What are the key factors when looking to deliver a reasonable pension pot at retirement? What about contributions levels, charges, investment returns and time?
All important factors and dominate the minds of the The Pensions Regulator, Trustees and the members of Independent Governance Committees (IGC). Rightly so.
However, if a member of a workplace pension reads an IGC report and its reassuring tone about charges, default funds, glidepaths, education resources and sustainable investment it can feel as far removed from their own pension reality as a Government report on the green economy does to someone replacing their boiler.
So how does an individual, or an employer, keep it local and focus on the factors that are of less interest to the captains of the pension super tankers but, if monitored, will have a disproportionate impact on their pension wealth. Looking at the following in more detail should produce positive results;
Charges
Surprisingly, with many providers the charges of your own scheme are not of particular interest to the captains. The charges are set at a local level and are rarely reviewed without a trigger from the client and/or their advisers.
Competitive pressure is lowering the charges across the pension world but, like personal insurance, it is the quietest, most loyal customers who suffer.
Providers delight in announcements of growth of their assets under management. This should raise the challenge that further economies of scale can be delivered and passed onto all customers, not merely the recently acquired ones.
Also, the long-held assumption that smaller clients receive higher charges than their larger counterparts no longer feels relevant in a single product, single charging structure world.
Product Features
The last few years have seen a positive explosion of additional features within (or near) pension products. Healthy competition from new entrants and a refreshing change of priorities from longstanding players have produced many new features that can boost financial confidence.
The key question is whether your scheme benefits from all the best features available with that provider. Sometimes it requires a change of platform and the loyal customer can wait a long time before they qualify for a golden ticket to the new world.
Corporate culture
As above we are not looking at the well-publicised corporate vision and mission statements. These reveal important and relevant data about the type of company you are entrusting your money to. No, we are looking at the less obvious, more local issues that can impact pension wealth.
It is heavily connected with the above two issues. With increasing economies of scale and lower cost of delivery who benefits from this downward pressure; long standing shareholders, new fintech entrepreneurs or all pension scheme members in the form of better features and value for money.
So the message is to get noisy and remind your provider you are there, have remained loyal but should not be taken for granted.