AHC's Peter Nicholas urges pension funds to inform members of the impact of Budget2014.
As I emerge from my jetlag haze, a result of spending Christmas with family in Tasmania, I'm stunned that the implementation date for the pension changes announced in Budget 2014 is less than 65 working days away.
From what I can see the industry isn't ready and members certainly aren't ready.
Why is it we leave so much to the last minute? Why are we so deadline reactive when we are well aware of the benefits of preparation and planning?
Case in point (pun intended) - whilst in Tasmania I was able to reacquaint myself with my wine collection, kindly cellared by a trusted friend. As we sampled the culinary delights of Tasmania, we indulged in the delicate complexity of 1994 Penfolds 389 Cabernet Shiraz. The preparation and discipline of buying and cellaring was well rewarded. Similar in many ways to finally accessing a pension pot.
Interestingly there wasn't one thought of the financial value of each glass, the price paid was long forgotten. We enjoyed it while it lasted.Notably, at the time I bought it I had no idea when I'd drink it or who I'd be drinking it with: I simply anticipated a future lifestyle need.
So if preparation and planning pay off, how do I best prepare for the next 20 years and beyond?
How do I ensure I can continue my wine lifestyle in retirement? How much will I need for my retirement? How much can I afford in retirement? How long will I live in retirement? This year, when I turn 55, should I access my pension pot and buy wine for my retirement?
These are the sorts of questions facing pension fund members today. These questions are further compounded by the uncertainty of the Budget 2014. Unlike wine, uncertainty doesn't get better with age.
Members need guidance now.
Members need to hear from their fund sooner rather than later. They want to know how they are impacted by Budget 2014 and what they should do. Even if we still don't have all the answers members want to know someone is looking out for them. We've been doing this with many of our clients already but sadly it isn't the norm.
Communication is needed now before members, lacking guidance, go online and spend randomly at Laithwaite's or indeed on Lamborghinis.
Of course you could simply ignore this prompt in the same way my teenage children ignore my advice. Mind you, giving them noise-cancelling headphones for Christmas probably wasn't my most inspired move.
Written by Peter Nicholas, Managing Director/CEO at AHC.
