For Pensions Awareness Week, I thought I’d bring together some thoughts I’ve been having about the varying routes that people take to reach retirement. The #nowrongpath gesture saw a number of my colleagues posting their career histories on LinkedIn, to show those facing COVID19 -induced career difficulties that few of us drive a traffic-free fast lane all the way to where we are heading.
Recently, a friend told me that her husband had decided to take early retirement because he had attained 40 years of service with his employer (in a very good pension scheme), so was financially able to do so. That made me think of my own working history and I’m totting up now how many of years of service I have – started working (part-time) at 15, current age 53, took about 5 years out for Uni and travel, that equates to 33 years, not bad right? But if you looked at my pension funding, you’d probably guess a lower number.
The main issue for me is that, although I’m not so far off the magic 40 years of service, I have attained that through a number of short periods of employment with many employers. So, time to tot up the numbers again – including part-time jobs to help fund studies and travel, there have been 20 different employers during those 33 years. That averages 1.6 years a job! These moves have resulted from a certain lack of patience in tolerating an employer’s imperfections, as well as a rather busy “second career”, managing the evolving needs of three children that came along in rather quick succession.
All these changes and times spent with different companies and varying work environments has given me a lot of valuable life and work experience, but it hasn’t had a great effect on my pension. Leaving companies that offered a final salary pension scheme with less than two years’ service meant a score of job 1, pension nil. Various small pension pots from other employments were left neglected for a long time, not always in the most suitable investment funds and sometimes in plans with high charges eating into the modest value accrued.
I have now tidied all these up and brought them together into a platform-based pension plan that allows me to easily see what I have and change the investments if I need to. That has allowed me to act on my preference for sustainable investment funds and manage the pension alongside my ISA, which consists of savings made over the years for the children. I am also finally able to pay in a bit more to my pension than I used to, encouraged by tax relief (fingers crossed that won’t be another COVID victim) and also by the confidence that I know these contributions will be invested where I want them to be.
But enough of my journey, and the current phase of playing catch up with my retirement fund, my thoughts also turn to the young people who are starting their careers and their pension funding in the turbulent twenties. Our new Cornerstone recruit, Lindsay, a Marketing graduate, recently spoke about how her generation expects a multi-job career – “nowadays to get ahead it has become the norm to jump between jobs in our careers to gain different experiences”.
Now, I’m hardly the person to suggest that moving between jobs is a bad thing. I’m just concerned that many young people, like me, will put off engaging with their pensions until they have passed Go a few times. Also, that older people who have gathered various pensions, but who don’t work in financial services as I do, will not know how to finally get their plans tidied up and sorted out.
For me, the best part of working in financial services has always been the communication and education aspect, helping people understand and navigate financial decisions that they don’t find easy to make. That’s why Cornerstone’s new Snapshot pension tool appeals to me, it’s all about encouraging people to engage with their pensions and go through that exercise of looking at what you have and figuring out what you need to do to make it better. Furthermore, it makes this exercise simple and easy, removing those classic barriers of not having time or not knowing where to start.
I don’t regret my patchwork career or my less than impressive pension fund, I’m just busy doing what I can to make the best of it. My colleagues at Cornerstone and our Snapshot Pension service would be more than happy to help you do the same.