Trip of a lifetime

Last month, I spent two weeks climbing mountains in the Himalayas.

Believe it or not, trudging up and down snowy mountainsides for several hours each day, crossing crevasses and camping out in the intense cold left me very little time to think about pensions…

But I did have one moment of pensions insight, after I was evacuated from the side of Mera Peak, suffering from altitude sickness.

You see, around this time last year, when I was first toying with the idea of taking a month off for this adventure, one question weighed heavily on my mind.

High-altitude mountaineering is a difficult challenge that defeats many – so how do you give yourself the best chances of success?

It's a numbers game

A highly experienced mountaineering friend told me that success rates are based on four factors:

25% depends on your fitness. That’s why I put in months of training before flying out and dropped several stone. And that’s one of the reasons why, once we arrived in the Himalayas, we spent more than a week simply going up and down 1000m every day, so our fitness could build.

25% depends on your mental state. As with any sport, you have to focus when the going gets tough – and in cold, isolated conditions in the mountains, the going gets very tough. You need to be resilient to get through it.

25% depends on how you look after yourself during the expedition. Are you eating the right things? Are you resting enough? Are you taking care of your personal hygiene, given the tough physical conditions?

25% depends on luck. Is the weather bad? Do you get altitude sickness? These are the things which are largely or completely out of your control.

Sadly, it was the last factor which got me. I ended up suffering from altitude sickness, which I did not anticipate at all, given that I had completed several challenging climbs in the past.

Mountains, but not pensions

Those kinds of odds would never work for pensions, though.

You can afford to leave 25% of your Himalayan adventure to chance. The outcome, if things go wrong, as they did for me, is painful but likely not the end of the world.

But you can’t afford to leave 25% of your pension to chance.  The outcome, if things go wrong – being short of money in your old age – can be disastrous, affecting your entire quality of life.

Thankfully, that doesn't have to be the case.

Here’s how I see the success rates breaking down in pensions:

25% is down to putting enough money into your pension pot, throughout your entire life.

You need to invest capital – probably more than you think, and at an earlier age - to ensure that there is money there to grow.

25% is down to being invested in the right funds and products.

Although this sounds like luck, it really isn’t. You, your advisors and pension scheme trustees can make smart decisions here, which brings me neatly to points 3 and 4…

25% is down to getting the right advice.

Most people are not pensions experts and need professional help making the best decisions around their pension. This is true throughout their working life but particularly around the time of retirement, when you need to decide how you’ll take your pension and how to maximise your returns in the last leg, before you leave your workplace.

25% is down to having your pension scheme governed and monitored appropriately.

Many pensions disasters are entirely foreseeable. If your trustees do their job, they can identify and correct serious issues such as a scheme that is not delivering good enough outcomes, risk that is not managed properly, or records that are not kept correctly, limiting damage done.

And ideally, they can prevent such issues cropping up in the first place, helping your pension scheme run smoothly and achieve optimal results at all times.

It's not a matter of luck

So, as you can see, very little to do with pensions needs to be left to chance – or luck.

Some of it is down to the individual, who must actively manage their financial affairs and take responsibility for investing regularly in their pension. But much of it is down to us -- the companies – who are responsible for encouraging individuals to save more and earlier; giving them access to good advice; and ensuring that their pension scheme is well-run and invested in the right places.

With all these measures in place, we can help ensure that when the time comes for them to retire, they can do so without financial stress – almost 100% guaranteed.

Personally, I prefer those odds…!