What baffles people most about pensions? STEVE WEBB answers his 200th reader question… and reveals what it’s like to be our agony uncle
Got a question? Find out how to ask former Pensions Minister Steve Webb about YOUR retirement savings below
Steve Webb answered his 200th pension question from a This is Money reader here.
Look out for special coverage all this week about Steve’s time as our agony uncle, and find out how to ask your question below.
I would like to say a big ‘thank you’ to the readers of This is Money who have given me a regular supply of questions that have formed the basis for 200 columns over the last four years.
Although it’s sadly not possible to reply to each one individually, there are certain themes that come up time and again – I try to make sure that we address these so that even if your question isn’t chosen you will find the column of interest.
One thing that never ceases to amaze me is the variety of questions that people have.
Over a working life of half a century people can build up a whole range of different pensions and investments and giving an accurate answer can sometimes involve delving back into the rules and legislation from decades ago.
It’s rare that I don’t learn something new when researching the answer to my next column.
We also get questions from people in a very wide variety of circumstances.
One week we will be wrestling with the complexity of the means-tested benefit system and whether having a pension pot means you get less benefit.
The next we can be explaining the rules for people with seven figure pension pots worried about breaching the limits on pension tax relief.
STEVE WEBB ANSWERS YOUR PENSION QUESTIONS
Given my time as Pensions Minister, you will have noticed that I’m particularly interested in issues around the state pension system, and that topic has given us some of our biggest campaigns.
These include our current campaign on underpaid women’s state pensions and also our efforts to make sure people sign up for the National Insurance credits that are so vital to making sure people get a full state pension.
Working in the pensions industry as I do, and talking to a lot of people each week who are immersed in the details of pensions, it is very refreshing for me to see reader questions every week and be reminded of the features of the pension system which people regularly find baffling.
Some of the most frequent areas of confusion include:
– Rules around taking a 25 per cent tax free lump sum – many people are confused about whether they can take a lump sum from each pension (yes), whether they have to take all their lump sums at the same time (no), and whether they can take the lump sum and leave the rest where it is (generally no);
– How the state pension is worked out, especially the infamous ‘contracted out pension equivalent’ or COPE figure which appears on state pension statements; (which you can ignore!);
– Retiring early – great if you can afford it, but important to remember quite how long your pension pot is likely to have to last.
One day, it would be nice to think that the world of pensions would have been simplified so much that people had no need of an ‘ask the expert’ column.
But there doesn’t seem to be much sign of that happening any time soon.
I look forward shortly to receiving the next batch of questions and finding a good topic to form the basis of column number 201…
TOP SIPPS FOR DIY PENSION INVESTORS