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11 December, 2017   |   By Fiona Tait, Technical Director   |   Blog


The only way is up @Pensionsgirlieblog 11 December

Last week was rotten. The weather was straight from Siberia and the AF7 results came out. I failed. Only just but still. This would be annoying at best, but as the Technical Director of a pensions firm and Fellow of the PFS it’s also very embarrassing. What I’m not of course is a PTS, and I’m delighted (not just marketing delighted, but really chuffed) to report that my colleague at IP who is a PTS passed with flying colours. Blog 1.jpg (3)

Having employed my usual last-minute cramming technique (which has always worked before) it is certainly possible that I didn’t work hard enough, but given that the specific questions that I apparently failed on were pretty much all on fact-finding, it is also very likely that I’m just a typical techie. Over-confident, good on the rules but totally impractical. Even so, you may consider me mighty fed up.

On the home front I did manage to get the Christmas tree up, and have liberally festooned the hall with tinsel and other sparkly stuff that the cat will no doubt play with, eat or just pull down before the big day. We also had the annual “child sitting in the empty Christmas tree box, although he somehow managed to stay plugged in to his iPhone at the same time. Other than that this year’s photo looks remarkably similar to last year’s, mainly because he’s wearing the same black and white hoodie that he’s clearly been living in for at least 12 months. He might have grown a bit but everything else is the same. 

Much the same can be said about my annual SIPP statement (see what I did there). The fund has gone up, although not by much, and my adviser suggested I might like to change to a different fund to try and do better next year. The thing is though that my timings and objectives haven’t changed. I’m not going to retire any time soon (always assuming I don’t get kicked out for bad exam performance) and I am still looking for growth. I may switch but it’s not a vital decision. Had I been close to taking benefits or already withdrawing income fund performance might be critical. Reviews should be for life, not just for Christmas.

I did promise a summary of the OECD report on state pension provision, and here it is – we’re all doomed. Brochure 50.png

Over half of OECD countries have taken steps to improve state pension sustainability, mostly by increasing retirement ages and/or lowering indexation. So we will wait longer for less. The UK of course is implementing the former but just about still clinging on to the triple lock. Despite this the report shows it is still the last generous state pension in any of the developed countries, with a net replacement rate of 29% in comparison with the OECD average of 63%. 

At the same time the purple book shows a “marked increase” in the number of DB schemes are closing, with only 12% outside the public sector still open to new members. Funding levels have improved for most schemes, but there are only 1.3 million active members who will benefit, in comparison with 3.6 million in 2006. Of the total 10.3 million people in DB schemes, 47% are deferred members which no doubt contributed to the rise in requests for transfer.

If anyone was in any doubt this confirms our future depends on private DC savings. Let’s hope the imminent results of the review into automatic enrolment, due “before Christmas”, has some more positive news. No pressure.