Why pension pros need to keep it simple

That is not actually a particularly rare phenomenon for pension professionals (I have been accused of it myself), but the surprising thing was these comments were from members of the public who were utterly and passionately convinced of their alternative facts.

Those of us who work with pensions every day can forget how complex and intimidating they seem to the man in the street

A taxi driver in Ipswich explained to me that final salary schemes are only unaffordable because employers took contribution holidays in the 1980s.

Sadly my protestations that not all companies did, that employers have to pay off deficits too, that successive governments have unilaterally improved benefits, that people are living longer and that interest rates are at historically low levels fell largely on deaf ears.

I also had a lovely chat with someone who had taken financial advice on transferring hundreds of thousands of pounds from a DB to a DC scheme and decided it was a great deal for him.

His plan was to take the maximum 25 per cent cash tax free straight away and then do the same again next year. He was shocked when I mentioned that the second lump sum would be taxed. At least he believed me and had the right information before making a final decision.

I also remember my dinner guests who were convinced that Sir Philip Green had withdrawn £571m from the BHS scheme just before he sold the business. They now know that BHS had not actually paid any dividends to shareholders since 2004, let alone any payments out of the scheme, though I am not sure they were not still under the impression that there must have been some funny business going on.

Apparently a credit crunch and a switch to more secure low-yielding investments would not really be enough to destroy the surplus declared in 2008, whatever the actuarial experts might say.

I have more sympathy with those who believe fervently that people are dying earlier these days. There has been a widespread misunderstanding that a reduction in the projected rate of improvement in mortality rates means that we are not living as long as we used to.

Those of us who work with pensions every day can forget how complex and intimidating they seem to the man in the street. We must strive to keep information simple and guide people to the right outcomes even if they do not fully understand all the technical details.

Hugh Nolan is president of the Society of Pension Professionals and director at consultancy Spence & Partners