Retirement - what no one prepares you for

“This is an un-monitored email address”. This is just one of the brick walls I hit as I was trying to get my finances sorted for my retirement. I’ve spent years listening to pension scheme administrators present to my clients – covering performance against service level agreements, net promoter scores and details of client complaints. One administrator recently gave a fascinating and informative presentation to one of my clients on how they deal with vulnerable customers. Normally, an admin report will give a reasonably rosy picture. But it’s only now that I’ve experienced moving into retirement as a member of three different pension schemes, that I can comment on what it really feels like to retire.  

Before I get into the details on the practical challenges I’ve faced, I wanted to explore the difficulties that constant change in pension policy has caused in planning for my retirement. Over recent years, we’ve had the introduction, and then abolition of, the Lifetime Allowance (LTA), changes to the Annual Allowance and Money Purchase Annual Allowance, the forthcoming inclusion of pension assets into inheritance tax and the potential future abolition of tax-free cash. How can pension scheme members like me hope to plan with such shifting sands of legislation? (And yes, I appreciate that not all these things will be relevant to all DC members!). 

The impact of the constantly changing legislative environment was brought home to me when I chaired the governance committee of the Hymans Robertson Staff Pension Plan. We do presentations, both to staff approaching retirement and to younger staff. The latter includes details of saving for a pension against an Individual Savings Account (ISA) and a Lifetime Savings Account (LISA), etc. When pulling together the slides, I’d used a chart which showed the difference in final projected pot size of starting to save at age 25 as opposed to age 35. It showed a difference of around a third in projected fund value at retirement when saving from the earlier date. I was quite pleased with the slide, thinking it would encourage our staff to save earlier!  

But when I ran the slide by one of our bright young actuaries who sat on the governance committee with me (and who understands compound interest!), she simply shook her head and said “no, I wouldn’t use that slide”. I looked at her and asked why. Her response has stayed with me ever since. “Well, if you think where pension legislation was forty years ago, where it is now and where it might be in 40 years’ time, this chart probably means nothing. What young people want to know is “if I pay £100 a month into my pension, what will Hymans Robertson pay?”. This was an eye-opening moment for me and something I’ve taken on board over my career since then.

Legislative issues weren’t the only ones I’ve had to come to terms with over the past couple of years as I’ve planned for retirement. There were also some interesting “practical” challenges, including:

1. Having to send my original birth certificate, husband’s birth certificate and our marriage certificate to verify my identity to the administrator in order to have one of my DB pensions paid, and then the documents being lost in the post. This was incredibly stressful, not just from the emotional point of view of losing original documents but also due to concerns over identity fraud. I also felt there was a certain lack of empathy from the administrator about the emotional impact this had on me, as well as a lack of practical support on where I needed to go to get new documents.  
2. Receiving an email about whether I wanted to take my tax-free cash – which I responded to, only to find that it had been sent from an un-monitored email address!  
3. Trying to get my tax code sorted for my new pensions – which involved a long wait online for an answer and a complex call with HMRC. 

I could go on…….

And it’s not just in pensions that I’ve faced these issues. Trying to bring all my ISAs into one place was a big challenge too. In one instance, I had to make three phone calls to each of the parties (transferring provider and receiving provider) before I made any progress on getting my ISA transferred, even though all the details I’d provided were correct. This process is supposed to be simple – but in some cases, it clearly isn’t. 

I’ve worked in the pensions and investment industries for 39 years. I know what I’m talking about! And I know what I need to do to resolve these types of issues. Can you imagine what would have happened if I hadn’t known what to do or who to speak to and the emotional stress this would have caused? And we must bear in mind that this will be the case for the majority of DC members… 

So, what are my conclusions from all of this?

The whole process of preparing financially for retirement has cost me a lot of time and has created unnecessary stress. This has added to the emotional challenges I was already going through on retirement (see blog one, or hear more about this in my Retirement: A Personal Journey podcast episode).  

I admit I’m not a “digital native”, but I run my bank account and credit cards online successfully (and can use an app to get my rugby season ticket!). Sometimes, it’s just nice to have someone to talk to who’ll help you sort out your issues and not judge your digital skills. We talk a lot in our industry about pushing everything online, but I think that’s a mistake, at least for now. There will be other “Ronas” out there who need to sort out important issues in a sympathetic way - and a chatbot can’t do that.

There are lots of great administrators out there. People who genuinely care about making members’ retirements a smooth journey. But with GMP equalisation, pension dashboards and a host of other projects to complete, they’re often pulled in multiple directions. Perhaps we need to start valuing and paying more for the best quality pension administrators so our members have a positive experience when they retire. 

And on the point of wider legislative change, the recent announcement by the government of the Pension Commission to be chaired by Baroness Drake is a step in the right direction – but any results are likely to be a long way off. In the meantime, we need more certainty on future pensions policy to allow for more effective long-term planning for retirees like me. For example, I have no idea whether I’ll get a State Pension when I reach my SPA – by then it could potentially be means tested. That, amongst other things, makes planning for the future particularly hard.  

Lots of things are uncertain when you retire, including how long you’ll live. Let’s do all we can to give as much certainty as possible and to help our members plan for their retirement years.  

If you have any questions on anything covered in this blog, please don't hesitate to get in touch.

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