Foreword
There’s a story that, some
years ago,
a market research firm
in the US was hired to find
how much time academic staff in American universities
spent on dealing with their pension arrangements.
The researchers reported back: on average, about an
hour. “How do you mean, an hour?” asked the
government department that hired them. “An hour
a week? An hour a month?”.
“No,“ said the researchers,
“an hour in their working lifetimes.”
The story is usually told to make the point that most
people aren’t very interested in their pensions.
That’s certainly true. But it makes another point, too.
Once upon a time, most people with pensions really
didn’t need to worry about them. Most people
(including university academics) had so-called “final
salary” pensions, which promised them a lifetime
income that could be as much as three-quarters of
the salary they were earning at retirement. Nothing
to do, or decide, or choose – just wait till retirement
and start collecting the money.
Some people (and this still includes many university
academics) still enjoy final salary pensions. But as
people’s life expectancy increases and the
performance of investments becomes weaker and
more uncertain, it’s becoming more obvious that
pensions like these are simply unaffordable. Final
salary pensions are disappearing like snow in spring
time.
What’s replacing them, in this country at least, is a
very different kind of pension. It has a variety of
names – money purchase, defined contribution,
Lucian Camp – financial marketing guru
DC – but they all mean the same thing: what you’ll
get out depends first and foremost on what you put in.
This puts a massive responsibility on your shoulders.
And, because the sooner you start paying in, the more
time your money has to grow, the responsibility is
there, whether you like it or not, for many, many years.
Starting to think about it a few years before you want
to retire really won’t do at all.
All of which goes to explain why it really is smart to
get your head around the content of this guide,
which will help you understand exactly what’s at
stake and the options you should be considering.
Beyond that, it’s equally smart to go on to spend
time on Trustnet Direct’s Retirement Programme
website, playing with some of the tools and
calculators you’ll find there to figure out what you
need to do to get to where you want.
Some people love spending time on this stuff. Many
hate it. It doesn’t really matter. The way the world is
these days, it’s one of those things you – and probably
the next generation of those US academics – will just
have to do.
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