By Dale Critchley, Workplace Policy Manager, Aviva
Step one in the Ross Kemp program is to “stretch” our minds back to previous employments and track down our pension pots. This can be done with the help of the government’s pension tracing service, but also with the help of some pension providers who offer a find and combine service. This is something we pioneered at Aviva, and which has reunited people with £millions in lost pension savings.
The second stage in Ross’s workout is to “check your form” and find out how much we might expect from our existing pension saving. This is where online tools are important. They need to be engaging, simple to use and relevant. Most large providers will offer modelling tools, allowing changes to retirement date, investment returns or contribution and most will allow individuals to add in pension pots from elsewhere to give a holistic view of pension saving. At Aviva we’ve recently added the capability to include a career break, or period of part time working, to reflect the real-world experience, particularly for women.
The big development in both areas will be the pension dashboard. Large and multi-employer pension schemes are now connected, meaning that data on millions of pension pots is available, ready for when the Moneyhelper dashboard is switched on.
The final stage of Ross’s pension fitness program is to “workout” how much you might need, by looking at the Pension UK living standards. These are important benchmarks as many people have little idea about how much they might need as income, and how much they might need to save to live an active life in retirement that could last for 30 years or more. Many providers, incorporate these benchmarks into their planning tools.
So, is there anything that been missed? Well, I think number one is probably “diet” and what you feed into your pension. Healthy contributions are a pre-requisite for any pension scheme. Modelling tools can help make this point to individuals, while contribution structures that encourage healthier employee contributions have proved successful over time.
The government would probably point to “supplements” in the form of more diversified investments, designed to drive more sustainable long term investment return. This is an area where providers and trustees, but also employers and advisers will play a big role over the next few years, as we see more focus on improving gains net of charges, rather than charges in isolation.
The final recommendation I’d add is to exercise the mind as well as the body. Pensions can be complicated and there are very few people who know everything about them all, but that shouldn’t stop us trying to understand the basics and in particular what happens when we come to take our pension benefits. Everyone should take up the offer of a free PensionWise session. An appreciation of the options, risks and opportunities might lead us to seek advice as to which is best, or to take advantage of guidance in the form of targeted support, which should be available from next year. Some of the more complex decision making is already being taken from the shoulders of pensioners through solutions like Aviva’s Guided Retirement that helps set sustainable levels of drawdown ahead of securing a guaranteed income for life. These solutions will be built on with the advent of default pension benefit solutions over the next few years.
Ross Kemp’s ideal retirement sees him fronting a programme entitled “World’s toughest golf courses”. We might not all have the same love of golf, but with a little effort and the help of the pensions industry it should be possible to have beach-ready pension pot in time for retirement.
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