrote: »

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.

My guess would be that he went for 'low risk' investments...

Anonymous101

Malthusian wrote: »

An example of the kind of "gobbledygook" you get in the standard text of a pension illustration is as follows:

How could this be made more "transparent" without losing any meaning? Replace "income" with "money you done get paid and you buy stuff and then next month we give more money"?

They can't say "and this would be really crap value so you probably shouldn't actually do this, so look into how much you could sustainably draw via drawdown" because that's advice.

Personally I don't think that its clear enough that purchasing an annuity is only one of many options. I think the general public's understanding of how pensions work is so far behind the average person on here its frightening. God knows how this can be improved, you'd think people would take an interest in how their money was performing and how best to make use of their investments but its quite apparent that this isn't generally the case.

Malthusian wrote: »

Also no-one is accusing anyone of being thick and lazy. If you think something is wrong because you have misunderstood it, you should ask more knowledgeable people to explain how it actually works and that's what the OP did. That's what this forum is for.

Absolutely. Kudos to the OP for asking.

AnotherJoe

Malthusian wrote: »

How could this be made more "transparent" without losing any meaning? Replace "income" with "money you done get paid and you buy stuff and then next month we give more money"?
.

I think they could just tell you how much money you'd have as a lump sum without mentioning annuities that are such poor value no one but the terminally ill will buy.
And not use projections of future growth that make premium bonds look tempting.

Doglegger

I get astounded at the arrogance of some on here with regards how much real people should know about pensions. In my line of work you could hardly call anybody thick but until 3 years ago I knew zip about what was going on with my pension. It was only speaking to an IFA (on my scheme providers advice) and then later coming here that I've managed to elevate myself to just about understanding half of it.
Within my peers I now seem to be the resident expert on pensions so that's how much attention highly educated, high earners care about it. Rightly or wrongly people have other more pressing things to care about. Probably have proper lives away from things like pension forums!!