What confuses people most about pensions? Steve Webb explains

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What baffles people most about pensions? STEVE WEBB answers his 200th reader question… and reveals what it’s like to be our agony uncle

By Steve Webb For Thisismoney.co.uk

Published: | Updated:

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…

ASK STEVE WEBB A PENSION QUESTION 

Former Pensions Minister Steve Webb is This Is Money’s Agony Uncle.

He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement.

Steve left the Department of Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.

If you would like to ask Steve a question about pensions, please email him at [email protected].

Steve will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.

Please include a daytime contact number with your message – this will be kept confidential and not used for marketing purposes.

If Steve is unable to answer your question, you can also contact The Pensions Advisory Service, a Government-backed organisation which gives free help to the public. TPAS can be found here and its number is 0800 011 3797.

Steve receives many questions about state pension forecasts and COPE – the Contracted Out Pension Equivalent. If you are writing to Steve on this topic, he responds to a typical reader question here. It includes links to Steve’s several earlier columns about state pension forecasts and contracting out, which might be helpful. 

If you have a question about state pension top-ups, Steve has written a guide which you can find here. 

TOP SIPPS FOR DIY PENSION INVESTORS

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