The Only Thing That's Certain About Personal Pensions

Take pensions. Or rather, take most of the companies that manage personal pensions and drop them off the highest cliff you can find.

If you’ve got a personal pension maybe you’re one of the lucky ones, benefiting from astute - or most likely lucky - financial managers who’ve generated you a promising retirement from your contributions. I’m told they do exist.

But the sad truth is that relying on a decent income in retirement by taking out a personal pension amounts to little more than entering a lottery. Even with genuine advice from this month’s favourite experts you cannot possibly know what’s going to happen to your investment or indeed the company to which you’re entrusting your retirement funds.

For all that’s good about a capitalist economy, it generally does investors no favours when pension companies close funds, cease trading, merge or sell your future to today’s highest bidder.

On top of that you’ve got successive governments constantly changing the rules about what you can do and when you can do it – sometimes you’d think it’s easier to pick a winner at Great Yarmouth racecourse than forecast a pension result many years ahead.

When I was young and had a few bob in surplus income (sigh) I was encouraged to invest for my retirement by paying regularly into a personal pension. Encouraged by tax relief and promised returns of 13% (read the small print – ‘estimated’ and ‘up to’) annually on top of that, I embraced Mrs Thatcher’s new world of self-sufficiency and happy times to come…

Fast-forward twenty five years and I’ve no recollection of exactly how the company that send me an annual statement came to be managing my funds – I think there’s been at least 4 changes, each time with increasingly daft-sounding names – but what is clear is that the fund is worth less than what I’ve paid in to it.

What monumental mismanagement could possibly account for such a situation? It turns out (what a surprise) that the financial services industry is more interested in making money for itself than for you and me. And they’re not even particularly good at it.

So in these uncertain times, there is one financial fact that you can rely on – whatever you thought your personal pension was going to be, you were wrong. It will be less.

Forget Barbados, think Bognor.

Makes me wish I’d joined the public sector… well, almost.