Let me give you some pension advice…

“What you should be considering” said my accountant, “is a pension scheme”

And with those words the drain covers opened and lots of my money fell through, never to be seen again.

In the 1980s pension schemes were the buzz words, I could not lose advised my accountant for not only would I get full tax relief on the money I had “invested” but then when I was very old I could live a life of unabashed luxury, taking world cruises on demand instead of sitting wrapped in blankets in front of a single bar electric fire while blizzards raged outside and I wondered if I had another twenty pee to feed the meter with.

It sounded excellent, after all, I already had one world cruise booked for just as soon as my mortgage was paid off by those myriad endowment policies, world cruises on demand at 65 years of age, bring this utopia on, I couldn’t wait.

Once again those useless bastards of bankers NatWest darkened my doorstep and once again it was the smiling Andy, the NatWest financial consultant, who sat in front of me one day with all the forms out on my desk, a shine in his eyes and licking his lips in anticipation of the huge bonus that was coming his way just as soon as I signed up.

I keep mentioning this Andy as if I hate him, I don’t, for he knew not what he was doing, clearly he had not the first clue of what an investment was supposed to be, its not his fault, he was simply regurgitating what he’d been told to say by the NatWest staff trainers who in turn knew bugger-all about investments, in short the whole pension, ISA and endowment selling machines in our nations banks were simply selling machines – the word “advisor” meant that they would advise which one of their products was the best one for them to sell you, ie which one paid the most bonus, to them.

So we signed up for two pension schemes, one for my wife, one for me, we were going to be soooooo rich when we retired, so rich would we be that I may even be able to consider retiring at, wait for it, the age of 55, yes that was an actual real target that I was offered in the Nirvana of pension salesman speak, retire at 55 and then be embarrassed by the sheer number of opportunities to go on world cruises, my wouldn’t life be grand.

We paid money in every month, £50 a month each originally, then £150 a month, then eventually as much as £500 a month each, after all, those world cruises were getting closer, year on year.

What I didn’t notice, but what I can notice now, is that at each year end statement the sum invested was increasing, but mainly because I was continuing to pay more money in, I didn’t have to worry about my pension schemes you see, I had experts at NatWest looking after them for me and they wrote to me every year and every year it looked as if they were increasing the value of the pension pot, all was good, I started to think about playing quoits on deck whilst sipping on a margarita as the sun set over the yardarm and we asked the captain “And which quaint former colonial Caribbean island is this and are the natives friendly…”

And then in 2009 something strange happened, in January 2009 I received from NatWest Bank the most bizarre letter that any investment manager has ever sent to a client, it started “Dear Client, We are pleased to enclose your pension statement for the year ending 2008…” which was all fine and dandy, it had been a tough old year in the financial markets and it didn’t seem to be getting any better, I wasn’t expecting much to be honest but here they were in the opening paragraph advising me how pleased they were to be enclosing my latest pension investment statement…

Then I looked at the statement.

At the start of 2008 both funds had £25,000 in them, strangely though by the end of 2008 both funds had … £20,000 in them.

They’d lost 20% of my money somewhere.

And they were pleased to inform me of that.

If I ever receive a letter from NatWest Pensions which starts “We’re sorry to advise” then I won’t read any further because I don’t think I could stand the impact of reading of the thing that makes them sorry, still being pleased after losing 20% of your clients money is indication enough to me that they all live in a bedlam world of ne’er-do-wells where real money becomes something to be pleased about losing just so long as you still get paid at the end of the month and the company can still extract its fees from the admittedly smaller pot at the end of that year.

And lets not lose sight of the fact that that is exactly what happened, all of those “experts” who were working so hard on my behalf to lose my money had all retained their salaries and the company had retained its fees year-on-year, it was just me that lost out then.

My handsome pension schemes at the last count will earn me a stipend of just over £100 a month each when I retire, marvellous, maybe not enough for a world cruise any more but I’ll probably manage a half hour in a rowing boat on Roundhay Park lake, visiting such exotic locations as “the other side of the lake” or “the dam at the bottom end of the lake”, and if there is no room for quoits on deck then I can probably amuse myself by throwing stones at the swans and being a disgraceful pensioner as I revert to childhood once again.

Lets face it, I’m not going to retire am I ?

Because of the endowment policy fook-up I have had to revert to a repayment mortgage and because of redundancies and the loss of the business two years ago I have had to extend the mortgage until I’m 70 just so that we can afford the monthly payments, I don’t expect to even think about retiring until that age and even then its doubtful.

No, instead I am destined to be one of the new wave of old people who will work until they die, their last unpaid job being to dig their own grave and then fall into it as part of David Camerons Big Society initiative where we save the cost of council employed grave diggers.

And we haven’t mentioned the redundancy payment, or the working tax credit arse-up yet…

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4 thoughts on “Let me give you some pension advice…

  1. The loss in January 2009 will almost certainly have reversed as the markets recovered – if not, you really do need a different pension company. But in general you are right – pensions are not actually a very good deal unless you have matching company contributions or you’re paying higher rate tax.

  2. It appears that public service pensions are next up for “slash and burn”, its time to admit that actually its not possible to save enough money from a lifetime of earning a “normal” wage to be able to not work for your last 20 or 30 years – I’d love to see the amount of money that a 40 year old on £20k a year is supposed to be saving in order to retire at 65 on £20k

  3. In simple terms to get a pension of £1000 a year – index linked and half pension for spouse when you die – will cost about £2500.

    So to get a £10,000 pension you need to have saved £250K!

    If you want a single life pension (nothing for spouse when you peg it) and not index linked the ratio is about 16 to 1.

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