Guardian Pensions Article

Zola.

https://www.theguardian.com/money/2019/sep/28/uk-pensions-saving-retirement

Interesting thread.
Cant believe 60k is what is in an average pot after a lifetime of work!

Terron

Three of my six pensions had pots of less than £60k. Two of the others had no pot as they were DB pensions. The average of the 4 pots was £85k.


£60k as an average pot size does not seem unreasonable.

Zola.

I was assuming they mean this is the total amount in ones pension account rolled up.

hugheskevi

Cant believe 60k is what is in an average after a lifetime of work!

That isn't what the figure represents, as the paragraphs in the article following the figure make clear. The figure is the average value of Defined Contribution pension pots accessed for the first time. So someone with a Defined Benefit pension worth £800,000 and a £10,000 personal pension who starts to receive their pension is treated as having pension wealth of £10,000 in the calculation of the figure.

To consider aggregate value of pension after a lifetime of work, the Wealth and Assets survey is a better measure. That shows that for individuals aged 55-64, the median pension wealth of those who have pension wealth is £174,400.

Including those with zero pension wealth reduces the median figure to £88,000.

worried_jim

I am half way through reading all the Guardian comments, seems to be a lot of "my mate Dave lost all his money so I'm not bothering, Tories, Corbyn, climate change etc etc". Prepare to plan, plan to fail.

JoeCrystal

Thanks, Zola for an interesting article. The article did say that the people got more than one pension pot.

Thanks for the link to the Wealth and Assets Survey hugheskevi. It is an exciting yet depressing read on the poor quantitative condition of the pension affairs of the society. Looking at the sheets though, it is worth pointing out that £174,400 also includes the DB pension schemes as well, which are much more valuable than DC pension schemes.

worried_jim wrote: »

I am half way through reading all the Guardian comments, seems to be a lot of "my mate Dave lost all his money so I'm not bothering, Tories, Corbyn, climate change etc etc". Prepare to plan, plan to fail.

:rotfl: You left out the point that buy to let is clearly a superior retirement plan than pension schemes...

Albermarle

There have been many similar articles before and everyone quotes a different figure .
I think I saw one as low as £30K but reading the small print it included a lot of younger people who had hardly anything in their pot .
So depending on how you set the parameters you can come up with almost any figure you like

[Deleted User]

The article claims that the average pension pot withdrawal rate is way too high, at 8%. Apparently it should be 4%.

That’s bad maths. Everything depends on how old are the owners of those pension pots. In a given year many should be withdrawing more than 8%, unless their primary objective is to leave a legacy.

sandsy

Deleted_User wrote: »

The article claims that the average pension pot withdrawal rate is way too high, at 8%. Apparently it should be 4%.

That’s bad maths. Everything depends on how old are the owners of those pension pots. In a given year many should be withdrawing more than 8%, unless their primary objective is to leave a legacy.

Better to look at the source than rely on a newspaper article: https://www.fca.org.uk/data/retirement-income-market-data

The withdrawal rate was the rate in the first year of drawdown and over 70% of the pensioners were under 65.

Without knowing what other pots they had, it's pretty well meaningless anyway.

SonOf

The article claims that the average pension pot withdrawal rate is way too high, at 8%. Apparently it should be 4%.

The stats data came from the FCA and 4% is not a recommended draw rate. 3% rising to 3.5% is.

That’s bad maths. Everything depends on how old are the owners of those pension pots. In a given year many should be withdrawing more than 8%, unless their primary objective is to leave a legacy.

The problem is that it will be distorted by those taking a temporary high rate to fund the gap (intending to reduce later) and/or those with multiple schemes drawing on one at a higher rate whilst not looking at another.

The FCA data doesn't have enough detail to get an accurate picture. For example, last week I did a case for someone that had 5 pensions. Two are cashed in under small pots, one is taking the GAR and 2 are being consolidated to do drawdown. The stats will show the GAR and small pots as being non-advised despite them being advised. And as phased flexi access drawdown is being used, it wont show as drawdown (as that is a series of UFPLS - even though its set up regular)

Albermarle

And as phased flexi access drawdown is being used, it wont show as drawdown (as that is a series of UFPLS - even though its set up regular)

I thought phased flexi access drawdown was different to regular UFPLS as although you take a mixture of tax free and taxable, it does not have to be in the rigid 25:75 ratio necessary for a UFPLS?

Or are you saying that is just how it will show in the stats?