“A dog is for life not just for Christmas”. So runs the phrase coined in 1978 by Clarissa Baldwin, the then CEO of the National Canine Defence League (source: Zigzag.dog). At the time pet rescue centres were being inundated with unwanted puppies in the weeks and months after the festive period, when the novelty of the canine gift wore off.

Jeremy Hunt was in a perhaps more positive frame of mind when he put forward the concept of the pension ‘pot for life’ in the Autumn Statement.

As the summary states: “To provide better outcomes for savers the government is…launching a call for evidence for DC schemes on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life…” (Source: www.gov.uk)

The intention of the pot for life idea is good. At the moment people are enrolled in their employer’s pension scheme every time they move jobs, potentially building up a number of small pension pots over their working lives.

As individuals move from job to job this proliferation can mean that they lose track of, or lose interest in, their old ‘paid up’ pension plans. These plans may then end up being invested inappropriately, and the already complex decisions that need to be made when it comes to drawing down on private pensions in later life can be further complicated.

Having a single portable pot, selected by the individual when they start their first job, would address these issues and, as the pot built up over time, potentially encourage greater engagement in the retirement savings process.

As with any large savings scheme, however, the devil will lie in the detail and there are parallel challenges that would also need to be addressed.

A key area is the need for advice.

As things stand very few employer-sponsored pension schemes include advice, but without it employees may fail to engage, lack the confidence to make good choices, or even take inappropriate actions with their pot…

A key example would be around investment decisions. The growing trend for ‘lifestyle’ and ‘target date funds’ is one area where an absence of advice poses risks, and where this could be magnified by having a single pot with a limited range of investment options.

Monitoring and managing the way a pension pot is invested, and making sure this remains appropriate as an individual’s personal circumstances and long-term goals evolve is key to the plan meeting its owner’s ultimate needs. This will be all the more important if there is just a single pot on which the individual is relying in later life.

It may be the case that for long periods of time all is well with the pampered pooch, but the occasional trip to the vet will be key to its life-long wellbeing. The same will be true of the pension pot for life, where an absence of any advice could see the health of the plan deteriorate.

If a pet needs a vet, a pot needs a planner.