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Pensions proposals from the postbag

I was honoured last night to carry out the MC duties for a pensions dinner where the bulk of the 30 or so dinner guests were drawn from senior money journalist ranks and the guest of honour for the evening was the pensions minister, Steve Webb MP.

This annual dinner is the brainchild of the Headlinemoney website and one that’s been supported by Scottish Widows since its outset six years ago. Last night’s renewal could hardly have taken place at a more timely moment.

Pensions have not been out of the financial headlines this January. In particular, stories to do both with the annuity market and a potential charge cap on plans have peppered the financial pages since the start of 2014.

During the dinner Webb, the longest-serving minister in this role since its introduction, spoke not only about these topics but also covered small pension pots and defined ambition plans. While he is proud of achieving the triple lock for State pensions, he admitted that the increase to the state pension age had been a more difficult process and that, in an ideal world, could have been carried out more gradually.

With representatives in the room spanning a wide spectrum of money media – from the Daily Mail to The Guardian – this also meant the journalists present had the opportunity to provide the minister with a flavour of the sorts of pensions queries that populate their respective postbags.

A recurring, if unsurprising, theme is just how complicated pensions are to members of the public. From the way schemes are structured, to the jargon bandied about by the financial services industry the whole sorry result is that people (even ones who are trying really hard to understand how their pensions work) often end up clueless about whether they are receiving value for money from their retirement plans.

Where there is complexity then there is also avoidance. One money editor present pointed out that while the number of online comments relating to the pensions stories he runs is on the up, the totals are as nothing compared with other finance-related (subjects such as buy-to-let). Inter-generational issues and the trust that people of different ages actually allocate to the importance of a pension product in funding a satisfactory level of retirement income also emerged.

The conversation also produced some interesting suggestions. For example, to avoid any question of conflict why didn’t the Government simply prevent customers from taking out their annuity at retirement with the same provider with whom they’d built up their pension fund?

At the same time, what about considering the creation of a central provider of annuities? And how about producing an advertising campaign which outlines, realistically, the levels of income you can expect from your pension when retirement day arrives.

As you would hope, the minister listened politely to these and other suggestions. What’s more, in Steve Webb the pensions world has a government minister who at least understands the issues underpinning this fiendishly complicated area inside out; not an observation you’d aim at all of his predecessors.

Advertising campaigns cropped up more than once during the evening. Webb mooted that viewers could expect to see a new phase in the ‘I’m in’ auto-enrolment advertising campaign. So don’t fret if you’re getting a little jaded about watching the likes of Dragon’s Den star Theo Paphitis talking up the benefits to workers of being auto-enrolled into a works pension. In fact, Webb pointed out, that’s probably a good thing. Watch this space for developments.