What is the item you own that has the highest monetary value? Maybe your house comes to mind if you have one. Or your car – the same way. Or maybe a family heirloom.
But I’m wondering if you counted your pensions. For millions of us, they are first or second on the podium. They are a greater store of wealth than property in the UK.
Therefore, given their value, it is surprising how often pensions are neglected. Annual reports are sent for recycling or in a desk drawer after a quick glance. When dividing the property of divorcing couples, pensions are often not even mentioned. Pensions worth more than £19bn have been forgotten.
But, as with other valuable possessions, pay a little attention to your pensions from time to time, and they will return to you handsomely. And the good news is that, unlike houses, they don’t need to be tidy, cleaned and repaired for hours. And unlike cars, they don’t need expensive maintenance.
Workplace pensions, in particular, are designed to require as little participation as possible. Retirement providers know that fundraising is not most people’s idea of a good time and want to ensure we get the best default results possible.
TLC: the tax system should encourage us to save for retirement
But, as Stephanie Hawthorne’s report shows, that doesn’t mean they can be completely ignored. She looked under the hood of some of the most popular workplace pension funds and found that their results varied widely.
Some of us have made incredible profits over the past few years, while others have fared much worse. Inevitably there will be winners and losers year after year. Pension service providers follow different strategies, so their performance will vary depending on market conditions.
Just because your workplace pension had a bad year doesn’t necessarily mean it’s a bad year.
But what you need to pay attention to is the fact that your company is constantly producing low or even negative returns. Second, keep an eye on whether your pension is losing money while the financial markets in general are having a good year.
This should set off an alarm. You can find out all of this information by quickly checking your annual retirement statement or by contacting your plan provider.
Unfortunately, we have no say in which provider our workplace pensions are stored. Employers choose a scheme and we like it or mix it up.
But this does not mean that we are powerless. If you are unhappy with your scheme, you can complain to your employer. And if you think your pension is in the wrong fund, you can ask your provider to move it.
Here’s what we can do to keep our workplace pensions in bad shape. That and paying as much as we can afford. But the pension industry and the government can do much more to help us preserve these valuable assets.
The most helpful step would be the pensions dashboard, where we could log in and view the details of all our pensions in one place.
We wouldn’t have to wait for dry annual returns in the mail if we didn’t want to. The dashboard will give us a snapshot of what we have and how our funds are working. This would give us a much better idea of whether we are reaching our desired retirement and what we need to do to get back on track if not.
But the dashboard, which was supposed to arrive in 2019, has been delayed again. We don’t even have a time frame for when this can be launched. Each additional delay lets down savers even more.
Of course, we need to get it right, and this is no small task, but the pension panel should be an absolute priority. Top of the Inbox of the Minister of Pensions. Didn’t put it in a drawer.
Chancellor Jeremy Hunt could also help give our pensions some TLC in his budget on Wednesday.
The tax system should encourage us to save for our own pension. The more we set aside for ourselves, the less we will then depend on the state.
So it’s ridiculous that there are tax rules that currently prevent some people from saving or even working. I hope Hunt fixes this. We’ll be watching Wednesday to see what he’s doing. It’s time for all of us to love our precious pensions a little.
Credit: www.thisismoney.co.uk /