Why we don't trust pension firms
New findings from the National Employment Savings Trust (NEST) show that we aren't happy with current pension schemes.
Save more money now so that you have more money in your pension pot when you retire. Straightforward, right? As it turns out, not really.
A new survey carried out by NEST reveals that it’s not the idea of having less money now that’s the problem; it’s the people who hold on to your hard-earned cash until you get there.
What happens to my money?
The survey from NEST found that savers feel there is a culture of corruption within the pensions industry. Some have even compared it to gambling. Between small returns and masses of complicated information, it just doesn’t seem worth it. Taking Robert Maxwell’s plundering of the Mirror Group Pension scheme and fear of another stock market crash in to account, workers are understandably concerned.
They want certainty, but it’s not something that pension providers can give in such an unpredictable market.
It’s still worth saving in a pension though. The basic State Pension for a single person is currently £113.10 (jumping to £155 with the flat-rate State Pension when it launches in 2016), so you may struggle to live a comfortable life when you reach your golden years if it's your sole income.
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What savers really want
The one thing pension savers really want, according to the survey, is a frank and honest conversation - particularly when it comes to investments. There are many concerns surrounding the complexity of how your pension is invested, which, which makes the whole thing a lot trickier to grasp.
Workplace pensions
Over the next few years, most of us will be enrolled in a workplace pension by our employer, as part of an initiative called auto enrolment. Contributions will come straight out of your salary, but will be boosted by payments from your employer and the Government. The idea is to get us all saving more for our retirement as currently we simply aren't saving enough.
NEST was established by the Government to manage those workplace pensions for employers, though there are a number of rival services such as NOW:Pensions and The People's Pension. It's up to your emplyer to decide who to go with, but each firm comes with slightly different investment options and charges.
For more on workplace pensions read Workplace pensions: what it means for you
Do you trust pension firms? Do you understand how your money is invested? What do you want from your pension firm? Let us know in the comments below.
Compare savings accounts with lovemoney.com
More on pensions:
Workplace pensions: what it means for you
10,000 employers join workplace pension programme
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Comments
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The pensions industry may not be perfect, but this article is OTT. To smear pension managers with the late Robert Maxwell is disgraceful and totally unjustified and as for stock market crashes, well they don't matter in the long run and you can insulate yourself as you approach retirement. It's called 'investment choices.' Sensible advice for anyone working now would be to stay in work as long as you can, belong to a managed pension scheme and try to fund an ISA, rather than be influenced by scare stories and rank, ignorant prejudice against 'The City'.
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Well pensions do get people riled up don't they?!! Love it.
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Where else do you face people who say (with a straight face) "give us your spare money now, and in 40 years we'll give you lots back. And we define what 'lots' is, and you'll have no way of complaining". Remembering that these are the people who honestly believe they are worth several millions a year - out of your money. Leaving your money in NEST means relying on politicians not to plunder it for short-term gains. You're more likely to win a rock-throwing fight with a cloud. Save - yes. In ISAs, no further tax to pay, you're in control, take what you want, when you want. The fewer people who eat out of your pie, the better fed you will be.
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20 July 2014