Tuesday, 29 July 2014

Crossing Pension Borders

The idea of a Pensions Passport is not new, but its time has come. To have one location that holds all your pension information from the multiple employers you have worked for, all in the same format and all readily accessible is something that can be done with today's technology- and should be done.

It should hold all the State pension data together with any and every pension from other sources -all held in the same way, in recognisably the same format.

Management of data has come a long way in a short time. This kind of thing is now achievable. Borders between pension schemes in the UK can be crossed easily in this way and the full information available for advisers means they can concentrate on the advice and not spend endless months gathering the information in the first place. There's a growing enthusiasm in the pensions press for a Pensions Passport and it might just promote enough enthusiasm to get the job done.

Wednesday, 16 July 2014

Grey Gap Years

'.....the idea that people have one job that they do all of their lives is “history” and second careers will become increasingly common for the over fifties.' Here says the Pensions Minister Steve Webb in the Daily Telegraph.

He's right.

The retirement 'cliff' - in work one day, out of work for good the next day - is increasingly uncommon. And a good thing too. The shock of retirement has led to many an early death, due, I think, to a sudden lack of purpose and lack of appreciation.

With the recent pension changes, we are moving towards a Lifetime Savings Account (something I've championed before) and considerably more flexibility in how we take our tax advantaged savings.

It will also allow for the Grey Gap Year, another suggestion from our Pensions Minister. I'm not sure it will look like a student gap year. Shorter and possibly with more purpose to it (!), but a good time to step back from work, assess, prepare and move back in to part time work, or even a different career.

All possible thanks to these changes. And thanks to the internet revolution. So much can be done from home now. Whole careers can be built around access to the World Wide Web (he says, writing this from the local pub due to BTs complete inability to provide broadband at our new house so far!)

Wednesday, 2 July 2014

Pensions in Unexpected Places

When you talk about pensions, certain pictures come to mind. Stock pictures used by many a journalist. An older couple walking along a sea shore. A piggy bank, preferably pink with a smiley face. Coins in a jar.

They're not bad images. At least it breaks up the text.

But how about pensions in unexpected places? One of the aims of pension awareness day on 15th September  is to try and get the pension wrist band into unexpected places! Maybe you can help? Order your wrist band. Take a photo of you with the wrist band in an unexpected place. Send your 'pensions selfie' to Pension Geeks. The best pictures will be on the site.

And the message? All of us in the pensions industry need to try harder to get pensions out there. And even the unexpected places (and people) need a pension.

Monday, 16 June 2014

House Moves and Pension Moves

Just recovering from moving house, so therefore catching up a bit with all that has been happening in the world of pensions.

(Incidentally, well done to all the various third parties, institutions and providers –and especially the Post Office- for responding so well to our house move. All except BT that is. Did you know you can’t order broadband if there is no recognised house phone? Actually there is a house phone- but it’s been offline with the house being empty. Anyway, BT rant over....)

The main pension move of course has bee CDC’s. Not new, but a new energy for the idea post Queen’s Speech. And Steve Webb linking it to his Defined Ambition project. Is it really DC+ (to use a Webb phrase)? Sort of.

Plus in terms of increased certainty by way of volume. Plus in terms of lower costs, again due to volume. But not plus in terms of additional guarantees. The pot can still go down as well as up. There’s no protection even on pensions in payment.

I remember managing a Dutch CDC for a large international company. The news was not good one year. There were going to have to be reductions in pensions in payment. It was a hard one for the local Dutch company to manage in terms of a news story that could get out to the press. No one wants their pensioners to suffer. The US parent company didn't like it one bit. How did we get to this, they were asking? It was a communications nightmare.

What looks good on paper and works logically for pension professionals is still hard to explain to a member. Especially a pensioner who’s just found out they are getting less in their bank account each week.

Nevertheless, I think it’s a good step forward so long as we can manage the message with the members.

Wednesday, 28 May 2014

In Modest Praise of the Active Manager

There’s no doubt active managers are under the cosh right now. The Hymans Robertson findings show that active management, after paying fees, has achieved little or nothing for the Local Government funds. Michael Johnson of the Centre for Policy Studies sees no on-going active role in listed assets.

The problem is the solution. The solution seems to be passive management and passive management follows the herd. Down as well as up. The herd aren’t always right.

But it’s a hard job to convince the investor of that. In the age of defined contributions, it’s the member that needs convincing, not so much the company. And the individual investor is cautious. State Street research shows young investors, often new to pensions via auto-enrolment, are averse to risk. They don’t want to see decreases on their benefit statements -and they find it hard to rationalise that they should save at all if they can’t get the money until retirement.

Back to communications here. If the State Street conclusion was to be followed in practice, you end up with extreme caution, cash and bonds, lack of growth and potentially, a lack of pension. The long term investor needs to accept a degree of risk. Not to do so is to live in poverty in retirement. How we need that pension advice and education aimed at the member!

There is a role for the active investor in both defined benefit and defined contribution plans. They can add value, especially when everyone else is doing the same thing. Hymans results are disappointing but not conclusive to the demise of the active manager. Fees can be an issue. And communicating risk positively; even more so. But the demise of the active manger? Not while investment tactics can still produce superior returns when compared to a tracking computer.

Monday, 26 May 2014

Communicating the Brand

Well done to Brafton for coming up with this search engine optimisation infographic. There's a clear need for companies to work with social media if they are serious about growth. And a clear need for that to be driven through blogs and information based articles, not just adverts.


Wednesday, 7 May 2014

A Long Road

It’s pleasing to see the views in the press that the new DC flexibility could increase member savings (Pensions Expert). I agree. There is room for optimism. Fewer restrictions on the pension should result in more willingness to save.
Another article, this time in Professional Pensions, records the latest LV survey. The income of the average retiree is almost 24% less than the minimum wage. There’s a lot of stats behind that statement of course, but one thing is clear, the new flexibility HAS to increase member savings. The savings gap is growing. We’re on the right track, it’s a good start, but (to retain the track analogy), it’s a long road.