Thursday, 9 July 2015

Osborne's Plan for Pension Poverty

George Osborne is in danger of single-handedly destroying the pensions industry.

First, the so called pension freedoms. I’m not sure his opposite numbers in the DWP knew it was coming. Definitely his initiative- and with unforeseen (or seen and discarded) consequences. By copying the Australian model, we are in danger of opening up the nation to ‘double dippers’ as Australia calls them. People that take their cash, miss-use it, or miss-calculate and end up dependent on the State to survive.

And now a consultation document considering scrapping tax relief on pensions. Throughout my 38 years in the pension industry, alongside company contributions, the one thing that ‘sells’ pensions to youngsters is the tax relief. If pensions get treated the same way as ISA’s, then ‘goodbye pensions’. The industry becomes a savings industry, and over time (with unforeseen consequences and/or an uncaring Government), people will find that they didn’t save enough and can’t live on what’s there in retirement.

Short term treasury gains are in danger of sending the next generation into retirement poverty.

Monday, 8 June 2015

Time Will Tell

"The pensions industry has had over a year to prepare for the changes- and it is encouraging some firms have risen to the challenge. But others seem to be failing to move with the times...."

So says our new Pensions Minister Ros Altmann.

It's all to do with time, not 'moving with the times'. Every provider want to move with the times in the sense of moving with the market. But a year is an incredibly small time to turnaround one of the biggest pension changes in a century. Better not to offer than to get it wrong, as, I fear, many will, either in product or pricing.

Well done to Friends Life for not cashing in cheaply, but in reviewing what is best, and the timescales needed to do so. It may be resources. It may be the merger with Aviva. But better not to go there than to offer the product and fail.

The Daily Mail sees it as a U turn. Maybe it's more like parking up in a layby and letting the market mature first.

David Cameron needs to be careful in warning of a crackdown on providers failing to offer the 'freedoms'. Time (again) will tell whether those that have rushed to market have got it right.

Tuesday, 21 April 2015

Translating Pensions

Well done to Louise Farrand of Pensions Insight for her blog on pension phrases she would ban. I agree ‘On-Boarding’ is not a verb and never should be!

It got me thinking…..

How do non-pension people understand the jargon we throw at them? Maybe they don’t.

Here’s my own selection of pension phrases that may have very different meanings for the population at large. There’s a few you may have to think about first. Any more suggestions?


Abatement – A posh flat

Accrual – The opposite of kind

Actuaries - Flying performers

Amortisation – French for love on a train

Blended – A milk shake

Commutation – Travelling to work

Concurrency – A payment method using large shells

Discontinuance Basis – How shops sell end of line products

Fiduciary – Fido’s friend sees Harry (think about it….)

Glide path – Slipping over on a night out with the lads

Longevity Swap – Exchanging time share apartments

Middleware – Clothes worn in Lord of the Rings

Mortality Drag – Dangerous car racing

Offsetting – Losing at tennis

Pre-Crystallisation – Going into a jewellers shop

QROPS – Wheat

Tactical Asset Allocation – Winning on a games show

Targeted Return – Winning on a games show

Time Weighted Return – Getting fat

Wrap – From Pret

Yield – Wrestling manoeuvre

Zombie Fund – Clothes purchased for Emo wardrobe

Wednesday, 25 February 2015

Common Sense and Efficiency

The latest research from Alliance Bernstein carries no surprises. It says that the consumer expects a common sense approaches to investment- a feeling of control but without certainty of outcome. A combination of good governance and a sensible default fund is expected. But consumer common sense also says it’s okay to expect a spread of outcomes at retirement.

What is also expected though is flexibility and freedom at retirement. That’s fine and good if we know what we’re doing. The NAPF tell us in Pensions Expert that we don’t know what we’re doing because the Government has failed to give us the detail. With 30 working days to go before the pension freedoms, what the consumer doesn’t want is someone telling them that ‘yes, the freedoms exist’, but ‘no, you can’t benefit from them because we don’t know what to do.’

Will we get the detail in time? Or has election fever already affected output?

Common sense and efficiency from the Government would be welcome right now.

Friday, 6 February 2015

A Vote For The Pensions Manager

Professional Pensions Magazine has started this year’s search for Pensions Personality of the Year. Was there ever a greater oxymoron? Pensions and personality. Not usually held in the same sentence. And yet…

When I started in pensions 38 years ago (first job Clerical, Medical & General Documentation Clerk- only staying for a short while to bring in some money. Not interested in pensions….), pensions really was a bit of a backwater. How times have changed.

Contracting out, Maxwell, the Goode Report, personal pensions, mis-selling, the Turner Commission, DC takeover, surplus and deficit, Auto-enrolment, pensions freedom…. And much more. Headlines in the Daily Mail and Daily Express on a regular basis. Scare stories mostly.  Much of it driven by an ageing population.

Nevertheless. A pensions personality? The well-known names tend to be self-publicists. I vote for the little known pensions manager working long hours for an employer that doesn’t understand and dealing with a government that can’t help but meddle.

Monday, 22 December 2014

Ten Pension Predictions for 2015


1.       A lack of clear and detailed regulation relating to the new pension freedoms.

As April draws near, many will be shouting loudly for clarity on detail, but it won’t arrive. Political parties will be in election mode and the April ‘new start’ will be hindered by poorly thought out regulation.

2.       Increasing pension scams.

Inevitable with the new pension freedoms. And frequent too, until the new systems get bedded in and the new government knows what to do.

3.       Appalling pension headlines.

Probably led by the Daily Mail as usual. People defrauded of pensions. People confused by the new freedoms. Anything to sell a paper.

4.       Quiet success with new products offering good customer value.

Probably won’t make the Daily Mail, but many providers will successfully navigate the new legislation and come up with quality, innovative products at a reasonable cost.

5.       New quality systems.

This has been ongoing since auto-enrolment was announced, but providers are making good strides with new data management tools integrated to pension provision. Again, unlikely to trouble the Daily Mail headline makers.

6.       Covenant worries.

No predictions here on a Russia collapse, Islamic militants and all the rest, but whatever happens in the world affects investments. And with that in mind, trustee covenant concerns regarding the remaining DB plans will increase.

7.       Adverts relating to not cashing in your pension.

As the new freedoms kick in, how long before we see adverts and articles relating to the need to think before you spend?  In Australia (a country we seem to be mimicking re pensions) it’s called ‘double dipping’ - people who spend their pension and then live off the Sate.

8.       Strengthened DC governance.

Whatever government is in power, I expect some firmer legislation around DC governance and management, akin to trustee governance.

9.       Pension Apps that work.

With a continued move to everything being in front of you on a smart phone, pension apps will come of age.

10.   Closure of small and medium pension schemes.

Whether DB or DC, there will be closures, mergers and buy-outs of smaller schemes, as the new legislation and auto-enrolment continue to change the landscape.

Wednesday, 26 November 2014

Pragmatic Steps Into The Unknown

I welcome the common sense approach adopted by the Treasury in not, after all, trying to fine individuals who take a pension pot and fail to advise earlier pension providers they also have benefits with.

The revised guidance extends the deadline from 31 days to 91 days and that states that only active providers need be contacted. This gets around the problem that individuals may well have pensions with providers that they have simply forgotten about. I know that shouldn’t happen, but not everyone loves pensions as much as me – and you, presumably, as you are reading this.

Common sense has prevailed.

The major problem remains however.  I’m not sure anyone, including the government who introduced the changes, knows exactly what is going to happen when the full freedoms on pensions come into force. Will there be reckless decisions to cash in pensions? Will advice be adequate? How will the government react to those who take, spend and then come back, begging cap in hand?

One thing is for sure. To change the analogy, the genie is out of the bottle and no future government will be able to put him back.

A pragmatic step by the government with regard to individual fines. But nevertheless, it’s pragmatic steps into the unknown.