The Bitcoin scam – that’s on your feeds today.

Screenshot 2019-04-23 at 06.42.11.png


Take a look at this link,

It purports to be the Mirror telling people they can make £1,000 a day trading bitcoin on an automated platform. All you have to do is feed in £190 and away you go. The algorithm buys and sells bitcoins and you put your feet up watching your account balance multiply.

The link appeared on my twitter feed this morning and it’s probably on your too.

Screenshot 2019-04-23 at 06.43.21.png

sounds too good to be true- is too good to be true.

On a trading platform, every buyer must be matched by a seller. If not then we have a bubble. Back in the 18th century, people bought into the South Sea Trading Company in the belief that its shares could only go up, people bought into black tulips, the Equitable Life and CDIs for the same reason.

So what in heaven’s name is a famous newspaper – the Daily Mirror doing running what appears to be advertorial.

Well because this is a scam. The website that looks like a Mirror website is not, every single link on that site leads you to a scam run by Crypto Cash Fortune.

Which means that ITV’s Good morning Britain becomes complicit in the scam too.

Press the link on this screenshot of the ITV program at the top of the article and you get through to this website

Does Rose Hill, the Mirror reporter supposedly endorsing this product, know her article  has been hijacked like this? I’ve written to ask her.

Do Susannah Reid and  Piers Morgan of the ITV’s Good Morning Britain know what losing even £190 can mean to a family on the breadline? And it won’t stop at £190- we all know that people pile in more and that’s when they lose their fortunes.

Which is why Piers and Susanna are endangering ordinary people’s finances – with such gormless incredulity.

Screenshot 2019-04-23 at 06.30.13.png

Does anyone really believe that an automated trading platform investing in CFDs is going to be a sensible investment for ordinary people?

Does anyone think that Steve Jobs, Richard Branson et al are talking about Crypto Cash Fortune?

Of course not, these endorsements of Crypto Cash Fortune are as fake as everything else on this fake website

Look everyone, this is an American organisation with no FCA authorisation using ITV and the Daily Mirror to sell an extremely risky investment as a get rich quick scheme.

How can this possibly be right?

How can this article be on our social media feeds? How many unsuspecting readers will take Rose, Piers, Susannah’s, Richard’s Warren’s and Steve Job’s word for it?

Crypto Cash Fortune are using all kinds of spoof websites to run what they call advertorial. I’m calling the Mirror and ITV because their commercial interests are at risk from this.

A scam is a scam is a scam; these guys will be stopped by the Regulators eventually but for now it’s up to us to make sure people are protected.



The Disclaimer on the website says

Earnings and income representations made by Crypto Crash Fortune, REAL_HOST (collectively “This Website” only used as aspirational examples of your earnings potential.

The success of those in the testimonials and other examples are exceptional results and therefore are not intended as a guarantee that you or others will achieve the same results. Individual results will vary and are entirely dependent on your use of Crypto Crash Fortune.

This Website is not responsible for your actions. You bear sole responsibility for your actions and decisions when using products and services and therefore you should always exercise caution and due diligence. You agree that this Website is not liable to you in any way for the results of using our products and services. See our Terms & Conditions for our full disclaimer of liability and other restrictions.

This Website may receive compensation for products and services they recommend to you. If you do not want This Website to be compensated for a recommendation, then we advise that you search online for a similar product through a non-affiliate link.

Posted in advice gap, age wage, pensions | 2 Comments

Contingent charging – a conflict too far

Screenshot 2019-04-22 at 06.57.40


BSPS was always going to cause collateral damage. The aftershocks of the £3bn that left the scheme during “Time to Choose” are now being felt by financial advisers as the testimonies in this article show.

The advisers are talking of their struggle to get professional indemnity insurance to continue offering advice on whether to take a cash equivalent transfer value from a DB Scheme.

One adviser, commenting on Darren Cooke’s testimony writes.

This is the biggest threat to small firms since I’ve been in this business. I think lots of companies will be for sale this year which will drive business sale prices down. Some might just have to close the firm down and see if they get another firm to take on their clients. The Regulator should have seen this coming, it was an easy way for unscrupulous firms to make a quick buck and clear to see.

The comment is insightful on a number of levels. Firstly it shows how vulnerable IFA businesses are to reputational issues such as the PR from Port Talbot. Then it shows how dependent many IFAs have become on the revenue streams from transfer business and finally it demonstrates how reliant IFAs are on the FCA to maintain standards among them.

Underpinning the comment is the dilemma at the heart any business model, to what extent do you compromise on long-term value to receive short term profit. This conflict can be expressed in many ways but let’s focus on the matter in hand, that around half of the transfers that happened over the last three years , were not satisfactorily advised on – according to the FCA.

In the short term, grabbing assets into a vertically integrated advisory model at £400k a pop is a win- win -win. The adviser gets a fee  for implementation which is paid for from a tax-exempt fund without VAT and with zero impact on the client’s bank balance.

The adviser gets ongoing advisory revenues on the money and possible a split of the management fees if the firm are involved in managing the funds. These fees too are from a tax exempt fund and not liable to VAT. They are not – under contingent charging , met from the client’s bank account, they are a charge on retirement income.

It is quite possible to earn 2% upfront (£8,000) and 2% pa on the £400,000 – the average CETV from BSPS. These fees are payable to retirement and – should the client choose to drawdown on an advisory contract using the IFA’s fund management service, they become part of the advisory firm’s embedded value.

What is happening is that the retirement funds of clients are funding the retirement of advisers.

This is the conflict that many IFAs face and it is only now, as FOS limits ramp up and PI shoots through the roof that the impact of those conflicts is being felt.

When will IFAs admit defeat?

It is all very well blaming the FCA for not seeing this coming. But the conflicts created by contingent charging on transfers were clear to see from day one.

Even now IFAs cannot admit defeat, that is because so much of the embedded value of their businesses is dependent on the recurring income on money transferred from DB plans and the positive cashflows of easy transfer fees, still sitting on the P/L.

Many IFAs are now caught on the horns of a dilemma, they have built businesses which are now so expensive to insure that the embedded value is falling and so are cashflows.

But admitting that contingent charging was wrong in the first place is a much wider issue. Many of the insurers and SIPP providers who provide the wrappers and platforms to which DB wealth has now transferred, are also in danger.


When will contingent charging be banned?

This is such a sensitive issue, that most providers won’t even talk about it. The IGC reports published this month make no mention of transfers. There are shareholders who should be asking questions about how much of the recent revenue successes of quoted firms such as Quilter, SJP, Prudential, Royal London and Aviva are DB transfer related.

Some insurers – such as Aviva have openly stated that contingent charging should be banned.  

But the general public comment from advisers and product providers is that contingent chugging should stay.   Steve Webb has out strongly against banning contingent charges. The matter has been discussed by Paul Lewis. The matter has been debated in parliament.

I suspect that the only thing that will stop the talking and get a ban in place would be a change of Government. There is too much of this Government in the wealth management industry (Rees-Mogg down) for the FCA to ban contingent charging. The FCA is conflicted too.

So contingent charging will continue to be justified as the way to bridge the advice gap where the cash-poor can become cash rich by spending vast sums dismantling their pensions- largely for the benefit of those who advise them.

The FCA will continue to consult.

I will continue to bang on about this and those reading this blog will continue to feel uncomfortable that I do.

Contingent charging is the root of all transfer evil. If the IFAs really want the FCA to lead, they should admit defeat, but they won’t – they’ll hang on in hope that somehow things will get better.

They won’t.


Posted in advice gap, BSPS, pensions | 2 Comments

St James Place GAA Chair Statement- a must read

There aren’t many employers or policyholders that SJP run workplace pensions for, but though they are few, they merit a mini-IGC – known as a Governance Advisory Arrangement (GAA).



The SJP GAA Chair Statement is an excellent document that looks at value for money within policies used by SJP customers as workplace pensions.

It is a must read because it brings an institutional perspective to a retail issue – that of vertical integrated advice and product management.

This is the second time I have read this report and for a second time, I am highly impressed.




Given that ‘value for money’ inevitably assesses all the benefits received in the context of the charges levied, the GAA’s opinion is that the value for money varies from good to poor. When considering the earlier series of plans, policyholders with large funds and Series 3 policy holders which are more than 10 years into their contracts may receive good value for money. Policyholders with smaller funds and other Series 3 policyholders with less than 10 years in their contracts receive lower value for money. Smaller funds represent a large portion of the early series of plans. Series 4 policyholders pay different and simpler charges with, overall, a similar level of value for money. Series 4 policyholders represent the majority of policyholders

Policy charges are easily assessable, but the investment strategies pursued by SJP advisers are varied – tailored to the needs of each customer. The only exception is the SJP staff scheme which is invested in SJP funds and administered by SJP/

So the GAA are right to point out that without better reporting it cannot do its job.

However, the GAA was not able to conclude that St. James’s Place reviewed the outcomes for policyholders individually or in aggregate in a way which fed back into the oversight of the model portfolios. This was particularly pertinent for the SJP staff scheme where there is no advice.

The Chair’s Statement carefully picks its way through these difficulties. The tone of the report is formal – the report is there to be read by professionals , this is not a populist report. It’s tone is perfect and gets a green.

Value for Money Assessment

Although SJP are not as other providers , the GAA looks to assess value for money and concludes that while some policyholders are getting value for money, some most definitely are not.

It is not very easy to see who is winning and who is losing, not least because SJP don’t seem particularly interested in opining on what good looks like.

When the IGC inquires about the transaction costs within the workplace pension investment strategies – they come up with some startling results.

As the majority of SJP funds employ active management these costs are higher than other providers generally. The highest disclosed at June 2018 being Alternative Assets at 1.08%. High costs like this can erode members fund values over time, although the GAA note that the picture is mixed with the lowest transaction cost disclosed being minus 0.38% for the Absolute Return fund.

Since the dispersion of results is twice the workplace pension charges cap, you’d have thought this would have solicited some urgent comments from SJP. This does not turn out to be the case.

SJP have not commented on whether the transaction costs are in line with expectations; this is something we will look at further next year.

The “money aspect of the VFM assessment looks extremely toppy. If transaction charges of more than 1% are added in, then they begin to look excessive. The negative slippage on the Absolute Return Fund is worth of some kind of statement, if only of congratulation!  I wonder how on top of these costs , SJP advisers are.

Although I think the VFM assessment methodology fine, I am disappointed not to see more analysis of outcomes.  The best way for this to be done is to analyse the Internal Rate of Return of individual policies and benchmark them against each other. That would at least get to the bottom of what is working and what isn’t.

I’m giving the GAA an amber for its VFM assessment. What is there is good, but there is too little here for the VFM assessment to be meaningful.



SJP is a quoted company with over £100bn under management. It is genuinely surprising that it does not want to adopt a full scale IGC (something I’ve said in previous years).

As far as I know, the GAA is the only governance mechanism that can ask the difficult questions about charges, costs and value – from inside the tent. Certainly it is the only one to publish its findings.

The next steps section of the report makes it clear that the GAA are not going about their work  quietly


In the next year the GAA will:


  • Further assess the extent to which St. James’s Place governance monitors policyholders’ portfolios effectively.
  • Review the process by which SJP Partners tailor the investments for each policyholder.
  • Further consider policyholder feedback methodology.
  • Assess the future consideration of charging structure.
  • Assess the extent of Environmental, Social and Governance investment considerations.
  • Assess the extent of any actions taken around transaction cost analysis.
  • Assess the investment review process for any exceptions.

For a mini IGC, the SJP IGC is not pulling its punches, I give it a green for that, it is doing  an effective, if under publicised job


In conclusion – this is a must read


I am really pleased that the GAA have again written an authoritative statement of what SJP are up to as a workplace pension provider.

In doing so , they provide valuable insights into the vertically integrated structures that SJP employs.

This is a must read for people who want to understand how over £100bn of the nation’s wealth is managed. Like it or not, SJP sets the pace and the benchmark for other such firms.

This statement is of great value.



Posted in pensions | Leave a comment

Are IGCs and Trustees worth it?





The best test of the value of an IGC or an occupational trust board is to imagine how things would work without one. Before 2015, insurers ran workplace pensions for multiple employers using the bald trust of a GPP operational interfaces that were what the employer saw. For bigger employers, insurers bespoke communications and can offer an employer specific default fund but no one acted purely for the member. The IGC was supposed to change that.

The occupational pension scheme now comes in two guises – single employer and multi-employer. Unlike a GPP, an occupational pension can provide defined benefits and will be able to provide semi-defined benefits under CDC.  The trustees do the same job whether they oversee a single or multi-employer scheme though the level of scrutiny they are under from regulators varies according to the level of guarantees in the benefit and whether the trust is set up by a single employer , or more commercially for multiple employers.

It’s my view that IGCs and Trustees are as effective as they have to be. If no-one takes any notice of them, they lapse into irrelevance – which is frankly what’s happened to most occupational DC trusts, some master trusts and even one or two IGCs.

I believe that without these fiduciaries, the workplace pensions we invest our money into , would be run for the benefit of anyone but members. Left to their own devices, consultants, platform providers and fund managers would so erode the value of our money that the money we have to purchase a pension at retirement – would be severely reduced.

Proof of this  is what happened before modern governance and regulatory supervision arrived.

The work I have done in 2019

Over the past three weeks, I have read, re-read and reported on the IGC reports produced by the providers of workplace pensions in the UK. These reports do not cover all the pensions we invest in, there is a substantial group of providers who do not have IGCs, it includes SJP (which has a mini- IGC) and many SIPPs that do not operate in the workplace. These products are supposedly “advised”, though the FCA is concerned that many of them have many participants who have lost or sacked their advisers and have very little protection from malfeasance.

I have read these reports with an eye to three things

  1. Engagement – is the report readable and is its tone engaging
  2. Value for Money – “is the report properly assessing the value you are getting for your money?”
  3. Effectiveness – does the report show the IGC robustly pressing for better for policyholders.

I have scored each factor red , green or amber and tried to remain consistent with the work I’ve done in previous years and can present my findings for the fourth time in the table below. I am happy to share the table with anyone who wants the spreadsheet – which includes URLs for every report still on the web. – (no firewall).

IGCs 2019 bright +.PNG


2019 trends

Transaction costs – a mixed picture

2019 was supposed to be the year when we saw how much we really paid for fund management- not just the fees to the managers, but the cost of the management itself.

In some reports we did. L&G showed that you can get cost data from external managers (though their report did give us the kitchen sink). Others managed to give us edited highlights which worked rather better. Fidelity showed a before and after table – which demonstrated how the Fidelity default reduced in cost after discovering last year that members were paying more in transaction costs than to the fund manager. Some reports gave up on getting these costs – which was disappointing. The most bizarre reports were those who discovered high transition charges but wouldn’t tell policyholders which funds had them!

ESG – a start but only a startESG

The reports all had something to say on ESG, but we have yet to see the fruits of this engagement. While some IGCs (L&G and Aviva in particular) have focussed on ESG in prior years, this year every report ticked the box  – and many only ticked the box.

I look forward to a time when we don’t have to talk of responsible investing as an alternative form of fund management but look at ESG as an integral part of the value managers bring. Only when ESG is part of the VFM assessment – will it be fully integrated.

Too many of the reports still talk of the risks of adopting ESG, not enough of the risk of ignoring it.

The wider context

The terms of reference for IGCs were set out in 2015, since then we have seen huge changes in the pension landscape.

One example is the extent to which DB rights have been exchanged for DC rights through CETVs. Very little of the billions transferred found its way into workplace pension. Part of the reason for this was that financial advisers prefer to use vertically integrated self invested personal pensions. Part of the reason has been a reluctance from employers and providers to promote the workplace pension over more expensive alternatives.

I am disappointed that IGCs have not extended their terms of reference to consider how these plans could be promoted to people transferring. This goes as much for master trusts as workplace GPPs.  There is a job to be done to compare the available workplace pension with the promoted advised solution and perhaps this is something the FCA will look into. It would be better if the IGCs (and occupational trustees) , got on the front foot.

Port talbot

Reactive or proactive?

The best IGCs are proactive, looking for new and better ways to assess value for money and improve outcomes. They look at best practice in communication.

But I sense most IGCs are more interested in meeting the requirements of the FCA, rather than going beyond.

It would be good to see IGCs looking at workplace pensions capacity to help people spend their pensions (rather than rely on transfers to specialist drawdown products, annuities or “cash-out” to bank accounts.

It would be interesting to hear the thoughts of IGCs on the opportunity and threats to their policyholder from CDC.

The FCA have said they are looking to extend the scope of IGCs to cover decumulation and non-workplace pensions, it would be good to see IGCs pushing to do more for policyholders and encouraging the FCA to give them greater responsibility.


In conclusion

It has been a great pleasure reading this year’s crop of IGC Chair Statements. During the year I’ve got to meet most of the Chairs and they know how keen I am to help continuous improvement of both the Statements and the work that goes on throughout the year.

To be relevant, IGCs have to be read. It is too much to be expected that the become general reading for policyholders, but there is no reason why IGCs shouldn’t be more in their faces.

Thanks for reading this, please promote the work of IGCs and interact with yours. They are the best way ordinary people have of improving value for money for their workplace pensions.

The same can be said of occupational trustees, who I hope to put under similar scrutiny in months to come.

IGCs 2019 bright




Posted in age wage, CDC, pensions | Tagged , , , , | Leave a comment

The Government’s pension stealth tax

virgin stagecoach.jpg

What are we to make of the disenfranchisement of Stagecoach from rail contracts?

I am extremely concerned by this statement , reported in the Financial Times

 Stagecoach said its recent bids had been non-compliant “principally in respect of pensions risk”. Mr Griffiths and others in the industry said the Pensions Regulator had been suggesting train operators would need to make increased contributions to the railway pension scheme in case the government did not fully fund it. Stagecoach said the gap could be £5bn to £6bn across the sector.

This should be read together with a second statement to be found in the FT report.

 Franchise tenders expected the winner to bear “full long-term funding risk” for pensions, Stagecoach said, which it declined to. While other bidders accepted this condition, Mr Griffiths said the gap “could be very significant over the long term, that was why it was an unacceptable risk and chance to expose our shareholders to”.

On the face of it, Stagecoach are refusing to take a risk transfer from Government to the private sector of obligations to the Railways Pension Fund.

I can quite understand why Griffiths and his partner Richard Branson are crying foul. The Government are moving the goalposts – or rather making the franchisees profit-goals a whole lot smaller. That’s not fair on shareholders and it won’t be fair on passengers, who will get the pass on.

Subsequently the FT have published a second article that hints that t pension clauses in franchisee tender documents is at the Pensions Regulator’s instigation aimed  to protect the PPF from another Carillion and members of the Railway Pension Fund from a weakened covenant.

The article also points out that no-one knows the current state of the Railway Pension Fund’s funding. I was struck by one reader’s comment

Unless the client (franchisee) is is able to separate out controllable risks and ring-fence and pool those, such as pensions, that are uncontrollable they’ll end up awarding contracts to the most cavalier or those with the deepest pockets rather than those best placed to deliver the service.

One  question is why other bidders are prepared to take this risk, another is why members of pension funds which previously had a gilt-edged covenant should be asked to accept a covenant from a rail franchisee in the first place.

A job on the railways came with a state backed pension which was understood by everyone. This point is well made by Mick Cash, general secretary of the RMT railway workers’ union, who warned that his members’ pensions

“are not there to be used as bargaining chips in a row between the train companies and the government”.

Same with schools and universities

Having allowed membership of the teacher’s pension scheme on benign contribution terms, Government is now turning up the heat by requiring schools and universities to pay a whole lot more to participate in the teacher’s pension scheme. For those footing the bill today, it’s a stealth tax on students and parents tomorrow.

This is fine so long as this was always baked into assumptions but it wasn’t and the increased costs are not budgeted for and will become a stealth tax paid by students and parents.

Sympathy for those enjoying higher and private education may be less than for railway workers but the same issue applies. The Government is the insurer of last resort for millions of pensions and the deal between the pensioner and the Government is based on there being a state promise backing the retirement promise.

I don’t get the policy statement that backs up this change in the Treasury’s pension strategy. I don’t see any of these changes in the way the private sector is being to take on public sector pension obligations as a matter of public debate.

I have no particular candle to burn for Stagecoach, other rail franchisees , private schools or universities, but I don’t see why people’s pensions and livelihoods can be put at risk so that the public purse is protected from making good on public pension promises.

Stop me if I am missing something, but I sense that there is something not quite right in all this . I feel like Martin Freeman

Posted in pensions | Tagged , , | 1 Comment

L&G’s IGC returns to form




The L&G IGC Chair report for 2019 and can be accessed from this link from it’s much improved IGC web-page.

Last year I though L&G produced a real stinker of a report and said so.

L&G have my money and many of the employers sourcing workplace pensions through  Pension PlayPen were guided to L&G. I hold the management of L&G in high regard .through their investment company (LGIM) , they’ve innovated, leading the promotion of ESG or what is more commonly known as  “responsible investment”.

L&G are credited with convincing Government not to refer the insurance companies operating workplace pensions to the Competition and Markets Authority. Through its policy and pensions teams , it proposed IGCs in the first place. So the performance of the L&G IGC in speaking straight to members, in offering a transparent view to the value for money they are getting and in effectively lobbying for members and for employers, is of particular importance.

I make no apologies about being very critical of the IGC in 2018, I thought they had taken their feet off the pedal and had produced a lazy report indicative of a lazy year’s work.

Getting back on track

From the moment I started reading the report, I felt something had changed. Here is the focussed and well written statement of the IGC’s responsibilities

Our responsibility to you

We’re committed to protecting your pension. We use our combined knowledge, experience and skills to make sure you’re getting a good deal from your scheme.

This includes (but isn’t limited to) checking that:

• your scheme is good value for money, and the costs and charges are reasonable

• the default funds (the ones you will invest in if you don’t choose something for yourself) are suitable

• the range of self-select investment choices can reasonably be expected to deliver the returns people are looking for to suit their own circumstances and timelines

• you can easily access your savings when you retire, and there are flexible options for taking your money

• you receive clear and regular communications about your pension • you can easily access help and information when you need it, and that customer service is efficient and accurate

We measure how well Legal & General perform across these areas, offer impartial advice when they need an external view and suggestions on how they can improve where needed.

And if they don’t deliver, we have the powers to hold them to account to the regulator, the Financial Conduct Authority

Tone of the report

I enjoyed reading this year’s report which spoke to me in a way that I understood and in a language which was generally accessible. There are times when any IGC report gets technical (the Appendices on funds) but provided these are appendices, I am comfortable.

There is one area where I think future reports can get bett. The chair’s statement is prone to hyperbole.

We’ve continued to be impressed by the quality of people in each and every area of Legal & General that the IGC works with.

(on the sale of the legay book to Reassure) All aspects of the transfer will be reviewed by an independent expert, with oversight from regulators.

We always want to make sure default funds are delivering the best they can for members.

These cases are taken at random but they suggest an imprecision of analysis; faults are found within L&G’s admin which must be down to individual failings – not all the people can be good. If the IGC know in advance that all aspects of the transfer will be reviewed, then their oversight is superfluous and the assertion that the IGC is always on top of defaults is tendentious, it is not for the IGC to be making that claim , it is for the IGC to demonstrate to members that that is what it does. “We’ll be the judge of that!”

My reason for raising these points is to improve the quality of the conversation with members, the IGC does not have to prove itself or justify the activities of L&G in this hyperbolic way. The still small voice is better.

But these are minor areas for improvement, overall I think this report has the right tone and I’m giving it a green for the way it talks to its savers.

Value for money assessment

The IGC are still struggling to get to grips with VFM. They are looking for it in the wrong places and haven’t worked out what really matters to members. In part this is because they don’t understand the dynamics of auto-enrolment and in part because they miss the importance of outcomes over the member experience.

Ironically , L&G are producing excellent member outcomes for the money received , but they are failing many of their stakeholders – especially small employers.

IGC failing small employers

L&G are one of the most widely used workplace pension providers in the UK, this is because they set up many large auto-enrolment schemes in 2012-13 and continued to be active in the mid to small scheme market well into the staging process. They took on relationships with the Federation of Small Businesses (FSB) and promised exceptional service to employers through payroll integrators ITM and PensionSync.

But since 2016 , I have charted a steep decline in its service offered to employers who are required to comply with regulations on auto-enrolment. Many employers complain of not being able to speak with L&G, of sharp increases in the cost of using the link with ITM and third parties (typically IFAs and accountants) complain that their reputations are being tarnished for recommending L&G in the first place.

L&G’s value for money assessment does not take into account the employer’s experience but it should, especially when the employer is spending as much money sorting out payroll issues as it is in contributing (something I’ve heard more than once).

The IGC seem quite divorced from a central dynamic in workplace pensions , that costs to employers of dealing with them, are costs to members. Money that is spent on workplace pensions that does not reach the member’s pot, is bad value for money.

The Chair Statement completely ignores the train-wreck that L&G’s workplace pension has become to many of its participating employers and this continues , despite my , and many other’s protestations. I brought this up at the IGC member’s meeting this year and was reproved for doing so, I bring it up again now as it remains the biggest failing of the IGC.

Anyone reading this statement on administration who has been involved in the problems of the past 3 years, will wince.

Screenshot 2019-04-07 at 08.39.23.png

The IGC must listen to small employers who have complaints about L&G’s support to them. They cannot pretend it is out of scope. They need to make this a priority.

IGC doing good work for members

I am sorry to have to carry on about employer support when I can see so much improving on the member’s side. Last year I was angry with the Chair’s report for delivering adverts from the communication and ESG teams. This year I am pleased to see the promise of those adverts fulfilled.

I am pleased to see policyholders like me getting more value for money and recognise that the insistence within the IGC’s VFM scoring system on good communications has driven this forward

At present the IGC weights all VFM factors equally. They say they will review this in 2019-20 and I hope they will. All external studies, including the NMG report commissioned in 2017 which looked at what savers valued, conclude that people want good outcomes and the experience along the way is secondary to them.

I am also pleased to see the IGC demanding and getting proper reporting on performance but ask that a summary of the fund tables which includes information on Future World – would be helpful as well.

There’s no doubt that L&G’s IGC are well intentioned and that they are working hard towards delivering better value for money for members, but they really need to work out what they mean by “Administration” , include employer interfaces in that and work harder on the promotion of outcomes based VFM metrics.

There is no reason why they shouldn’t, L&G really is providing excellent outcomes for members- I should know.

I seriously considered giving the IGC a red for ducking the employer admin issues but have given them an amber instead. 

I will revert to red next year if the IGC doesn’t take L&G to task and force it to treat its employers fairly.


How effective is the L&G IGC?

I was concerned to read this statement in the costs and charges section of the report

We asked Legal & General to make sure that initial unit charges for Mature Savings members were no more than 1% a year. We were pleased when they did this for active members. But we were disappointed when they decided not to limit these initial unit charges for members who are no longer active.

What this amounts to is an active member discount, something that is illegal for post 2012 workplace pensions (the ones we auto-enrol into). The IGC have not got the legal power to force L&G to treat all mature savers the way, but they have ways of putting pressure on them. One of these is to refer L&G to the FCA.

Whether they do so, depends on whether they feel paid up members of the Mature Savings Group deserve to pay more. If this group of savers are “no longer active ” (contributing?) – it is probably not their fault.

Their employer has most probably closed the scheme or closed as an employer. Why should members be paying more  because of this. Doesn’t this look like L&G charging members to recover costs and is punishing them for what is not their fault really treating customers fairly?

Here is an example of too much weight being loaded into the one word “disappointed”. The report leaves “disappointed” hanging, but I want to see more.

When we read later the rationale for not pressing on this, I am left “disappointed”.

Legal & General considered this (treating active and deferred members the same) but decided against it on the grounds that it wouldn’t be fair to other members of the with-profits fund…

We disagreed with their decision. But as their rationale was not unreasonable, and we recognised that they must consider other factors outside our remit, we decided that we should accept the decision and bring the matter to a close.

I don’t see why the costs of treating customers fairly should be born by the with-profits fund, L&G is a PLC with shareholders who have the capacity to meet these costs from shareholder returns.  What “factors are outside” the IGC’s remit, when it comes to treating savers fairly?

I am not sure that the IGC has pushed as hard as it should have here.

I’m not sure that it’s being totally straight with us about other areas in which it is making claims for itself

Later in the same section we read

We’ve been asking for the drawdown administration charges applied to the members in the WorkSave Pension Plan to be removed and were pleased that Legal & General agreed to do this.

I’m really pleased to see this but I have never read anything in previous IGC reports that was openly critical of L&G’s drawdown charges. I have been very vocal on this matter both to L&G and to the IGC and I’m really pleased that L&G have stopped charging me to have my money back.

For me to be sure that the IGC are really acting in my interests and of fellow savers, I’d like to see something rather stronger than “disappointment” and some transparent criticism of L&G in the report.


In 2018 a lot has gone right for policyholders and the IGC should be credited with having an effective year.

  1. The default fund range is better (including a more responsibly invested version of the default)
  2. The back catalogue of self-select funds has been rationalised
  3. Costs have fallen
  4. The investment administration system has been improved
  5. Oversight of the transition costs resulting from fund restructuring has been effective
  6. Communications are better (especially through the web portal)

The IGC seem involved in all these areas and this report is so much more focussed than last year’s that I am giving it green for effectiveness , with an urgent request to continue the path back to righteousness!

One feels the benign influence of Daniel Godfrey is telling and the keen intelligence and no-nonsense approach to governance of Joanne Segars will hopefully continue this improvement.

In conclusion

The steep decline in the authority and quality of Chair’s reports following the departure of Paul Trickett has been arrested. This report sees the IGC moving back into the black and out of my red-zone.

But it still misses the point on VFM (employers are critical and they are being failed).

It still shows areas where it is ineffective and there are times when the report over-states the mark.

I am an L&G saver and care particularly for fellow savers as I have championed L&G over the years. The inclusion of Joanne Segars on the board is great. The improvement in the Chair report is good and if 2019-20 continues to see the IGC tackling L&G on service and on treating “mature savers” fairly, then they will get a bigger thumbs up this time next year.




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Scottish Widows IGC report – a most interesting read.

scottish widows

The Scottish Widows 2019 IGC report has been published and is available here

In the past few years, Scottish Widows has moved from a quiet backwater in the tidal flow of Lloyds Banking Group to very much centre stream. I have heard anecdotally that Scottish Widows is expected to bring in £50bn of new business in the short term and that the banking group now considers the management of pension and other wealth core to the growth of the group as a whole.

This is the context in which LBG bought Zurich’s DC business (effectively the  Eagle Star /Zurich Assurance corporate book) from Zurich and outsourced the administration of its legacy book to Diligentia.  Scottish Widows is now competitive in most areas of corporate pensions and supported by a wide range of advisers as a workplace pension provider. This is a very different proposition to the one that Babloo Ramamurthy and the remarkably stable Scottish Widows IGC, reported on in 2015.

Sensibly, the IGC has approached its 2019 reporting by looking at the new Zurich Book, the outsourced legacy book and the core workplace business book as separate, How fair it is to have three classes of customer is the elephant in the room. Making this assessment is a challenge that the IGC faces going forward and one it is clearly gearing itself up for. The 2019 report is an interim statement of intent, I sense there is plenty for the IGC to do going forward.

Tone of the report

As I have come to expect, this report is measured, accurate and consistent. If it errs , it is a little boring, it does not purposefully engage the reader as it could, it talks to the reader , but from some distance.

Take this example of reporting on the customer experience.

In general, service performance times continue to see a downward trend since the beginning of 2018, with an average reduction of 20% in customer journey times.

What a customer journey time amounts too and what is meant by service performance times is unclear. These do not sound the words of an IGC but of a Scottish Widows internal report.

I’d urge the writers of the detailed areas of the IGC report (and it does feel as if there are more than one), to focus more on the reader as a lay person and not a pension professional!

Similarly, the report could do with being de-cluttered of wordy titles like this

The experience customers have when interacting with Scottish Widows about their workplace pensions.

Ordinary people don’t interact , they deal or ask. Nobody interacts “about” and “experience” is a rather grim word to describe “what it’s like”.

The stiff formal tone of language is at odds with one of the key aims of the IGC, to get better engagement.

So  I am giving this report an amber for tone, it’s very well written but written for the wrong people, I’d urge the IGC to spend some time with a professional communication team , considering how the tone could better engage ordinary members.

Value for money

The report uses a conventional value for money assessment, described in this picture

Screenshot 2019-04-02 at 06.18.34

This has the virtue of simplicity, but it doesn’t quite tell members the value they are getting for their money, so there is a lot of general comment about fund performance , administration levels and capacity to administer for employers and engage members , but not a lot about individual outcomes.

The IGC clearly haven’t drunk the Kool-Aid on digital engagement.

Scottish Widows has also developed a digital site for employees. Uptake here, however, has been slower, with only 72,000 employees from a potential population of 1,400,000 having registered for the service so far

likewise, they are pressing to know why IFAs don’t like Scottish Widows.

Adviser net promoter scores remain stable, but at a lower level than we would like to see. Scottish Widows is constructing a survey to understand what is causing this and will share its findings with the IGC.

I’d urge the IGC to talk to advisers first-hand , and to do so outside the Corporate Adviser Conference it attended. The damage poor administration and support levels delivered to workplace pensions and their advisers between 2012 and 2016 will take time to repair.

The overall picture, the IGC paints of the three books of business is demonstrated like this

Screenshot 2019-04-02 at 06.17.43

The report is critical of the administration standards in its (formerly Zurich’s) Cheltenham office

I suspect the scoring of the Zurich UK book has yet to be developed and that these scores will be marked up in next year’s report,

The positive picture reflects the research I receive from my company on Scottish Widows performance, it has picked up and the poor returns for Scottish Widows funds in 2018 reflect the aggressive exposure to UK equities rather than mis-management of the funds. This approach has served investors well in the medium term but it is not consistent with the default strategy of the Zurich workplace book and there’s clearly a job of work ahead.

Similarly, there’s a job of work to get the engagement projects initiated in Edinburgh, rolled out for the Zurich customers. My understanding was that the long term aim of Scottish Widows was to use the fund platform offered by Zurich as its principal new business offering. Reading the IGC report , this doesn’t seem to be ready to roll just yet.

I am impressed by the value for money assessment from the IGC, it offers people a meaningful insight into the respective books and is helpful to advisers and indeed to Scottish Widows, in working out what should be done both with legacy and the choices between “modern Scottish Widows” and “Zurich UK”. In the context of what is going on strategically at LBG, the IGC is proving itself very relevant. I give the report a green for its value for money assessment, I hope that next year it will be able to focus more on member outcomes.


Scottish Widows have gone a long way to clean up the mess it had created in its legacy book and its “modern” workplace pensions. I suspect that the IGC had a good deal to do with that . I have praised the IGC in the past for urging Scottish Widows to play an effective part in getting people engaged with pensions, this report highlights initiatives it has encouraged such as the Pensions Bus. Scottish Widows are a force for good in many areas of pension development and again, I think this partly down to the IGC.

I’m also pleased to see that the research Scottish Widows co-commissioned on responsible investment is prominently positioned in the report and discussed at length. This is the one thing that younger members seem really interested in.

I’m not sure about the research itself and I suspect neither is the IGC. The framing of the questions asked to the 2000 people questioned ( a proportion of which were Scottish Widows policyholders) suggests that people were confused by what they were asked.

For example, the IGC reports

“When customers were asked if there was appetite to take ‘some’ investment risk to pursue ESG principles, a majority of customers were resistant”.

I would be resistant to having to take more risk from my investments to have them managed responsibly, My understanding is that responsible investment reduces rather than increases risk. The question could have been asked better.

I hope that the IGC do not take the research to Scottish Widows, without thinking hard about the quality of the research. I fear that if they follow the conclusions of the research, they may be repeating established prejudices inherent in the research questions.

This is not to negate the value of what the IGC has done. I continue to give the IGC a green for its (overall) effective lobbying of Scottish Widows on behalf of members.


This is a good report, it could be bettered with a little re-writing and it could have done without quite so many charts in the appendix. But I welcome proper reporting on transaction costs which is comprehensive, well laid out and useful.

The IGC is clearly effective and working well, it is a success story and deserves wider promotion. I hope that in 2019 , Scottish Widows finds ways to promote the IGC report to all its members, especially to the 72,000 who have signed up to its online service.

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AgeWage goes public!

We started on Wednesday, nervously wondering if we could raise £200,000 from the crowd by the end of May.

We did not count on the support of those we know but we should have done.

This morning we have pushed  to “open”  the link to the AgeWage funding page and it will show that we have all but hit our target in our pre-launch test. As I write we have raised over £188,000.


Last night, I hastily gathered the clan and we agreed that we will press on, raising more than we initially targeted to make our Seedrs campaign a key part in the EIS rise.

And the great thing is that we now have 90 investors who have told us we are worth it. Those who do not know us, will take heart from that. We have – thanks to you – achieved the momentum to make this a momentous fund-raising round.

The rules remain the same for large investors

If you are looking to invest a five figure sum, you may wish to invest directly via our Investment Memorandum which you can request from the site or request from me directly (as several did this weekend). For larger sums, a direct investment can have advantages but these are now diminished as we will be paying Seedrs on all monies received (whether to Seedrs or to us).

So thanks to the direct investors who between them have invested £135,000.

Smaller investors are so welcome

You have the right to remain anonymous if you invest with Seedrs and many of you have chosen that route, avoiding becoming the target for third party marketing.

But – gratifyingly, most of you have told us who you are and your names are visible to new and existing investors. We are incredibly proud that you put your trust in us, and doubly proud that you are happy to stand up and champion.

I am so happy that we have this growing community to work for.

agewage snakes and ladders

Every single investor, no matter how small, is valuable to us. You will be the people who will make us stick to the task, you will be in the forefront of our minds. You are also going to be responsible for maintaining AgeWage’s place on the Seedrs’ pecking order which investors visit, We want to be and stay in the top two rows, you make that happen.

What happens next

We’ve had a lot of people concerned that when they go to they don’t see AgeWage there. That’s because we are hidden.

What happens next is we jump out of our hutch and appear on the Seedrs homepage, hopefully in a very prominent position. Just when this morning this happens, but it will.

And we’ll go on raising money till we have enough (w don’t want to dilute our shareholdings more than necessary but there is a great deal we can do which needs more than £200k!

So get investing and enjoy!

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AgeWage goes public tomorrow – this is why you should invest today!

we need you

agewage snip

Today is the last day before we go public with our crowdfunding. Since Wednesday we have been in private mode and so far 60 investors have invested around £140,000. We have promised today of a further £25,000 meaning that AgeWage will go to the crowd over 80% funded with a strong investor base.

This is unusual and a very good sign of things to come. Once we go live, we can fund for a total of 60 days, assuming we are as successful with the general public as we have been with those who know us, we could be a sensation.

But let’s not get ahead of ourselves. Raising money is one thing, delivering to our investors is another. We are working hard on what we can do and when. We don’t want to be another start up – full of promise – that spent the money without purpose and never delivered its social purpose or a return on its funder’s investment.

Moving into production – the next step

Currently our management team includes me , Chris Sier, Ritesh Singhania and Andy Walker.  We intend to expand this team once we are certain of our finances so that we have the capacity to deliver. We will bring in new people with the skills in marketing to ensure our app has an awesome journey and we’ll build the modelling that people need to get to the financial decisions they need to take.

Our commercial team will build the relationships with partners to ensure we analyse millions of contribution histories and deliver the follow up to our app users.

And we’re going to invest heavily in people who can provide the support you need when you have questions.

Behind the scenes, our technology team in Bangalore will be coding our ideas into applications.

A message for larger investors

But there is never a day when we can afford to take our foot off the gas.  Our message is “don’t delay – invest today”.

If you have several thousand to invest, ask me for our Investment Memorandum which allows you to invest directly onto the AgeWage share register. Today is the last day when we can receive your money without us having to pay a fee to Seedrs, so if you are thinking of investing a five figure sum, do it today.

A message for small investors

Our reason for crowdfunding is to broaden our investor base and have a wide number of champions for AgeWage.  So every new investor is greeted with whoops and hollas in our WeWork office. If you want to get involved, we encourage you to!

Here is how Penny Cogher, a top pension lawyer who invested with us yesterday got in touch

I’m in…yhanks Henry. I think it’s an interesting idea and I’d be happy to get involved
That’s perfect.
We really don’t worry about the size of your investment, we worry if you aren’t investing.  £16.50 is all it takes and you get £3.95 of that back!

A message to all investors – getting your money back!

We think for the long-term but we know that you are investing with a view to getting your money back!

As I’ve just pointed out, everyone gets 30% of their investment back once we’ve closed the round (probably the back end of May). You should also know that you can get more of your investment back if we don’t succeed. You can write off your initial investment against future tax bills if we fail. So only around half of your money is really “at risk”, that’s because you’re investing in an EIS.

But the other half of the money is at risk and at risk of growing very fast indeed. What happens once we close the round is we build out and get a proof of concept that will allow us to raise more money. While this money will dilute your shareholding, it will also mean your shares will be valued at a great deal more.

If we meet our financial projections, the target is that we create proper liquidity for you from three years out. Seedrs offers a secondary market in shares (a bit like betting in running if you know what I mean). But the really big returns will come from the sale of the business, either to a trade-buyer or to the management team. We could also float on the stock market.

Whatever your reason to invest – we hope you do!

We really don’t mind how little or how much, we want you as an investor! We’d love to have 100 investors by the end of today and we’d love to be 100% funded. These things are possible if you work hard for them and we’ve worked hard for AgeWage.

So press this link and get your money down – please!

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Thanks to you – AgeWage smashed day one!

agewage wework

Smashed it.

Thanks to everyone who invested in AgeWage yesterday. We have smashed all expectations. In what is down as a 66 day campaign we raised well over half our funding target in the first 12 hours. Collectively you invested nearly £105,000 in amounts ranging from thousands to the minimum investment of £16.50

To remind you, here is the link to our crowdfunding page on Seedrs

For those of you who want to know what AgeWage about, here’s our pitchbook

If you want our business plan, a comprehensive series of spreadsheets , then please mail me on  We require an NDA which I can quickly turn around.

Here are the great things!

Our landlords – WeWork got wind of AgeWage crowdfunding, saw our numbers and came to my desk with a bottle of Prosecco! This is the kindest of things

Here are a few of the messages I received yesterday.

I’m in. I love this idea, there’s a real market need as currently no basis for comparative rating of pension funds. This “power” needs to be within the mandate of the member.

Good luck, and if I can help, let me know.
Henry. Thanks for the opportunity, I’ve just invested a further (just over) £4,000 which I’m sure you will steward carefully, good luck.
It’s very exciting that you have raised so much so quickly! Very well done!

Building on this.

The most exciting part of all of this is that we really haven’t started yet. We are in private mode, only the people who read my blog and are connected with me on social media are seeing all this.

We don’t go out to the wider public till next Monday!

When we do, we have an opportunity to be pretty well at target, meaning that we will be considered a success by the algorithm of the CrowdFunding platform of Seedrs.


The way that algorithm works takes into account not just the amount of money invested but the number of people who are investing. Currently we have relatively few investors compared with how much we’ve raised.

So if you think you have to invest thousands to be a shareholder – think again! In the world of crowdfunding, your £16.50 is very important.

And once we’ve got your tax back – that £16.50 shrinks!

This business is eligible for EIS relief – providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

But as a minimum (and do read the small print) you should see your £16.50 (or multiples thereof) shrink to £11.55 and – if you pay a lot of tax – forget about CGT when it works and write off your losses against tax, if it doesn’t.

Seedrs provide a handy tax calculator which you can access here.

Tax is complicated but Seedrs make getting your tax back a simple business.

What I want you to do – please!

It’s a lot easier to go to some private equity house for your money, or get a rich sugar daddy type sponsor. Getting money through crowd-funding is a ball-ache with a lot of due diligence to even get to the Seedrs platform.

As far as we know, no organisation like AgeWage has gone this route and we’re proud to be the first.

But it wouldn’t be the same without you.

Can you, when you have finished reading this , press the link and buy at least one share?

And then tell your friends!

agewage evolve 1


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AgeWage needs you!


we need you.pngagewage snip


I , together with Chris Sier and a group of business minded pension experts am raising money for AgeWage.

You can help us achieve our goal of raising £200,000, ideally by April 5th (the financial year end).

All you have to do is click this link


As far as we are aware, pensions is virgin territory for the big crowd-funding platforms.

It’s a big step for our start up to be the first pension app to get its funding from the people that will be its customers and to be sure of success, we need the pump to be primed by you!

For as little as £16.50 you can buy a share in our company and seed the great things we plan to do.

Here they are

  • We will work with life companies, their IGCs – with master trusts and large DC company pensions and we will provide millions of people with an AgeWage score.agewage evolve 1
  • The scores will tell you how much value you’ve got for the money you’ve investedAgeWage evolve 2
  • When we’ve shown you how you’ve done, we’ll guide you to the choices you have aheadagewage evolve 3
  • We’ll make it clear how those choices will work for you.

Agewage evolve 4

  • We’ll equip you to make those choices and help you to a better AgeWage.

AgeWage is not here for the 6% of Britains who take financial advice.

We will actively promote the value of advice but we will not compete to be your advisor.

Instead we will provide you , through the AgeWage app with a way to understand what you’ve done, how you’re doing and what to do next.

I think you will agree that this is a bold and important business.

We are grateful to  the FT who have written about what we are doing.

We are grateful to our first round investors who have got us this far.

And now we are asking, humbly – for your money, whether £16.50 or £150,000.

Of course we’re going to make this easy for you, you’ll be investing into an EIS and that means that there are substantial tax-breaks. This business is eligible for EIS relief – providing qualifying investors with income tax relief of 30% of their investment and certain other tax reliefs. Tax treatment depends on individual circumstances and is subject to change in future. Click to learn more.

So if you’re wanting to help us and be a part of the democratization of pension know-how press the link!



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Why can’t we talk about money without paying for advice?


Screenshot 2019-03-16 at 06.27.49

Iona Bain has been travelling around Britain finding out what young people are doing to get help with their finances. She has documented her findings in a great FT article

Shunned by traditional advisers, younger investors use apps and digital platforms

Her travels take her to the usual suspects – Nutmeg, Multiply and MoneyBox though – like any grand tour – there are sites that are missed – MoneyHub, E-vestor and PensionBee (for three). The article is not supposed to be a directory.

I have a few complimentary copies of the article I can share to those who do not subscribe to the FT – mail if you want one.

The A-word and how it’s been

Advice has become a commodity and an expensive one. It’s the caviar to the cod’s roe of guidance, it’s so precious that it is only given to those who can pay for it, through a clip on their wealth. Advice is what millenials want and can’t get – because they aren’t (yet) wealthy.

If you are wanting to pay for a financial adviser, and plenty of us should, then follow the advice in this blog by Paul Lewis. But remember, the fact that you clicked the link makes you a rare (and probably privileged) breed.

At times Iona’s article hints that IFAs are being short-sighted, not focussing on a cradle to grave advisory service. But it concludes that IFAs can afford to wait till the wealth has cascaded before engaging with the young. Advice is a minority sport – like fox-hunting – there will always be demand from the entitled.

But if it’s true, (as suggested by recent research from Drewberry) , that only 6% of people want to pay for advice from a clip on their liquid assets, why does the Ad Valorem model (which collects advisory fees as a clip on liquid assets, prove so popular?

Iona Bain’s article cleverly avoids answering these questions. Instead she feeds back using twitter, the responses to the article.

The harsh conclusion is not that people don’t just want an end to valorem charging, they want an end to advisory-charging. That is a much greater issue for regulators, than protecting the livelihoods of IFAs – who are proving more than capable of looking after themselves.

The Burn-Out generation

My son – who is a generation younger than Iona, seldom answers my inane senior questions verbally.


Olly Tapper

He sends me a link to the answer on one of around ten messaging systems he employs (and I slavishly sign up to). These include Slack, Whatsapp, Facebook Messenger, Twitter DM as well as  and SMS. He has reluctantly signed into LinkedIn (the old folks home) and even messages me on that. E-mail is a work app, but only one of many

The answer to just about everything is downloadable and app management is now essential to avoid  “errand paralysis” . 

In a great article on Buzzfeed (linked above),Anne Petersen points out that Iona’s  is the “burn-out generation” where existence is reduced to “to do”lists organised digitally but never quite completed.

Reading the article – I realised that what has changed is dependency, young people are now dependent on the ready availability of answers to questions from the web.

What they are not getting is ready answers to their financial questions, and especially their questions about pensions. Ask social media what to do with your financial problem and you get referred to a financial adviser.


Lottie Meggitt

I heard the same frustration from another Millennial – Lottie Meggitt – at a recent pensions event.  She more or less accused my generation of not handing down to hers the keys to the secrets we hide in our black boxes.

This ever-present fear that millennials have of not being able to manage for themselves is exacerbated by a financial advisory industry that refuses to play ball. Lottie and Iona’s frustration is not just with the complexity, but with their inability to cut through it. We are in danger of burning-out their patience.

I get this – though I am not sure I am the answer

Actually that’s not true, I am quite sure that I can be part of the answer, though I need Iona and Lottie and Olly to deliver it.

The best that my generation can do is to pass down answers to their questions which they can deliver intelligibly to those around them.

Attempts by baby-boomers to deliver solutions to millenials are doomed to failure. We can only follow.

The first thing we must learn is that the vast majority of financial advice  should be and remain free. The calamity of putting advice behind a firewall and charging for it is that we have alienated more than 9  in 10 people for asking for it.

“I can’t give you advice” is one of the great lies. Anyone can give advice, the question is whether it is worth listening to, not worth paying for. What financial advisers have done is created a means to monetise advice which I and my generation whole-heartedly endorse. We are in fact trying to make ourselves relevant, but we are lying when we do so.

“I can give you advice, but I don’t have time”, would be a more honest answer.

“I can give you advice – follow this link” is the answer my son gives me.

Will the  market find an answer?

Financial services has been slow to answer the need people have to get their questions answered digitally. It’s just not created the way to deliver the answers which are out there.

But the answers to our questions can be found , if only we know how to frame those questions and have confidence in the search process itself.

The encouragement for the market is that the opportunity is out there. The investment of time and energy in delivering the digital advisory services needed requires patient capital and a confidence among investors and entrepreneurs that where trust is gained, reward will follow.

The question is not how but when. I suspect the answer to this question lies with the Regulators. I have the opportunity to speak in a few weeks with the Chair of the FCA and I will be putting this issue at the top of my agenda.

I think it is critical that Government moves with the times and understands the issues raised in Iona’s article. We need to allow people to get straight answers to their questions without the complications of products and product related fees.

We need advice to become free again and for its delivery to be trusted. Pensions Experts  should not be afraid of the A-word but aspire to be trusted advisers (if only through the digital delivery mechanisms created by younger generations).

The answer to the questions raised by the Financial Advice Market Review and by the Retirement Outcomes consultations will not be found in the past but in the present. The questions are being asked by the millenials – which is why Iona’s article is so valuable.

Iona Bain

Iona Bain




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Why we cannot ignore the NHS Pension Scheme.

doctor writes

Nobody writes about the NHS pension scheme and you don’t see it featuring in PLSA and other pension events.

That is because it generates precious little profit for the private sector. So here is a brief description (thanks Wiki).

The NHS Pension Scheme is a pension scheme for people who work for the English NHS and NHS Wales. It is administered by the NHS Business Services Authority, a special health authority of the Department of Health of the United Kingdom. The NHS Pension Scheme was created in 1948.

The NHS Pension Scheme is made up of the 1995/2008 Scheme and the 2015 Scheme. From 1 April 2015 all new joiners, without previous scheme membership, join the 2015 Scheme automatically. Members prior to 1 April 2015 retain rights to remain in the 1995 or 2008 section of the existing scheme.

The NHS Pension Scheme has 1.35 million members and 650,000 members actively contributing.

The benefits and conditions vary according to the type of worker and the dates of their service; from 2008 the “Normal Retirement Age” changed from 60 years to 65 years while the proportion of pay upon which a pension is based was increased. The benefits are index-linked and guaranteed. They are based on final salary (members who joined before 1 April 2008) or average salary (members who joined after 1 April 2008) and years of membership of the scheme. There are no administration costs. Members can increase their contributions if they wish to get larger benefits (within certain limits).

As of 2016, the tiered employee contribution rates start at a 5% rate increasing in 7 steps to 14.5% on income above £111,337.

If the NHS pension scheme was funded, it would be the largest funded pension in Britain, it might even rival the mighty CALPRS in the States to be the largest funded pension in the world. But it isn’t funded and therefore doesn’t trouble the  asset management scorecard.

To the lay-reader, a pension scheme that serves 1.35m of the UK population would deserve considerable attention – but the UK pension industry has but one master – the fund management industry.

Which is why  bottom-up engagement is more likely than top-down debate. It is why the most vigorous discussions on the NHS scheme (and by extension all state sponsored unfunded pensions) are on social media.

Pension problems for doctors is a problem for the NHS

We should not confuse the apathy of the pension (fund management) industry toward the NHS pension scheme with its potential consequences for the nation’s health service and the nation’s health.  As Nitin Arora points out in his blog (published alongside this), the issues Doctors have need immediate address.

The problem the NHS has is that we have most consultants working ~20% more than full time, with anything over 10PA being non-pensionable; and lots of departments rely on consultants doing extra lists.This is not conducive to efficient tax planning for individuals.

When people realise that their extra 20k of income results in a 12k tax bill, and potentially 3-5k of ‘scheme pays’ they may elect to stop doing this extra work.

Nitin call for action is deliberately targeted at people who care about the health service, whether within or without.

We as custodians of the NHS need to look at the bigger picture, and alert the government to the impending crisis. The taper, AA and LTA together, are going to drive an already demoralised workforce to cut working time. At this time of an overstretched health service, and staff shortages, this would be a disaster.

Why the NHS is not the USS

There is no crisis of funding at the NHS Pension Scheme, there is no question that the NHS pension scheme will close for future accrual, there are no arguments to be found about self-sufficiency. This is because the balance between  Government funding (via taxation) and member contributions is maintained by the Government Actuary without the usual hullabaloo around investment strategy.

The business of the NHS pension scheme is in providing pensions and this singular intent is recognised by its members, I am not aware of any substantial challenge to the Scheme (though clearly there is an issue around the provision of support for members in the decisions they now have to take.

The issues around the NHS pension scheme relate to tax. The suspicion is that the already burdensome membership cost to higher earning members is increased further by progressive taxation . We are used to the pension system robbing the poor to pay the rich – (the regressive alternative), but with the taxation of high-earners pension increases running at as much as 67.5%, there are now serious reasons for Doctors do the “hokey” – the member’s phrase for going “in-out” of the scheme as tax liabilities dictate.

The main difference between USS and NHS is that the NHS is making membership untenable for members while UUK argues that USS membership is untenable to employers.

Giving members a voice.

What I find interesting about the eruption of interest in the NHS Pension Scheme – is that it is happening on twitter. Twitter also provided the platform for debate on USS and Facebook was the platform members of the British Steel Pension Scheme (BSPS) use to understand their “time to choose”.

What is interesting is the attitude of the unions to the mobilisation of their members in these self-help groups (and threads). At BSPS, there was no involvement, at USS, the UCU has been heavily involved in the debate, we have yet to see the extent to which the BMA and other NHS unions will encourage the debate on an open platform or try to confine it to in-house publications and forums.

In my view, social media has become the forum where pension policymakers have most to learn. If I was HMRC or the Treasury (especially GAD) , I would be exploring the different views expressed on the threads that Nitin Arora and others have created.

We have yet to explore the full functionality of social media in assessing opinion. Polls can play an important part in this and are as yet virtually unused as a way of testing the water.

What social media has is scope and – using a limited number of hashtags, social media can provide scope and immediacy to conversations that demand quick and decisive conclusions.

So I look forward to the NHS Pension Scheme debate being conducted in public, as it is today. It is far more healthy for doctors and other members to share their grievances with a wider audience, than be confined to the pages of Pulse.

Posted in pensions | 4 Comments

How to turn a pot into a pension (megablog)

pot into pension.jpeg

Hello and thanks for your interest!

This mega-blog should be helpful to people who are 55 or older and have money “stuck” in pensions which they could do with to replace income from work.

“Stuck” is the right word, most of us would like our money back to spend at some point but don’t know the rules for getting at it and fear we’d make a hash of things if we did it ourselves. This blog is a self-help manual for us lot – and I hope it will be a fun read.

It may also be helpful if you are planning for the future or if you are trying to help others.

Preparation Step one – do your background reading

My first piece of advice is that when you’ve finished reading this article, you press on this link and read Factsheet 91 from Age UK. 

This goes into much more detail than I can here and deals with subjects like the integration of pensions and the benefits you can receive at working age and as pension credits

It also contains valuable advice on avoiding scams, avoiding falling foul of the Inland Revenue and the DWP’s support for those needing (long-term) social care.

Preparation Step two – Think about your need for cash in the bank

Having a rainy day fund for unexpected costs is a good thing. It’s money that can earn interest (as in the Santander 123 account) , it might be money you have in cash ISAs, the important thing is that it’s money that you can get at within a few days without having to worry about stock-markets and withdrawal penalties.

This is your “contingency” fund. You only need it to have enough in it to make you feel secure, it should not have all your savings in it. It’s a common mistake to have all your money in low or no interest accounts rather than working as hard as you do – or did!

You may have enough money in accounts or even too much. If you think you have too much in the bank, then you can start thinking of investing some of that money for the future. If you don’t have enough money in your rainy day fund, your pension may be able to help.

Preparation Step two – think about your debts.

If you have paid off your mortgage and have no debts, skip this bit. If you still have debt then the key questions are when that debt comes due and have you got the ability to meet the repayments. If you are comfortable that you can repay your debts from your income then pensions don’t come into it, but you should know that if worse comes to worse, you can take 25% of your pension pot, without having to pay any tax on it. That money can be used to clear debt.

Preparation Step three – think about your future

You are heading into holiday-time. As you get into your sixties and seventies , you are likely to work less hard and for shorter, that’s why we have pensions, to take up the slack in income and make sure we can do the things we promised ourselves we could do , later on.

You should find out what is due to you as a State Pension and you can do so by pressing this link. You can get a state pension forecast – unique to you – quickly and in a user-friendly statement. Hopefully it will be good news. The State Pension has got better for most people and is much simpler than it used to be. Plan on having a pension in today’s money of around £8000 from 66, 67 or 68 – depending on how old you are – the younger you are the longer you’ll have to wait!

You may have some DB pension owed to you by the trustees of employers you’ve worked for, if you do have , make sure you have an estimate of what is coming to you and when

When you have your state pension, you can start thinking about how you’d like to dovetail work and pensions. What you take out of your pot as a pension should be to fill in the gaps.

For heaven sake – don’t get too strung on getting a financial plan in place where every eventuality is covered. Life isn’t like that, there are bound to be surprises (good and bad). But remember you have your rainy day fund and make sure you think about the other things you own which you could sell – like shares, ISAs and even investment property.

Finally – think about your house and ask yourself if you really could realise any of the equity in it. It’s not as easy to downsize as you think, especially if you have kids and grandkids.  A lot of people think their house is their pension and you can turn bricks into sausages if you qualify for an equity release plan – you can find out about equity release by reading the Equity Release Council’s frequently asked questions.

You could also have a look at Legal and General’s LifeTime mortgage options, which show how equity release works in practice

How to turn your pot into a pension

One pot policy.

You’ll notice that the headline implies one pot. I strongly suggest that you try to bring all your pensions together into one pot and that pot is with a pension provider that you feel comfortable can help you as an individual – do what you want to do.

Don’t think this will be easy or quick, your portfolio of pension pots could run to 10 or more and many of them will have quirks in them that you need to research. Be particularly careful about guarantees, early exit penalties and loyalty bonuses. Transferring pots can be a tricky business. I will be writing more on this in weeks to come.

Do I need guarantees?

Once you’ve got your pot portfolio into one place, the first question you need to ask of yourself is how important guarantees are. If you want a guaranteed income you have to buy an annuity. George Osborne said that nobody would have to buy an annuity again but nobody’s found a way of turning a pot into a  guaranteed pension that lasts as long as you do, that isn’t called “annuity”.

There are a lot of different types of annuity and the key – if this is where your search for a pension ends up is to shop around. My advice is to go and read the stuff on this page from the Money Advice Service .

It may be that you already got guaranteed DB pensions or even guaranteed annuity rates in your DC pots, they are good news and form the platform for your pension , only ditch guarantees you already have after a lot of thought (and take advice).

Would I prefer guarantees – yes – but can I afford them!

What you’ll find when you are working your way through your options is that you are always having to make trade- offs like the one in the title of this bit.

Planning for the future is about guesses – they include guesses which are hugely important like how long you’re going to live, will you need social care as you get weaker and whether you’ll need more or less income the older you get. There are no certain answers to these questions so if you can’t afford to guarantee you have an income to meet all eventualities – at least you’ve got a lot of freedom over how you spend your pension pot.

The pension you,ll be offered from a guaranteed annuity is likely to be a lot less than you thought you’d get for your savings.  That’s why most people move on to other ways of providing a pension.

Would I like money now – or money later?

This trade off is not as simple as it seems. Of course we’d like money now but most people are cautious and save rather than spend. You can save too much and become a hoarder, not spending your money now may be something you regret in later life, when you can’t do the things you’d wished you’d done when you were younger.

But if you blow all your money in your fifties, not only will you be skint in later life , but you may well have given much of your savings to the tax-man. Getting the balance right on the shape of your pension is important. Ideally you’d have a financial advisor helping you here to do your cashflow planning (though every plan comes unstuck somewhere).

If you’d like to do some cashflow planning for your retirement, I’m afraid there is precious little software in the public domain to do so. I am looking into creating a utility for AgeWage in conjunction with some altruistic actuaries. For now we will have to make do with simple rules of thumb, which help us to set our pension from our savings,

Getting the pension rate right

Ok – so we’ve looked at the future and decided we don’t know, we’ve decided that annuities may be too expensive and we’ve decided to look at alternatives.

There is currently only one  alternative to an annuity (for your savings) and that is something called drawdown. Drawdown is a pension you pay yourself from your pension pot and you have the freedom to have it paid any way you want. Sounds good eh!

Well not so fast…

  • If you screw this up you will run out of money later in life
  • If you screw this up you could end up giving a good part of your pension (unnecessarily) to the taxman
  • If you screw this up you could unwittingly deny yourself the chance of the state paying for later life social care

Which is why paying attention to your pension is very important when you are making decisions in your fifties and sixties

The 4% rule of thumb

I think it’s useful to set out with a simple starting point. Divide the amount of money you have in your pot by 25 and you get the amount that most pension experts would consider a safe enough drawdown rate. So for every £100,000 you’ve saved, you can pay yourself £4,000 pa as extra income.

If you want more than £4000 pa then you are pushing it, you may not be able to adjust your income in future years to keep up with inflation and you could fall foul of what experts call “sequential” risk, when your pot is ravaged by a sharp decline in stock markets and does not recover.

One way of making that £4000 pa a little more palatable is to make sure it is paid to you tax-efficiently. I mentioned earlier (for those with need of cash today) that you can take up to a quarter of your pot as tax-free cash. If you need the money now, take it now. But if you don’t need the money, then keep it in your pension fund and you can drawdown the tax free cash in the early years and only take taxed income later on (when your top tax-rate may be lower).

Another way of making sure that your income is higher, is to stack your pot with contributions from cash you don’t need.

You can pay up to £40,0000 pa or your taxable income – whichever is the lower, to boost your pot. You get tax -relief on all your contributions and the money is invested in a tax-efficient fund. Stacking contributions in your pension fund in your final years of work is a good plan if you have cash in the bank not working as hard for you as it should.

Unfortunately, the amount reduces from £40,000 to £4000 as soon as you have drawn money from your pot, so hands off your pot if you are considering stacking!

4% is only a starting point

A lot of people will take a view that they can draw down at much more than 4% and get away with it. They may well be right, most of us will start drawdown before we get our state pension and drawdown at a higher rate as what experts call a “bridging pension”. Once you’ve started getting your state pension you can drawdown at a lower rate and get back on track. Other people will consider inheritances as a similar windfall in future years. Some will deliberately run down their income to avoid the threat of being means-tested out of social care benefits (though you should read the rules on deprivation in Age UK’s fact sheet).

Second rule of thumb – For heaven’s sake – stay invested.

When you start drawing down your pension , you begin a process that could last 30 years or more. It is not something that stops when you are 60 or 70 or even 80. So it makes absolute sense to be invested for the future when you start. Do not move all your pot into a cash fund, this may sound the safe thing to do , but it is the opposite, it will mean that you are stuck with virtually no growth on your savings meaning that you will run out of money later on.

Putting your money in cash is not even guaranteeing you your money back, most cash funds you can buy can go down as well as up and what is almost certain is that the cash fund will not return you the rate of inflation so in real terms , the value of your cash fund will fall. If you are planning on losing out from your investments for 30 years, then go for cash at outset, but you will probably look back and call yourself a muppet.

Third rule of thumb – keep costs down

To keep your money in a pension drawdown fund, you don’t need to be paying away a lot in fees. Remember that 1% of £100,000 is £1000, a lot of money every year. You should not be paying more than 1% each year for your drawdown pot and you should only pay advisers on top, if you feel you really need their advice.

One way of keeping your costs down is to shop around and find the best drawdown provider. There isn’t a lot of good comparative advice out there at the moment (and frankly most of the drawdown plans are far too expensive).  Probably the best place to start looking is Which? – the link’s here.  

The Which table is ok as far as it goes, but it only tells you what you will be paying for the drawdown service (the platform), you have to pay again for the funds which will at least double the platform fee.

If you want to pay an adviser, expect to pay around 1% pa for the first £100,000 of your pension savings pot (less for more). If you have a small pot, you probably won’t find an adviser who will be able to help you.

You will probably find -if you want to stay within a 1% budget that you need to go on a non-advised platform and use the support of the platform. I find Pension Bee and E-vestor the kinds of organisation geared for your needs.

It may be worth waiting for the market to improve, the big workplace pensions like NEST and People’s pension may well open up for drawdown in years to come and it’s likely that there will be more competition from existing pension providers when they do, for now the market looks weak and consumers look like they are generally getting poor value. That’s why the FCA are looking at capping the amount a drawdown manager can charge a customer in drawdown.

Fourth rule of thumb – choose your drawdown investment wisely.

I really don’t see why people who could not choose their own investment funds when saving for a pension, can suddenly be expected to make choices when spending their pot.

But because most of the large workplace pensions don’t offer a satisfactory drawdown option (yet), people are having to move to self-invested personal pensions (SIPP) to drawdown which (by definition) don’t make the investment decisions for you.

I’m sure this will change but for now, if you are investing in a SIPP, then you should look at a fund that is within your budget (I suggest 1%). Remember you have to pay platform fees and transaction costs (see the Which report) so your fund budget is unlikely to be much more than 0.4% and that will restrict you to investing in a passive fund or perhaps something called Smart Beta – which might tilt your investment towards sustainable investments or a more diversified approach than just a single stock market index. Generally speaking diversification is good so if you can get a fund that invests in shares (UK and overseas) , bonds and perhaps a little in other things (alternatives) for 0.4% – that may be your best option.

You want your investment fund to give you as smooth a ride as possible and diversification is a good way to get that smoothness.

Fifth rule of thumb – take your time

If you’ve got this far in one of my longest ever blogs, you are probably pretty interested in this subject and I suspect that’s because you have a personal interest.

I’ll declare my hand, I’m hoping that AgeWage will be able to help people like you to turn pots into pensions and I expect to draw upon the ideas in this blog when we launch the AgeWage blog later in the year.

I’m having to take my time in this – not least because I will need the buy in from the FCA and other regulators to help people with the kind of guidance they need to turn their pots into pensions.

It took me nearly 10 months just to get all my pots in one place. It is taking me as long to research my drawdown options and I’m still not sure of what to do.


Can I help?

As far as I know, I’m about the only person who is actually trying to set up an app for people to learn about this stuff and take practical steps to organise their affairs to convert pots into pensions.

If you found this blog helpful, please contact me on  and we may be able to set about working with each other!

great egret flying under blue sky


Posted in advice gap, age wage, pensions | Tagged , , , | 4 Comments

Why the pension dashboards have to be commercial


Sun Pension Pot

The Sun;s vision of a pension pot is a witch’s brew!

Government pension projects rarely succeed and where they do succeed – it is because the public and private sectors find a way to work together. There are exceptions – the state pension and unfunded public sector schemes are pretty well 100% a Government initiative and the PPF is getting less rather than more reliant on the private sector.

But when it comes to the pension saving market – Government has not found a way to do it themselves.  The public sees pensions – as the Sun sees pensions – as a witch’s brew in a pot!

Recent initiatives have had their moments – TPAS being an example – but generally Government does not do pension guidance or advice well and there is little expectation that it will do a much better job with the dashboard between now and 2025 than it has since 2015.

The SFGB needs our support but it is a backstop

I don’t know anyone who is remotely excited by the Single Financial Guidance Body and I don’t see Pensions Wise as being much more relevant under it than it was in the hands of MAS/TPAS and CAB. The spaghetti soup of acronyms tells us just how little impression Government has made on our day to day retirement thinking.

We expect that the dashboard will be controlled from within SFGB and judging from the people who are being assembled as dashboard experts – we can be sure that it will be very much “not for profit”. This is a holding position, but the Government knows very well that once data is available to us through pension finder services – then the private sector will be very interested indeed.

Data is money – it’s as simple as that. The best that Government can hope for is a well -regulated market where data integrity is upheld and advice and guidance is monitored.

The SFGB will be powerless to stop the commercialisation of the pensions dashboards, nor should it try to.

The SFGB should encourage private sector innovation.

The Government will quickly work out that the private sector is quite capable of finding pensions for itself. If the Government wants to give a centralised contract to one pensions finder service, then people will avoid using that service and scrape their own data. That is because people want to avoid paying through the nose for data , being dependent on a single service provider which might prove unreliable and because people will want to get on with things at their pace, not that of a third party.

So – if we get a single pension finder service – procured at great time and expense , the chances are that the current pension finder services – which are little more than scraping – will simply carry on – with all the data risks that come from sharing passwords and so on.

Sooner or later, people will get tired of waiting and they will get angry with Government for not delivering. Think Crossrail.

And this will bring the SFGB to the public attention and not in a good way. It will become the scapegoat for non-delivery, even if it had no part in what came before.

Plan for the future not the past

The future is digital, it is open source and it is handheld. The deep future may be quite different but for the next five years we can see the direction of travel. It is not the direction that the Pensions Dashboard is taking, that is a direction that looks back to the first 20 years of the century (and we will be looking back by the time we get anything).

The future is represented by Pentech and the dashboard should be designed for and by people who are familiar with open source data. Government should stay well out of the way. It’s job is to ensure that the data standards are common and to root out the rotten apples, it is not to stand in the way of change.

Similarly, what the dashboards show should not be a matter for Government (other than that trading standards should apply). The old distinctions between guidance and advice need to be reviewed so that everyone can make decisions about what to do with their retirement funds with confidence.

The future is not going to be about sitting down with an adviser for two hours, it’s going to be about user journeys that make sense to ordinary people and take them to guided outcomes that are generally right. We will revert to a default culture which will replace pure collectivism with rules of thumb.

The future belongs to the brave

Necessarily, those who will be at the forefront of dashboard innovation will be entrepreneurs. It is impossible to imagine that Government, the ABI, the PLSA and the PMI are going to drive change.

The change that happens will be driven by self-interest  which is what drove Isambard Kingdom Brunel and James Watt and it’s what has made Apple and Google and Facebook change the way we do things. Government can only be responsive to change – it cannot be entrepreneurial – nor should it.

This may sound disruptive and I expect that many (including the many who packed Prospect’s office to opine on the dashboard) will see me as precisely the kind of person who shouldn’t be allowed near a commercial dashboard.

I love Origo’s vision of the commercial dashboard – it tells me just how far the pensions industry is wanting to keep this dashboard to itself!

dasboard suspects

Origo’s veiw of the world

Here is the dashboard that I put together with the Sun’s Mr Money – sorry about the lack of digitality in either image!

find a pension 3

There comes a time when people just get fed up with waiting and all the fannying around and just want to get on with finding their pensions and spending them.

That time is now.

We need commercial enterprises to help ordinary people to get their money together and get it back. We do not need more guidance from Government or governance from the Guidance Body.

Those of us in our late fifties are growing into retirement with practically no help. It is time we got it. The dashboards can help but they will only work if they are commercial.

No Government initiative is going to work on its own, Government must now allow the private sector to get on with satisfying the public’s thirst for information, guidance and advice.

Exploit is  the wrong word but meeting demand is what we are about and there is no doubt that the public demand a commercial service that helps them retire properly.

Posted in advice gap, age wage, pensions | Tagged , , , , , | Leave a comment

Should your house be on your pension dashboard?



You can’t buy a sausage with a brick

James Coney, one of our best financial journalist has written a very fine article in FT Adviser on why he wants to “leave property our of pensions dashboard”.

It turns out that the Equity Release Council has been lobbying to get the un mortgaged value of your house onto your financial balance sheet, so when you see you’ve got no savings, you don’t burst into tears but nip down to your local friendly equity release specialist and liquidate your bricks and mortar.

James is against this

If there is one financial question every British person knows the answer to, it is how much their house is worth.

We are utterly obsessed with property prices. What is more, our attitude towards property has led to many people to make some very bad financial choices.

And these are just two reasons why housing wealth should not be included in the new pensions dashboard (another more obvious reason being: a property is not a pension).

It is of course impossible to stop people considering their finances in the  round. The idea that a pensions dashboard can frame our thinking on retirement planning is fanciful but that is to jump ahead of my argument.

The “bad decisions” he’s referring to are to do with over reliance on property equity and under-provision of the replacement income we need when we stop working.

The article turns on itself as it explores the relative merits of downsizing and taking a lifetime mortgage. It hints at what is a very real moral hazard, that if you are so skint in retirement that you have to mortgage your house to live properly, you are certainly not going to be able to pay the costs of long term care (other than by selling your house).

The moral hazard is that people assume the right to state care and recognise that that care is means tested. If you are planning on a state assisted later life, then you should burn your equity and your potential income. Since most equity release plans don’t ask any questions about how you spend the cash released, the opportunity for people to game the NHS and the social services funded by the DWP is obvious.

We pay far too little time thinking about how ordinary people consider housing, later life income and the threat of needing long-term care.

Self sufficiency?

The over reliance of a very large number of people on their house as their pension also misses an important historical factor. Those people who pushed their finances to the limit to buy a house and keep up the mortgage payments, often did so by not paying into a pension.

Their idea of property investment was to be independent of pensions – which many people see as a black hole into which you pour your money, never to get it back.

The tangibility of a property is pretty obvious, it is a place to live and – if rented out, is a self-sufficient asset. Property has become a free lunch – with low interest rates, high rents and a seemingly inexorable rise in property prices.

The housing shortage , which the Government continues to talk about – without building houses, keeps property prices high. The tight control of interest rates keeps away the perils of negative equity, the young are priced out of the market – but they don’t vote.

All this has the smell of a rigged and rickety market with the potential for a real fall in property prices which could have very nasty social consequences – especially for those for whom property underpins their lifestyle, retirement plans, their legacy and their long-term care insurance.

Far from offering self-sufficiency,  a property can and does give a false picture. Which is how James leaves his argument.

People who rely on housing equity or investment income from rental property to fund their pensions are playing a scary game, the risks of which are underestimated.

Or a contingent asset?

The terminology of Defined Benefit pension funding is useful here. Most people do not achieve financial self-sufficiency when they enter retirement. They have to carry on working – or they rely on their savings whether inside a pension wrapper or not.

The house is the back-stop. It acts as a “contingent asset”, something that is pledged to be used but only as a Plan B or C.

If people are having to rely on work and savings to produce income, then they are taking on a lot of risk, risks associated with health, interest rates, markets and people’s capacity to make financial plans and keep to them. There are many calls on older people’s money and most of them cannot be anticipated.

So the financial backstop of a lifetime mortgage is a tremendous advantage to someone who has not achieved self-sufficiency. It makes for a much more relaxed prospect for someone reaching the end of their working life.

Which is why I am very much for equity release, especially the responsible varieties such as Legal & General’s Lifetime mortgage. So long as property is viewed as a contingent asset and not as the answer to all life’s future property, I see it as key to the financial security of most older people.

Property equity is a contingent asset which should form an important part of financial planning for later life

Messaging and dashboards

I am concerned that the expectations of politicians and the proletariat for the dashboard are being set too high. In particular – I fear that “trust” is being commandeered by the pensions industry to justify “control”.

The current obsession with controlling the messaging will doubtless be reflected in the DWP’s consultation response due out shortly.

It is the easiest of wins for those who respond to these consultations to demand high levels of centralised governance resulting in a state dashboard and a few highly regulated portals that plug into a single pension finder service.

It is very unlikely that anyone from the pensions establishment  will have written to the DWP telling them to let the market control the messaging. Here for instance is Prospect’s report on its recent dashboard meeting with the Minister.

“All feared the potential for confusion, and some the possibility of exploitation if commercial players had too much scope to fashion the presentation or in any way edit the contents of the dashboard”.

Controlling the messaging from pension dashboards will be quite beyond Government or the pensions industry. People want access to data on their pensions and they want to take control of their savings. They will include housing in their thinking – they would be mad not to.

I hear the splashing of water around King Knut’s chair.


Should your house be on your pension dashboard?

The argument of this blog is this

  1. James Coney’s article is right to raise the question
  2. The interaction of housing on pension savings is perverse and underestimated
  3. People who rely on house equity to be self-sufficient in old age are usually deluded
  4. Housing equity is a good backstop or contingent asset and shouldn’t be ignored
  5. Messaging from pensions dashboards can’t be controlled (worthless power of kings)
  6. With responsible positioning housing could and should feature on dashboards.

I think, were James to read this blog – he’d ultimately come to the same conclusion , despite his title suggesting the opposite.

Posted in pensions | 3 Comments

Pension dashboard stitch-up exposed!

pp dashboard.jpg

I find myself the horns of a dilemma. I violently disagree with the ABI, Origo and at least two of the big master trusts. In particular I disagree with People’s Pension, who normally I agree with and Gregg McClymont- one of my favourite people. I do not think them dishonest, but – in the pursuit of their aims- I find them saying things for what they believe the greater good – that amounts to a “stich-up”.

My beef

Like everyone, I reckon the pensions dashboard , a “once in a generation” opportunity to put people back in control and restore confidence in pensions. The dashboard could help people to find their pensions, understand their likely position in retirement and do something about making the most of what they have (including their savings rate).

However this is achieved is secondary to it being achieved, so the comments below are based on a fundamental agreement with all parties that the fundamental aims of  dashboards are good.

But I have a beef and this is it.

The major pension providers and the organisation they set up as a pensions data clearing house (Origo), want to orchestrate the finding of pensions meaning that they control the means of dashboard production. They have convinced the DWP to write a consultation where there is only one pension finder service and only one data validation service. There can be no doubt that in a procurement process, the provider of that service would be Origo, with the help of a couple of subsidiary companies.

I believe that this is a stitch up and it will lead to no good. Here are my five reasons why

  1. The DWP are in no position to determine the technical architecture of the dashboard. They do not have the skill set to call the market, the procurement process will delay implementation and what will be delivered will be subject to the same problems that have led to failed roll-out of Universal Credit. Putting the DWP in charge is a mistake. The DWP should not prescribe the technical architecture of the dashboard.
  2. There is proof of concept for a system of open sourced pension finding (rather than the single pension finder service proposed). It is called open banking and it has worked. We now have faster payments, integrated data and an altogether better banking system than we had before the implementation of the CMA 9. This is despite the protests of the big banks who adopted precisely the protectionist position the large insurers and master trusts are adopting today.
  3. There is, outside the hegemony of the biggest players a nascent “pentech” sector , it includes soon to be household names such as Smart Pensions, Pension Bee and infrastructure players such as Altus, F&TRC and Pensionsync. Data aggregators such as MoneyHub, MoneyBox and AgeWage are keen to provide better information on pensions to the 94% of us who do not pay for advice. The single pension finder service will make them reliant on a centralised , old school, approach that will prevent them innovating.
  4. The arguments for the single pension finder service and the oligopoly it would be created are based on a pensions “project fear”.  They are protectionist and self-serving. We are told that it would lead to less data security, more expense to the providers and a lack of consistency with which the data was presented. These arguments fly in the face of the actual experience we have had of open banking, they are the same arguments as the retail banks put up to prevent open banking, they were rejected by the CMA and they should be rejected by the DWP. The counter-arguments are stronger as they are evidence based (see below).
  5. The original conception of the Pensions Dashboard , back in 2016 (Treasury led) was for open pensions where the dashboard would foster innovation and best practice. It has taken three years to get nowhere listening to counter arguments from those with an interest in the status quo. The status quo is rubbish, people can’t see what they’ve bought, can’t plan for the future and the DWP’s proposed timeframes for delivery of the dashboard are so long that it is unlikely people will genuinely benefit from these dashboards for five years.

To summarise

  1. The DWP are out of their depth and should leave this to the market
  2. Open Banking shows pensions a better way
  3. There is capacity to build open pensions
  4. The arguments against open pensions are protectionist
  5. The proposed roll out of the dashboard will be too slow, we need action now.

Why I have to say this again.

All of this has been said in previous blogs and in articles in newspapers – by me, by Pension Bee and by many others. But our voice is a small one and it is drowned out by the lobbying of the ABI and friends.

Before the launch of the consultation, the Work and Pensions Select Committee were assembled to hear the voice of this lobby. Frankly that was bad Government, no ear was given to the Pentech position.

Now, with the launch of the consultation’s findings imminent, we find that senior MPs, including the Pensions Minister are being entertained by Prospect Magazine in a meeting arranged by People’s Pension.

What is more, the write up of this meeting is being publicised on social media as a genuine debate.

But reading the Prospect Article that came out of these differences I find that someone’s moved the cheese.

The differences were akin to arguing how many colours you paint the car and ignore the arguments for a choice of different engines and chassis. Whether allow people to see the data through multiple dashboards or just one is irrelevant – how people access the data is up to them. Open Pensions is not about seeing numbers on your phone.

Open Pensions is about creating a data sourcing infrastructure as consumer friendly as exists in open banking and a state sponsored app just doesn’t add up.

Where were the Pentechs?

The Pentechs were not invited to the event, the consumer groups who were have a quite different agenda and the debate allowed the ABI to pretend to Guy Opperman, Nicky Morgan and Ian Murray that there was consensus on the fundamental dashboard architecture.

Every one of the project fear arguments can and should be tested. All will be found wanting in the light of actual experience of Fintech in the financial sector.

The single pension finder service will lead to greater risk of outage of supply, greater risk of cost hikes (a sole supplier) and it will lead to the stifling of innovation. The DWP should wake up to this as the Pentech firms aren’t going away and we will not sit in a dark corner.

The chance to be good at pensions (again) on a world stage, is being missed.

And the blueprint on how open standards could improve the dashboard has been presented to Government and the pension industry.

This debate should not be held behind closed doors

These arguments were excluded from the debate, the pseudo-debate that happened was a convenient smokescreen.

There is a space for a genuine pensions debate and that’s what should happen as a result of the consultation. The lobbying of ministers and senior MPs prior to the publication of the consultation, and the presentation of the debate in the way that it has been engineered is a perversion of parliamentary process and needs to be called as such.


pp dashboard

Posted in age wage, Dashboard, pensions | Tagged , , , , , | 2 Comments

Now and then.

now that's

It all started so well – and ended so sadly. Yesterday NOW’s owner, the Government backed Danish Pension Fund announced it was selling it’s UK master trust to Cardano, the Dutch Fiduciary Manager.

NOW were the first organisation to seriously compete with NEST as an occupational pension scheme. They made it absolutely clear where they were coming from and they set their stall out with conviction

  • Just one fund
  • A Segregated Fund unique to NOW members
  • A Trustee Board drawn from the great and good
  • Outsourced admin

The original vision we were sold at launch also included free life-cover – though that never quite happened.

I remember the launch, a grand affair just off parliament square, it was like a film premier. NOW was launched at a time when its first customers were the large employers without a pension scheme. Employers like ISS who has a workforce in six figures, cleaning trains – they were early stagers and chose NOW.

NOW’s early success was predicated on purchasing employers getting the NOW story. It was that the Danish pension system – was deemed successful because of ATP – the owners of NOW. NOW was popular with Danish owned companies, especially in the shipping sector. If there was a Danish ex-pat in charge of your employer – you got NOW.

NOW’s second phase distribution strategy was to go after large accountants with whom they did deals in return for those accountants using NOW pretty well exclusively. It wasn’t a bad distribution strategy and for a time it worked.

But after a year or two, the large employers who were NOW’s flagship customers started raising alarm bells. Money wasn’t being invested or it was being invested in the wrong place. Money wasn’t being collected or the wrong amount collected. NOW had outsourced the record keeping and contribution collection functions to third parties and had trusted that the third parties would work together. They didn’t.

What actually happened was that NOW lost control of the most important piece of the jigsaw, customer support.

Before long NOW felt it had to switch its original record-keeper, Entegria (Xafinity) . It replaced one third party with another – JLT. In doing so it created the infamous black-out where employers were completely shut-out. It was scary for employers and it freaked out the accountants who had been sold a tale of Danish efficiency and super-clean compliance.

A number of high profile clients – including the biggest by employees – ISS, walked. ISS actually replicated what they were doing with NOW with JLT.

By 2015 the Pensions Regulator was involved and what followed was three years of torrid discussions between NOW’s trustees , its management and an increasingly angry regulator. Poster-boy CEO- Morten Nilsson fell on his sword and was replaced by JLT backroom fixer – Troy Clutterbuck.  NOW ditched its middleware supplier and finally created a dedicated customer service unit in Nottingham. But the damage had been done.

From being top-rated for its vision, Pension PlayPen gradually down-graded NOW for its appalling customer service and the failure of its systems and processes. By 2017, nobody was using NOW.

Where did NOW go wrong

The original vision for NOW was grand (I mentioned its launch felt like a film premiere).

It hired the then top DC players from the occupational market and its architecture was that of the classic unbundled DC scheme of the first decade of the century. NOW’s Trustees were and are trophy. Nigel Waterson arrived from Westminster, a few votes more at Eastbourne in 2010 and he not Steve Webb would have been coalition pensions minister. John Monks was a senior Union man, other trustees had similarly luminous backgrounds in the pensions industry.

But all this glitz blind-sided NOW. They bought the Kool-Aid of the consultants, by-passed the tough job of setting up a proprietary admin system and dedicated customer support. They totally didn’t get the payroll challenge – leaving the interfaces to “middleware”.

NOW were about investment and in particular the investment approach advocated by ATP which was implemented impeccably.

The think that finally sunk NOW was not the train-wreck admin, but the failure of the investment strategy to deliver short-term returns. What happened was the BREXIT vote and NOW’s strategy was predicated on Britain remaining. NOW hedged its currency positions and failed to pick up on the huge gains that could have been made from the currency markets. Relative to its principal rivals (apart from Standard Life’s GARS – which got caught in the same trap), NOW’s investment performance was abysmal.

Had it had its intermediaries and employers on side, this might not have mattered, But they had lost both those training rooms and NOW were horribly exposed.

The final nail in the coffin was NOW’s reliance on its use of a tax-relief system that was de-rigeur for its original clients but which turned out an albatross around its neck. NOW’s members were and are a varied bunch but very many of them fall into the net-pay trap and are not getting the Government Incentives promised by HMRC – because NOW does not use Relief at Source. Worse- all the GPPs and its two principal rivals – NEST and People’s, use Relief at Source. NOW have commendably campaigned to get HMRC to give Net Pay the same advantages to the low-paid as relief at source but without success.

Although NOW has righted the ship with regards record keeping and contribution collection, it still has some fundamental problems which Cardano are inheriting. Apart from the net-pay problem, NOW has a very large of very small pots. These pots are not uneconomic to NOW because NOW charge the pot-holders £18 pa to maintain them. The trouble is that small pot holders aren’t getting much return on their investment and if the pot isn’t getting new contributions , it is gradually being eroded by the charge. Watch out for some newspaper or other discovering a bunch of NOW members whose pots are so small that they cannot meet the admin charge. Try explaining to an ordinary person that their pension provider has just eaten their pension and check the reaction.

So why did Cardano buy NOW

NOW is Britain’s third largest master trust in terms of membership with some 1.7m people having a NOW pot. Well that’s what we’re told though record keeping has never been NOW’s strong point and we can only guess how many pots are duplicates.

NOW has accumulated a decent fund – we aren’t told how much but I believe it is north of £2bn and it boosts Cardano’s assets under management by up to 10%.

No doubt Cardano have considered the risks that NOW brings with it (see above) and feels suitably indemnified to take them on.

To the 30,000 businesses that remain with NOW, the news of change of ownership will not mean much. For admin it will be BAU and investment considerations are pretty low down an employer’s priorities.

Among members, there may be a little frisson of interest, but the number of people who will understand the difference between NOW and Cardano’s investment style’s are pretty small.

Consultants may feel a little aggrieved that they have unwittingly supported what (for most of them) is a rival proposition.

For a small bunch of idealists, who genuinely believed the NOW story back in 2010, this is a sad conclusion to what could have been a great enterprise. It is very hard to be excited about NOW owned by Cardano.

So what of the future?

It will be interesting to see if Cardano change the model. They might get rid of the trophy trustees who look like white elephants in the room. They could tackle the systemic issues associated with small pots and the net-pay collection system (though this looks a tough one).

But I doubt they’ll make many changes. Troy Clutterbuck looks like staying on – his feet are well and truly under the table. Having switched administrators once, NOW will be unlikely to do so again (even though it is JLT who are blocking the move to Relief at source).

I doubt that there’s much appetite to put new employers with NOW in the immediate future and so that 30,000 employer number should stabilise.

NOW need to really deal with small pots and get involved in what their policy guru Adrian Boulding calls “prisoner exchange”. The potential practice of swapping small deferred pots with other master trusts (pot consolidation).

If it continues to run down small pots with its admin charge, it will find itself in deep water. It will similarly find the take-up of its compensation offer on net-pay unsustainable in the longer term.

Cardano are going to have to get their hands dirty on these issues and I’m not sure that they are that kind of organisation. I know Cardano well and will be asking them what their intentions are.

You shall know them by their fruit.



Posted in pensions | Tagged , , , , | 2 Comments

Who are these pension delinquents?

Pension delinquents

The weekend has seen a fair bit of interest in pension saving. This morning’s Wake up to Money featured Ros Altmann celebrating 10m new savers auto-enrolled into workplace pensions.

Sunday’s lead story was Amber Rudd’s threat that she and the DWP were coming for future Philip Greens.

As I was finishing yesterday’s blog damning Rudd’s sensationalism, the phone rang asking me to come over to Broadcasting House. Within an hour, I’d done a three minute spot for television and snippets of what I said were reported on stations as diverse as Radio 2 and 6.

I focussed on the balance that needs to be kept between the needs of employers to keep going and the needs of the pension scheme to meet its obligations. I also called on ordinary people to pay more attention to the defined benefits pensions they are lucky enough to be in.

It is really not helpful to scaremonger and Rudd’s “coming for you” comments were also criticised by Wake Up to Money’s Louise Cooper who questioned whether this kind of employer delinquency was top of the pensions agenda.

Sadly, it seems it is the easy target for politicians seeking to make political capital. The wrong focus means that bigger problems – such as the net-pay scandal and pot-proliferation in auto-enrolment are swept under the carpet.

The success of auto-enrolment has been about employers behaving responsibly. A shame that the big message of the weekend was about the existential threat to pensions from sponsors unknown

The 10m figure hit – a pensions good news story

Ros Altmann’s contribution was eloquent on the need to protect defined benefit members, though she ran out of time to say much on auto-enrolment.

Sadly she had to spend more time calming the waters stirred up yesterday than celebrating the 10m milestone.

One person (not me) had emailed Wake up to Money , complaining that he/she had already built up several pots under auto-enrolment but had no way of merging them. The issue could not be discussed for lack of time.

Instead Ros chose to stay “on message”, celebrating the 10 million “new savers” milestone. Considering over  a million of the new savers may not be getting promised savings incentives (owing to their being low-paid and in the wrong kind of scheme), I’d half- expected the great campaigner to seize her chance.

But perhaps Ros was right. 5.30 am is perhaps not the time to get inside people’s heads with more pension issues. 10m new savers are about to experience their big contribution hikes in just over a month’s time. They need all the encouragement they can get.

We need a lot more of Ros’ positivity and a little less employer bashing from our Secretary of State.

Delinquency from opting-out?

I usually listen to Wake Up to Money because I’ll hear something new and Ros had been billed as talking of ways to get those not saving to save into something. This conversation didn’t happen.

But it should! If people don’t save into a pension in the workplace, it’s either because they’re not eligible for auto-enrolment or because they’ve opted-out. Those who aren’t eligible include those not on PAYE – the self-employed , those who are too old – too young and those who don’t earn enough to hit the auto-enrolment threshold (£10,000 pa).

We hear very little from those who opt-out. I hope that we will hear more. Some opt-out for good reason – they may be protecting their Lifetime Allowance. Some opt-out because they simply can’t afford to pay anything into pensions , but most opt-out because they do not see the need to save. We don’t know the splits or whether there are delinquents who choose to rely on the state rather than their own efforts.

Prioritising the real delinquents

It seems odd to use the same word to describe bosses who underfund pensions and employees who ignore them. But “delinquent” is a good word as it describes both minor crimes and – in a more legal context – a  breach of duty.

Where employers are in breach of duty , we have a Pensions Regulator with the powers to enforce compliance.  Will giving them extended powers to mount criminal prosecutions against miscreants choosing to invest recklessly, or saddle pensions with debt (presumably Rudd meant “liabilities” rather than “bonds”), make any difference?

Will any prosecution ever be successfully brought which relies on the basis of Rudd’s definitions? I think it very unlikely.

Where prosecutions can and are being made (both criminal and civil) is in the areas of pension fraud and deliberate non-compliance with auto-enrolment. Here pensions delinquency is under the scrutiny of the Pensions Regulator (with varying degrees of success).

Unlike the cases of BHS and Carillon – which the DWP cite as provoking this new round of sabre-rattling, the frauds against individuals from scams and from the non-payment of auto-enrolment contributions, are very real.

As I hinted at in my comments to the BBC, the non-payment of the promised incentive to those not qualifying for pensions relief at source, may be the most real fraud to future savers and one the Government do not want to talk about.

Policing the problem we can solve

Opting-out is another form of pensions delinquency – where it is done recklessly and with intent that the saver relies on someone else (usually the tax-payer) to make things up in later life.

We should not sanction this kind of delinquency, we should try to understand it and deal with it where we can. But surely this is no more the priority than chasing after delinquent sponsors of defined benefit schemes.

Instead, we should be focussing on the areas where the Pensions Regulator can make a difference, protecting savers from scams and the non-payment of promised contributions.

And we should be focussing on the matter not discussed today – how we encourage those outside of auto-enrolment to save for their retirement.

Once again, the good work of a million new employers is being undermined by silly-talk about bosses playing fast and loose with DB pension liabilities (and assets).

The real shame about Rudd’s comments this weekend are that they deflect from the good news story of improved pension coverage and focus on the wrong problems. 

We have the pension policemen, politicians need to focus their attention on the real problems and not grandstand for votes.

Pensions Regulator

Posted in pensions | Tagged , , , , | 2 Comments

What do we mean by fiduciary care?

store pod

Travelling back from Newcastle last week in a much delayed train, the passengers in my carriage were trying to get to sleep. It was tough as the carriage were illuminated by the brightest of stip lights.

Eventually some of us summoned up the energy to find the train manager who – along with the train management team appeared to be having an extended cup of tea. One of us asked if the lights good be dimmed, the management team seemed shocked and the manager asked “why”.

We did eventually get the lights dimmed and those who wanted extra light used their individual spotlights above their head.

I thanked the chap who asked the question and he replied “so much for customer care”.

This is an example of a whole train being kept awake because the train management team weren’t paying attention to the needs of their customers.

It’s a good example of a failure in fiduciary duty, in the end it was a member of the collective who changed things and took control.

An example of fiduciary failure

There’s a good discussion about fiduciary care in this linked in post by Ben Fisher.

The post is a story on BBC about a Welsh worker who’s lost his pension savings through a Storepod investment . The investor bought the pod and thought that the trustee of his SIPP would make sure that the pod was used. It wasn’t and the pod is now worthless.

He said: “I phoned Store First, and a lady said ‘Your store pods are empty.’ I said ‘What do you mean they’re empty? They can’t be.’ She told me they’d been empty for two years… Nobody had contacted me to tell me.”

The investor had assumed that his trustee would look after him but the trustee did nothing (a git like the train manager).

Store First said they were never contracted to manage, advertise or let the storage pods – that responsibility, they say, lies with the pension trustee, Berkeley Burke.

It said: “Mr McCarthy has not purchased any store pods direct – he has instead arranged for a trustee to buy them, as part of his self-invested personal pension.

“We have asked the trustee, on two separate occasions, if they would like Store First to manage their store pods.

“The trustee has not however returned the management agreements we have sent to them. That is entirely within the power of the legal owners of the store pods. Store First cannot, and would not want to, force any investor to use Store First’s services to let out their store pods.

Where is the duty of care?

The notion that the customer’s interests come first, appears not to have occurred to Berkeley Burke.

No doubt they will argue that self-investment means just that – you manage the investment for yourself.

Judging by the incredulity of the investor, this notion hadn’t occurred to him.

So there you have it, investors being told to get stuck into an investment they have to manage themselves while the provider takes no responsibility for the investment other than to provide a platform and a tax-wrapper.

Who’s is the duty, the investor, the trustee or someone else?

I suspect that the original adviser (who went out of business shortly after recommending Store First and Berkeley Burke will not have the resource to compensate, if the Financial Ombudsman finds in favour of the investor.

That responsibility will then fall to the Financial Ombudsman and the Financial Services Compensation Scheme, funded by the guys who advise and don’t go bust.

The duty of care reverts to those who care.

Restoring confidence in pensions?

Clearly people expect those who manage their money to exercise a duty of care. In a recent conference NEST told delegates that when asked, members said that by investing in the Government pension , they expected the Government to provide them with a pension.

People don’t expect to be on the hook for managing risks when they have paid others to do just that.

Whether it’s NEST  or the Berkeley Burke SIPP, people expect the people who they pay to manage their investments to manage their investments.

When this doesn’t happen, they are incredulous. Just as I was incredulous that the man who managed the lights on our train asked why at 11.45 pm people wanted the lights turned down.

I am sure that every time a complaint is raised against a railway company or a pension provider , confidence in the service is eroded just that little bit.

Which is why the customer experience matters every time.

When fiduciaries stop caring, we really will have to start managing our money ourselves.

Proper outrage.

It matters a lot that fiduciaries care, whether they are running NEST or a SIPP or simply advising.

The retail pension system, though it might appear to be every man for himself, is much more collective than at first seems. Compensation is collective and so is the perception of “care”.

I do not currently have to pay the FSCS levy or fund FOS but failures like the management of this man’s Storepods are damaging to me and my business interests.

I’m glad to see the proper outrage from those commenting  on the article.

Someone has to care!

Posted in pensions | 1 Comment

Trustees and transfers

Jo Cumbo’s article in Pensions Expert on contingent charging takes a dim view of trustee behaviour to date.

Her idea that advice to stay in a DB scheme could be paid for by docking the original pension has got some support, importantly from Sir Steve Webb


Certainly trustees haven’t been involving themselves in offering guidance, though that could change.

Adrian Boulding’s suggestion – posted on my “planning permission” blog is as follows

I can see a case for a “pre-advice” service, costing not thousands of pounds but hundreds of pounds, that would provide an indicator as to whether full advice is likely to say either yes or no. It would just need an algorithm asking key inputs like your age and wage…….Maybe scheme trustees could offer this service.

The only bit of that , that I’d disagree with is that this kind of triage should cost hundreds of pounds. The key inputs can include a “why are you interested in transferring with a “tick one box” capture, including five or six reasons such as

  1. I don’t think I’ll live long enough to enjoy my pension
  2. I need cash now to pay my debts
  3. I think I can invest my transfer to give me more in retirement
  4. I want the flexibility to spend my money how I like
  5. I’ve been told to look at a transfer by someone.
  6. I’d rather have the money in my bank than in a pension


 1 and 2 ;- the needy

A few questions as to the motivation of the person making the inquiry would quickly establish where this person should go. There are some very obvious danger signs, people trying to draw cash out of pensions before 55 should certainly flash a red light. Tax-free-cash can of course be used to pay off debt but anyone thinking of mortgaging their retirement needs debt-counselling and fast. A responsible pre-advice service can sign-post the free debt counselling availably locally through citizens advice and centrally through the Money Advice Service (now part of the Single Financial Guidance Body).

Where the motivation is driven by the inquirer’s concerns over their health, it’s a different matter. Many people do not realise that were they to die before drawing their pension or as a pensioner , someone else can be nominated to receive a residual pension as a dependent. Obviously a lot of this comes down to definitions but this is an opportunity for trustees to properly promote the scheme’s capabilities before the inquirer is referred to a financial adviser. Defined benefit schemes employ administrators who’s job it is to explain these things and if the administrators can’t do that job, it may be time for the trustees to reconsider them. Trustees can and should back their administration teams to explain scheme rules.

These two categories of inquiry are “needy” and they both point to what the FCA call “vulnerability”. These kind of questions are best dealt with by people who know what they are talking about but they do not generally need financial advice. In an extreme situation, it may be that the inquirer needs medical help, the duty of care to members does not preclude referring the inquirer to a medical service.

3 and 4; the greedy

There are some confident people who believe they can do a better job with the monies allocated to pay a defined benefit than the trustees. These are the people who should be taking financial advice and they may well be those who least want to pay for it. These are precisely the people who are being failed by contingent charging.

I appreciate that many readers will consider me paternalistic or even patronising , but the reason we have trustees is to protect some people from themselves. It’s not just in Port Talbot that contingent charging unlocked the money, hundreds of thousands of people are now sitting on pension wealth unlocked from defined benefit pension schemes – with the money either sitting in cash or in equities and very much at risk of not providing an income for life with any kind of inflation protection.

I also appreciate that for many of those people, replicating the defined benefit income stream was not the point of the transfer and I can accept that some people will be quite comfortable with the depletion of their transfer value by the fall in world markets and the scant interest available to them in 2018.

But I am quite sure that a very large number of the people who transferred out considered the charges levied on their pot by the adviser, the price they paid to get their money, rather than the cost of financial advice. These are the people who we should worry about, for they are the people who consider the payment of advisory fees a kind of insurance policy against which they can claim if things go wrong.

And if things continue to go wrong with their pension policies – or worse still if they have by now transferred the money from their personal pensions into their bank accounts, then the fall in pot value and/or the tax bills on claims, may be the basis of claims to come.

The FT run another story today about the costs of drawing down cash – showing it is hard to have your money managed in an advised way for less than 2% pa.

It is hard to see how a  drawdown strategy costing 2% pa can deliver value for that money in a low-interest, low-return economic environment. Yet this is precisely what many of the personal pensions set up under contingent charging are costing and – even if markets do pick up – the cashflow projections which underpinned many of the transfer approvals I have read, have little or no chance of being met.

If the reason for transfer is that someone is backing themselves to beat the trustees, then that person should be testing that with a financial advisor and paying up front for that advice. The argument that contingent charging is more tax-effecient and maintains liquidity for the client are pure sophistry. If someone is so good with money that they can manage their pension themselves, they should have plenty of liquidity and should know that VAT is charged on professional services. IFAs who think they can avoid charging VAT by charging advice to their fund clearly do not believe they are offering a professional service.

5 and 6; the numpties

There are some people who are neither needy or greedy, they are just financial numpties. These people should not be taking financial advice, they should be taking their pension.

People who take transfer values and then cash in their pensions so they can have money in their bank accounts are numpties.

People who get persuaded to take transfers by financial advisers or friends or family are behaving like numpties. They are generally following the crowd, they are not thinking for themselves – they are neither needy or greedy – they are just being stupid.

I could have told many of the people I met in Port Talbot they were behaving like numpties and in fact Al and I did – when we heard some of the reasons given for transferring – including the arguments that they didn’t want their money with TATA, we told people straight not to be so stupid.

These people did not need to have a financial adviser do cashflow planning for them, they needed to transfer into new BSPS or occasssionally take a reduced pension from the PPF.

To be fair to the Trustees of BSPS, they had set up help for these people, but it was like building the Maginot line- the defences were in the wrong place.

Any pre-advice service needs to identify financial muppets and tell them to leave well alone.

We try to be too tender – people need telling

Amidst all the hand-wringing of the past 12 months, I have heard very little straight talking about transfers.

Hopefully you have read some straight talking on this blog and if you don’t agree with me, you can straight talk to that effect in the comments box.

I don’t agree with Phil Young who blames the transfer debacle on freedom and choice,  

I don’t agree with Quilter and SJP that contingent charging should remain to broaden the range of people who can get advice.

If there was a policy mistake, it was from the Fowler review in 1987 which allowed transfers out of DB plans in the first place. As for vertically-integrated provider arguments about financial inclusion, some of the people who are targeted for DB transfers would never have passed their IFA’s sniff-test, had they not had a big fat CETV.

These are bogus arguments that perpetuate the misery that is being occasioned by transfers out of DB schemes using contingently charged advice.

The pensions given up by steelworkers and many others were designed to provide them with a wage in retirement and a residual spouse’s pension. They also gave people the option of tax-free cash. They were entirely suitable for most people’s later life needs and they have been swapped for wealth management schemes about which most of these “new to advice”, contingently charged people – have no idea.

The people who need telling this are the FCA and TPR who are supposed to regulate advisers and trustees respectively. I tried to tell the Trustees and Advisers of BSPS but they didn’t listen. I am still trying to tell it straight

Contingently charged advice is little more than commission and should be banned immediately.


Posted in advice gap, pensions | Tagged , , , , , , | 3 Comments

Pension Transfers need planning permission.


cumbo cetv

Jo Cumbo

In an important contribution to the debate on how members of DB plans can pay for advice on whether to transfer out, the FT’s Jo Cumbo calls for the financial advice bill – regardless of whether the answer is “yes” or “no”, to be paid by the DB scheme.

The suggestion is very helpful;  this practice is already in place for individuals to pay tax bills arising from stealth taxes on pension accrual where individuals inadvertently breach annual allowances. Schemes are getting used to docking pensions for divorce settlements and the administrative processes needed to administer the advice payments are already in place.

Royal London’s Steve Webb has now come in alongside this suggestion.

Indeed – but if contingent charging was banned we’ve also suggested in our submission that the impact could be mitigated by allowing advice costs to be debited against DB rights, in line with your column this week in @pensions_expert

— Steve Webb (@stevewebb1) February 7, 2019

This is a rare example in pensions of a news reporter making the news!

The ironies of over-information

Most of the time, prospective pensioners walk into life-changing financial decisions surrounding their defined benefit pension schemes with little or no knowledge of the decisions they are taking. An example being the taking of tax-free cash, which is now so much the default that actuaries assume it will happen in scheme funding calculations.

Many schemes are offering commutation factors that can only be justified by the tax-free outcomes, means that schemes are getting away with poor exchange rates between cash and pension – because people don’t know the questions to ask.

So it’s ironic that the conversion factors surrounding a CETV are accorded so much scrutiny that such a cumbersome vehicle as scheme pays – is actively considered.

The reason it is, is that large parts of the DB pension system are now so fragile that they risk being eroded and falling like cliffs into DC. It needs to be pointed out that there appear to be no losers in such erosion, the advisers are making money, providers are making money and pension schemes are clearing swathes of risk from corporate balance sheets. As with most “win-win-wins”, the dictum we should be reminding ourselves of is..

“If it looks too good to be true – is probably is”.

Case study – me!

When I was 55 , I looked at taking my defined benefit as a transfer to a DC scheme. I was allowed a free transfer quote, prepared at some expense to the scheme by scheme actuaries and administrators. I looked at my CETV and was able to assess whether I would be getting value for the money on offer. I gave myself advice (which I was entitled to) and did not take the money. It wasn’t hard to see that there was a good case at the time for taking the transfer , but I didn’t.

  1. I didn’t trust myself to manage the money successfully
  2. I didn’t trust anyone else!
  3. I didn’t want to be worrying about the markets and the impact on my pension
  4. I had confidence that as a pensioner, I would get my pension paid as long as I was on the planet – and that my partner would get a residual pension too.

Because I did not pay to come to these conclusions , I saved myself around £10,000 (+vat) in advisory fees or a nasty litigious time with an IFA – if I had turned down a recommendation  to transfer on a contingent charge.

I will of course have to live with my decision to get paid a pension rather than take cash, but I am sanguine about that.

If I had taken advice and had a £10,000 charge against my pension, I would have around £25 pm docked from my pension (increasing by RPI each year) for maybe 50 years.

The consequences of eroding pensions by fractional deductions through scheme pays are every bit as serious to my long-term finances as the payment up front. I imagine that in a scheme pays, the VAT I paid would be un-recoverable ( 20% of the £10,000 I was quoted).

The danger of scheme pays

The numbers above are sobering. £10,000 paid to an adviser from a scheme or from the client’s bank account is still £10,000 and that £25 pm is the equivalent of £10,000 whichever way you cut the cake.

It is effectively paying for advice on the never-never – a kind of Hire Purchase agreement of which PPI is the latest incarnation.

The danger of this approach is that it is presented to clients as so painless as to be a “no-brainer”.

“what’s the worst that can happen, I say “no” and you’re out a fiver a week?”

If a fiver a week’s the downside and the upside is half a million pounds of accessible capital, the temptation to take unnecessary advice is obvious.

Unnecessary financial advice

I don’t think you’ll find the phrase “unnecessary financial advice” in the FCA’s COBS rulebook, you certainly won’t see it as a risk in any advisory literature. The received wisdom is that regulated financial advice is necessary.

But in my case study, I firmly believe that I did not need advice about taking my transfer, all the decision points listed above were decided upon by my emotional response to the prospect of having to manage my own money.

Most people, when presented with the stark reality that now faces people who’ve transferred, is that they would have been better off in their schemes being paid a scheme pension for the rest of their days.

They didn’t need to be charged thousands of pounds to be told that. So for most people, the scheme pays route is a total red-herring and good advisers will not lead people down that route.

The danger is that less good advisers will find the each way bet of being paid by the scheme or out of the transfer value, a bet they cannot lose. The poor adviser will be able to lean on the victimless charge argument to provide unnecessary financial advice – as damaging an insurance policy as PPI – and equally useless.

Scheme pays requires full disclosure

If we are to have a non-contingent charge transfer advisory payment based on scheme pays, it must be made crystal clear by the trustees that they will be sending the client’s adviser an amount in pounds shillings and pence terms. Trustees must also make it clear that the deduction from someone’s pension as a result of this is likely to cost the member that same amount – in today’s terms and is simply the same bill expressed another way.

Advisers who work on such a system would need to be equally clear about the impact of scheme pays.

I remain to be convinced that a system of scheme pays would stop unnecessary advice. I think we need more, applying for a transfer should be like applying for planning permission on a house.

Planning permission

I stick with  previous comments in precious blogs; that this kind of advice – advice that is paid for on the never-never, should only be entered into where there is a clear reason why a prospective client might be better off not taking the scheme pension.

My argument is that the onus should be on the adviser to prove that there is a case for the client to be asking the question about transferring in the first place.

Taking a planning decision like this should be as serious a decision as applying for planning permission on a house

The submission of that case for clearance – should be something that should be carefully considered by the adviser. It should not be a cost-free process. As with a house- planning application – it should be submitted with the risk of failure being obvious upfront.


cumbo cetv2

The advisory diagnosis may not always be what was hoped for,


Posted in pensions | 5 Comments

“Why pensions might just change your life”.


This morning I’m travelling north east to Newcastle on the first train up. I’ll be delivering the graveyard slot for my friend Carsten Staehr at the Cintra Conference.

The people I’ll be talking with don’t like pensions, Carsten’s title is provocative. For the payroll and reward people who are Cintra’s clients, pensions are a pain in the neck, the most incredible mess of rules which they struggle to comply with, always worrying about fines and worse – being dished out by a distant pension’s regulator.

I guess my job is to breathe into their day something of the enthusiasm I have for helping people manage their financial affairs so they have a decent wage before and in retirement.

If pensions are supposed to help you stop work, people should be enthusiastic about them. But “thank God I’ve got a decent pension”, is a phrase seldom heard either in or outside the pension bubble that I live in.

If you get to a point in your life when you find that because you have the money, you can stop work, then your pension has changed your life – no doubt about it. And millions of ordinary people are retired today on good pensions with the prospect of an income ahead of them that lasts as long as they do.

I think we take this for granted. But it is an economic miracle that we have created a safety net for so many through the national insurance system and through workplace pensions.

Yesterday evening I sat with some great pensions people variously representing Local Government Pension Schemes, Corporate defined benefit schemes and the new style DC savings plans. It became clear early in our discussion that this meeting was going to be fruitful and that we would agree a common agenda for a conference being planned for May.

What brought us together was the phrase “better pension outcomes” which is all that we focussed on for nearly two hours. Whether we were looking for greater efficiencies for Local Government Pension Schemes , or improving the certainty of the full pay-out of corporate DB or helping people with the business of turning the pot into an income for life- we were joined together by a strong sense of purpose.

This purpose was made the more real as the people around the table clearly felt they had the power to change lives in a positive way.

I’ll be the first to admit that pensions are to most people “scary” almost unbearably complicated and an aspect of their finances that is best consigned to the bottom drawer to be properly opened late in life, People know damned well that pensions are very important and they feel guilty that they don’t feel better informed about their retirement planning.

This is the challenge that I face today, I will be talking to a group of people who see pensions – both personally and work-wise, as extremely hard work. My job is to make them easier, simpler and less scary.

I can only do this by approaching my talk with a positive state of mind. After the conference, I am having supper with two smart academics who appear baffled by their own circumstances. They told me their retirement problems and I blurted out “that seems simple enough”. I can see the wood – they can only see trees!

Like the people in the conference, my friends are looking for encouragement to do what they want (I assume to find a way to stop or cut down on work and rely more on pensions and retirement savings.

They, like most people I know (professionally and socially), feel embarrassed about asking simple questions about how they can get their money back to meet their financial needs. It is fantastic to be able to help them get better pension outcomes.

Pensions have undoubtedly made my career, last night I really got what my vocation has become and I look forward to my talk this afternoon and supper because I’ll be doing what I love.

I hope that some of the people I’ll be meeting today, will read this blog and say – yes – Henry really does enjoy helping people get better pensions. That is why I am travelling to Newcastle for the day and why I’m happy to!

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Come join the party – the AgeWage video!

I think AgeWage the most exciting thing I’ve done in my working life!

Watch our video and see if you agree!

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Not all recycling’s in the public interest!

recycling 2

Pensioners recycling

A lot of people are confused about taking money out of their pensions and the pensions industry isn’t being very helpful in encouraging people to have their money back (funny that!).

So when I read a headline in the Financial Times announcingUK pension freedoms open huge tax trap for over 55’s I smelled more scare tactics from those who would rather we kept money with them than spend it on ourselves – I was right.
The tax trap in question has “caught” 980,000 over-55s who took advantage of new pension spending freedoms between 2015 and 2018, with an irreversible reduction in their annual pension tax relief allowance from £40,000 to £4,000.

In practice, very few people who are drawing down money from their pension will be saving more than £4,000 pa and you would expect that most who do – will be accessing tax advice. This is a rich man’s problem and is almost certainly dwarfed by the amounts in unclaimed tax-relief that higher rate taxpayers miss out on when contributing to personal pensions.

I was pleased to see the comments below the article were generally robust. This is typical

This is boring nanny state speak. If you are able to invest £40k but unable to figure out the implications without the help of financial advisers then time to go peacefully to higher planes in the company of grim reaper with a scythe.

Putting this problem in some context

Generally speaking, people who are investing into pensions while drawing money from pensions are doing so as a tax arbitrage and not as an insurance against old age.

Nonetheless, it is important that people who do have pension pots and are over 55 are aware that the annual allowance that they have (normally £40,000) is reduced if people are found to be recycling money they are drawing from a pension back into a pension.

As soon as you start drawing more than the tax free cash available from your pension pot, you are seen to be “recycling”.  Sometimes this recycling has  value as in this idea from Debt Camel

pension recycling

But the reason that recycling is restricted is that for the most part it serves no social purposes other than to make the rich richer.  I doubt that many of Debt Camel’s customers are worried about losing the capacity to pay £40k per annum into their pension!

We currently have over a million people missing out on their promised retirement savings incentives because of the net-pay anomaly. Let’s get back to questions of social justice.

Arguing over the annual allowance misses the bigger point

That people are not aware of the technical issues around recycling is not the big issue. What is much more important is that many people are confused about whether they can start taking their pension when they are still at work.

The simple answer is that they can and that apart from the fact that the pension may be subject to a higher rate of tax than salary, there really isn’t any reason why someone over 55 shouldn’t have access to their money.

Indeed, many employers are keen to promote the freedoms people have , so that their mature workers can give themselves options which may include part time working, consultancy or early retirement.

What is surprising is that employers who are keen to offer flexible working practices, are paying so little attention to the opportunities their staff have to structure their exit from the workplace using the retirement savings plans that these very employers have sponsored.

The use of pensions for the over 55’s is perhaps one of the least understood areas of reward strategy and it doesn’t require employers to spend a lot to get right. We recommend that employers work with their staff’s financial advisers or provide financial advisers for staff to use. There are opportunities for advisers to be paid by employers without that payment being deemed a benefit in kind.

If the budget permits, an employer can commission pension consultants to provide a program of seminars and one on ones with employees in the retirement zone (effectively anyone over 50).

An alternative strategy may be to empower those in reward to become pension champions themselves. Learning the pension ropes may appear daunting, but there are plenty of training courses that can help. The Pensions Management Institute are particularly helpful as are the CIPP and the Learn Centre.

First Actuarial, like most pension consultancies, operates a program for the over fifties. We call it  “saving enough to stop work” and it runs at big companies such as Unilever. We are encouraging staff to create their own pension dashboards where they can see all their in retirement financial resources on a single screen. Even if this is no more than a spreadsheet word table or even a hand written list, the creation of a personal balance sheet and cash flow forecast is not as hard as it sounds!

Most people are frightened by pensions, but in our opinion, this fear is increased by the scaremongers within the pensions industry who would rather have us hang on to our money, than see it spent on retirement.

saving enough to stop work.PNG

Posted in Debt, pensions | Tagged , , , , , , | 2 Comments

Al Rush has made the difference

Al rush new face

Al Rush


I’m surprised , a little freaked out – to be on a list of candidates for Professional Adviser’s personality of the year.

You can vote for me, but I’d rather you didn’t. I’d rather you voted for Al Rush who is not just a personality but a personal hero!

And the main reason I’ve got anything to be proud of -is because that lad drove me down to South Wales a couple of Novembers ago!

Here’s something that I got on Facebook messenger that means more than winning any award. It makes being a blogger worthwhile. I won’t embarrass the sender , but if he wants to reveal himself, he can comment below!

Good evening Henry , I’ve just seen that you liked my post on FB.

The fact is, I should tell you that your blogs , and appearance at the parliamentary committee , has helped me enormously..

I’m still not out of the woods , but I just wish I’d have had your advice a couple of years ago . I equipped myself with some print offs from said blogs(apologies if there is any copyright infringement 🙂 ) , and went to an IFA and was armored, protected empowered and that so , I’m eternally at your debt for . Kind regards….


Thanks for making my weekend!

Putting things in perspective

I know that some of my blogs are controversial and some have just proved me wrong. But with well over one million reads, I’d like to think that people get value from what I’m saying.

So this is what I am saying

Blogs may make a little difference but Al has made all the difference!


Posted in advice gap, age wage, pensions | 4 Comments

Paperless pensions are nearly here!

Someone said something great about me last night. It was Kevin O’Boyle, retiring head of BT Pensions. He introduced me to a millenial as “Henry Tapper” the only person my age who thinks like a millenial”.

It’s a hell of a compliment and one of an exaggeration but I do think about younger people a lot.

One of the things I’m thinking more and more is that we must start our conversations with people who are saving and spending their pensions – digitally. If you can see an invitation to like AgeWage Ltd at the top of this page, you should also see that quite a lot of people are liking it.

My guess is that what people like is not the detail of what AgeWage does but the fact that we’re  trying to talk about difficult things using tools that people like to use.

Let’s go paperless

To my great relief, First Actuarial’s payslips went paperless last year. You had to opt in to a printed payslip , which meant being near a printer. I don’t have a printer and can’t be arsed to file paper anyway, I can see any of my payslips on a file that I have a password to – sorted.

So why is it that I get my pension statements from the people I’m saving with and the pension scheme that pays me each month – in paper?

Every time I get a statement, I sigh. If L&G sent me a mail or a message with a link, I’d be able to see what I want to see on a screen. I’d be able to click through if I wanted more detail, I’d be able to hook the information up to MoneyBox or MoneyHub or to my pension dashboard. But no – I get a piece of paper without so much as a QR-code

It’s not just statements that need to be simple

We think that digital is complex, and to those who do not understand digital it is. But to consumers, a digital pension statement can be the easiest thing in the world. it can contain a video telling you how to read it, it can contain links to apps that can explain more , every data item can be clicked through to give more information.

In short, a digital statement simplifies the way we can absorb complex information so that users get to understand things the way they want.

I am not saying that people can’t request a paper statement, but the last piece of paper should get automatically should tell them that unless they ring a certain number, everything they get going forward will be paperless.

It’s not just payslips, it’s tax returns and insurance claims and smart-phone bills. We should make it our earnest aim to make the postbox a thing of the past. Digital can simplify our lives.

So what of simple pension statements?

The work that Ruston Smith, Quietroom and others have done on simplifying pension statements is quite excellent. I hope Ruston has taken heart from the call of the FCA for charges on drawdown to be explained in pounds shilling and pence terms.

The original project was stymied by a move from certain parties not to tell us what we had paid for our pensions on pension statements, – apparently a till receipt is too complicated.

Of course a till receipt isn’t complicated though people do need to have it explained to them from time to time – it’s good that people do question till receipts – sometimes they show errors – the process is called engagement and that’s exactly what we’re supposed to be encouraging people to give us.

If a simple pension statement was delivered digitally, the till receipt could be clicked through from the “this is how much your pension cost last year” button. If people wanted to query each item, then they could click on it. If the provider of the statement was a bit advanced, it could develop a bot to answer questions, they could even provide live chat within certain time constraints. Questions could be answered by fifteen second videos, the customer could be educated in a single visit to the statement.

Moving beyond simple statements

A great deal of time is being spent on making digital experiences good ones. My phone is full of apps which I use because they make life easy – apps like MoneyHub and MoneyBox challenge me to see my finances in a new and better way. They make a difference to my day to day living. I don’t pay £2.70 for a Cappucino any more, I pay £3 – 30 p of which goes to an ETF which I will cash in a couple of years for a few hundred pounds.

Similarly, if I want to find out not just the value of my pension pots , but how they’ve done, I’ll be able to use the AgeWage app. I’ll be able to ask it how responsibly my investment managers have behaved, what my options are going forward and most importantly – how I can get my hands on my money!

Simple statements can incorporate an AgeWage score and a click-through from the score does all the rest.

Pensions needs to bootstrap themselves into the digital economy.

We talk about pension communications from the perspective of a world that is no longer there. People have moved on, pensions hasn’t.  Paper statements are not part of the world I live in.

Believing that we have done enough to simplify pension statements is to allow ourselves to be blind-sided by the past.

Believing that we can get away by posting performance charts on websites as part of statutory disclosures is to totally miss the point. The information we post about the money we manage for others must be delivered on their terms and not ours.

We need to be a lot tougher on ourselves, get out of our offices and onto our phones. We need to see things as millennials do. For where millenials lead, the rest of us follow.

This “boot-strapping” is hard, it involves people doing things differently and learning from others. I hope that  that was the compliment Kevin was paying me last night.

I wish Kevin O’Boyle a long and happy retirement – properly funded by his pension

KevinOBoyle happy retirement Kevin

Posted in pensions | Tagged , , , | 2 Comments

FCA to tame the drawdown bucking bronco!


broncoYesterday was a good news day for people concerned about retirement income. The FCA made two meaningful statements on what it intends to do to help ordinary people trying to manage their in retirement finances. The first was the publication of PS19-01 and deals with disclosures and the second was  PS19-05 which deals with investment matters.

Investment Pathways

We are seeking feedback from stakeholders on proposals to require drawdown providers to offer non-advised consumers a range of investment solutions – with carefully designed choice options – to help consumers choose investments that broadly meet their objectives. We describe these as ‘investment pathways’.

Ensuring investment in cash is an active choice

We are seeking feedback from stakeholders on proposals to require drawdown providers to ensure that consumers invest in cash only if they make an active decision to do so. We propose that these providers must also give consumers warnings about the likely impact of investing in cash on their long-term income, both when they enter drawdown (or transfer funds already in drawdown into a new product) and on an ongoing basis.

Actual charges information

We are seeking feedback from stakeholders on proposals to require firms to tell customers beginning to draw on their pension how much they had actually paid in charges over the previous year, in pounds and pence and inclusive of transaction costs.

The investment paper  , which may become rather more important ,  also concerns the role of IGCs in regulating the wild west of “post retirement strategies”.

A financial bucking bronco.

The best image to explain the current state of affairs for people trying to draw an income from their savings is the bucking bronco.

You get on the beast with no instruction manual and you ride it till it throws you off. Each time you get thrown off you do serious damages to your finances- till in the end you do serious damage to yourself.

How else to describe investments into funds whose overall charge is in excess of 2% pa , where the tenable drawdown rate (gross of charges) is no more than 5%?

How else to describe the dangers of sequential risk through individual investment into volatile funds that can trade – intra day by as much as 10%?

How else to describe the impact of advisory charges which can add 1% + to Discretionary Fund Management Agreements already costing the said 2%+.

Why the proposed extension of scope of IGCs matters

The original scope of IGCs was to oversee workplace pensions. IGCs were given a second task which was to see through the recommendations of the IPB on legacy charging.

In CP19-5 the FCA state that

After careful consideration, we still intend to extend the IGC regime to cover investment pathways.

Many of the larger providers who will offer investment pathways already have IGCs to provide independent oversight of the value for money of workplace personal pensions.

These larger firms will account for most consumers in investment pathways.

As an alternative to IGCs, we already permit Governance Advisory Arrangements (GAAs) for smaller and less complex workplace personal pension schemes. We intend to allow GAAs for providers with smaller numbers of non-advised consumers in investment pathways. We are considering further a proportionate approach for providers with smaller numbers of non-advised consumers.

Providers will not need to provide investment pathways if they require that all their consumers take advice before entering drawdown.

We intend to consult on our proposals for independent governance of investment pathways in a future consultation on IGCs, due for publication in April. This will include a more detailed response to the feedback. Our planned consultation will also include proposed new rules requiring IGCs to report on firms’ policies on environmental, social and governance considerations, member concerns, and stewardship, for the products IGCs have oversight for.

The FCA are also looking into employing IGCs and GAAs to oversee non-advised drawdown from non-workplace pensions.

Right now, the IGCs are relatively under-employed and looking for new work. The biggest area of concern to the FCA is the under-regulated in retirement market where there are no charge caps and little oversite as to whether insurance and SIPP providers products are being used in the interests of clients.

Some of our most powerful insurers and SIPP providers – most notably St James’ Place, do not even have an IGC. They are allowed to get by using a GAA – which is a bite-sized IGCs with bite-sized budgets and influence.

Extending the scope of IGCs and GAAs would seriously strengthen the IGC’s remit to cover the wild west and help tame the bucking bronco.

It seems that IGCs will not be used to assess the value for money of advisory fees – indeed the direction of travel (which will be better flagged in April) – suggests that IGCs and GAAs could have a remit to cover all non-advised drawdown. But the paper does mention that the IGCs and GAAs may be asked to oversee drawdown from non-workplace pensions. I think they should – there is precious little else to protect the 94% of the population who do not pay for financial advice.

Since the majority of the issues that negatively impact people’s drawdown strategies derive from over-charging within the product, the use of inappropriate funds and the lack of value for money from adviser charges, the job of oversite should play to IGC’s strengths.

Taming the drawdown bucking bronco

The proposals in the two documents published yesterday are worthwhile. There has been disappointment published by the Work and Pensions Select Committee and by Which that the charge cap has not been extended into post retirement products but I don’t share the view that it should be.

We need a more fundamental approach to fiduciary care than the blunt instrument of a charge cap.

I would prefer to see the IGCs and GAAs and the FCA test the value people get for the money they pay to be on that bucking bronco. If it can be proven that people can be taught to ride it and ride it as experts, then there is value. But the cost of advice cannot be so great as to ruin the ride.

If the FCA, IGCs and GAAs cannot bring the costs of drawdown down, then we may have to resort to a cap in the final resort; but the cap should be the long stop, not the wicket-keeper.

If people are left to their own devices, the measures that are proposed – the investment proposals – need to be shown to work. I do not see how these measures can provide the protection people need to get the kind of wage in retirement most people expect.

For that people will need a different kind of product, a collective product such as an annuity or CDC. These products carry different risks but – I suspect – risks that people will find easier to deal with.

The bucking bronco may be fun for a party, but it’s not what you  ride into retirement on,

Posted in advice gap, corporate governance, FCA, pensions | Tagged , , , , , , , , , | 5 Comments

The “annuity puzzle” and how to solve it.


Have you noticed how TV drama focusses on dying? We’re obsessed with death. Statistically the county of Midsomer should be totally depopulated by 2050, such is the carnage wrought on its citizens. We mark each celebrity , friend who dies. Our news broadcast focus on the loss of life. Our obsession with our ending overshadows the fact that we are still living and most of us are showing no sign of dying.

We spend time in the gym, we walk the hills , we diet and we avoid toxins to avoid death. Yet we still bet on our dying sooner than later.

This fact is we do not want to insure against old age because old age is not in our imagination. Everything we are doing in this massive attempt to stay young, is in denial that we will grow old.

I am not surprised by the findings of the IFS. Paul Lewis comments

He is partly right, but the propaganda is populist, there is a pre-existing bias in our psyche towards nostalgia and we yearn for youth rather than preparing for the future.

Death is so much more glamorous than living long. Death doesn’t just sell TV drama, it stalks our imagination, a real foe against whom we fight to be rewarded with the one thing we have no plan for – a long older life! This is so curious. It is what the Institute of Fiscal Studies calls “the annuity puzzle“.

A conspiracy against annuities?

Picking up Paul’s theme about “propaganda”, and continuing my musing on murder mysteries, I’m looking for a motive.

Why has everyone from George Osborne to the Wealth Management Industry got it in for annuities?

Research from the mid nineties on (Orzag + Orzag +Mehta) shows that annuities purchased in the UK are value for money products. They are well priced , there is a competitive market and for the certainty they offer, they provide a decent income in exchange for the capital used to purchase them. The research consistently shows that annuity providers are not ripping off their customers.

When George Osborne said that nobody need ever buy an annuity again, he raised the roof of the house of commons, we all dislike a product the point of which is to fund the part of our life we don’t want to think about.  But the product is sound, it does what it says on the tin. I wrote recently about work Legal and General have done on annuities which shows again that the problem is not with annuities, but with people’s failure to engage with the reality of the future.

I think that this unstated bias against protecting ourselves against old age is built in to much of the objections to CDC. If only 12% of us are purchasing an annuity with any of the money we have at retirement, why should 100% of us choose to club together and insure ourselves against living too long? Do we want longevity protection – 88% of us clearly don’t see this as a priority.

Do we need longevity protection? Well we are likely to hear within the next few weeks more bad news about the state of long-term healthcare and the vital need for us to do some planning to afford the implications of a long demise.

If our answer to this problem is to blow our pension pots in our sixties and seventies, then DC is presenting the next generation with a massive problem. The moral hazard is obvious, we are presenting our children with a long-term care bill that can only be met from their inheritance or for a levy on the wages of those still working. Either way our children will have to pay for our healthcare – unless we make provision today.

Mortality pooling prevents inter-generational transfers.

My conclusion is that ordinary people cannot afford annuities any more than ordinary private companies can afford Defined Benefit pensions. The cost of guaranteeing the future is too great, a lower level of certainty must be admitted or people give up altogether.

The lower level of certainty I am thinking of, is of course the unguaranteed wage for life offered by a properly managed CDC plan.

If we cannot afford “proper” pensions , we cannot afford not to insure against old age either. The annuity puzzle presents this paradox but no answer.

CDC presents an answer, albeit one that depends on a belief that over time – maintaining the funding of unguaranteed pensions depends on investing in growth assets rather bonds, keeping admin and investment costs down through economies of scale and ensuring that new people arrive into the retirement pool to replace those dropping off the perch.

This is what Royal Mail are doing with a pool of around 140,000 postal workers. It is a noble experiment that will need to be emulated by other organisations if we are to call CDC anything more than an experiment.

Without such an experiment, I see little chance of individuals changing their behaviours much, people will continue to vote against annuities nine to one and we will have as a nation no plan as to how to spend the massive sums we are saving into DC workplace pensions.





Posted in pensions | 1 Comment

People’s pots

Gregg mc

Gregg McClymont- a man of the People

Nigel Mills asks the right question, but it is not for Gregg McClymont or People’s pension to answer. This question needs to be aimed squarely at the Department of Work and Pensions and its Pensions Regulator.

We are now six and a half years into auto-enrolment. Ten million new savers have been included in the second “workplace” pillar of pensions. The vast majority of them can now say that they “have a pension”, though what they mean by that , I doubt many could explain.

As for People’s Pension, the 4m pots that they manage will be unlikely to turn into pensions – in the sense that most people understand “pension”. They are unlikely to turn into a “wage in retirement”, the pots will simply augment other sources of savings, albeit in a tax-advantaged way.

People’s have done exactly the job they have been asked to do.

It should be noted that the 4m people who have pension pots with People’s pension, are paying a very low amount for the management of their money (only 0.5% of the amount in the pot each year). Many  of the employers that People’s provide workplace pensions for, engaged with People’s at no cost and those that are now paying to sign up are paying a low amount.

People’s has had no Government loan yet it has been competing with NEST that yesterday announced another loan from the tax-payer, this time for NEST to meet its obligations under the Mastertrust Authorisation regulations.

People’s do not have this backstop, while NEST can boast they are well on their way to self-sufficiency, they will have got there with the help of up to £1.2 billion of our money lent to them on non-commercial terms.

It is in this context that the Work and Pensions Select Committee should consider statements to employers on People’s websites.

People’s are the real deal.

Employers value their staff, they are pleased to run pensions for their staff – but as I know from running Pension Play Pen since 2013, employers do not feel they have an obligation to provide better pensions, they have an obligation to comply with the rules, to stay solvent and to reward shareholders but they are not obliged to become pension experts.

Actually, those employers who contract with People’s Pension are probably already going the extra mile, People’s has regularly featured in the top three workplace pensions in Pension PlayPen ratings and – in terms of useability for employers – it is right at the top. Not even with all the money spent on it, has NEST bettered the People’s inter-operability ratings for company and multi-company payrolls.

A genuine not-for-profit

As Gregg McClymont likes to remind me, People’s are a not-for -profit organisation and do not have a shareholder to reward. They share this with Royal London and several other smaller master-trusts.

It does make a difference, not just in terms of the commercials, but in terms of the care that the organisation can focus on individual members. In my experience (and Pension PlayPen’s, People’s Pension have done the right thing for members, they have not fallen into the net-pay trap, they offer good member support and they are working towards a more sustainable investment default with the help of the relatively new CIO – Nico Aspinall.

People’s Pension should be getting a round of applause from W&P Select for achieving all this with no soft-loans and in the teeth of competition with a Government backed organisation that operates with the tax-payer’s safety net sitting below it.

It’s a commercial not-for -profit and like its parent B&CE – it always has been


Time to put the member first?

It’s clear that People’s are beginning to think about the peculiarities of being seen as a pension provider, without actually providing pensions. People’s don’t offer an annuity, nor does B&CE (the life insurer).

As their membership matures, helping those members to spend their money will become an increasing feature of what Peoples Pension does. It is not a wealth preservation outfit, the majority of its savers will need at the very least a top up to the state pension, at best a proper wage in retirement paid from their People’s Pot.

This will mean, at some stage, getting those 4m odd savers to take decisions. Decisions such as whether they use People’s or some other pension scheme as their big pot. People will have to have a basis to decide to move money to or from People’s pension and they will do so on the basis of their perception of who has done best for them in the past and who is likely to do best for them in the future.

That value for money estimation is not something that most people are prepared for. The decisions that lie ahead of the 4m employees who Nigel Mills is thinking about are hard and right now there is precious little advice to go round.

People’s pots

So far, to survive as a commercial not-for- profit, People’s have had to focus on the needs of their employers and not on member support.

But that strategy has to – and I’m sure – will – change.

I expect that if W&P Select to ask that question of People’s Pension in another six years, they\d get a very different answer.

Gregg bighair

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The Rookes report is a fine piece of work but actions speak louder than words.


Having read Caroline Rookes’ review of the regulator’s handling of the BSPS “Time to Choose” episode , I’m  satisfied that she’s sending the right messages to the various authorities involved.

There are four authorities who have their say in the report’s press release. They include the soon to be defunct TPAS, the SFGB which is taking on TPAS’ responsibilities, the FCA and the Pensions Regulator. Lurking in the shadows are the Treasury and DWP who jointly fund these regulators and guidance agencies. To the list we could add FSCS , FOS and the Pensions Ombudsman.

This is a report from a civil servant to civil servants and it generally hits its mark.

The headlines will be about the provision of advice

Perhaps the most powerful statement by anyone involved in the Port Talbot scams was how one steel man followed the advice from the Money Advice Service to the letter and was referred to Darren Reynolds of Active Wealth (via Unbiased). As Rooks says- Unbiased isn’t unbiased and the  circle that led the FCA and MAS to point steel men to their nemesis shows just how “due process” can destroy confidence.

We all know how the bottom feeders like Active Wealth behaved, it’s been a matter of public record since the inquiry carried out by Frank Field and his Select Committee.

But there is another advisor that Rooks has stopped short of naming, who should be mentioned in this. That advisor was paid by the Trustees of BSPS to prepare its membership for the Time to Choose and the report stops short of naming it.

But everything in the report suggests that the opportunity to avert the problems of Port Talbot and elsewhere  was missed because of the failure of the Trustees to put in place the basic support that members needed when they considered their options. The support that was needed and not supplied was the provision of a transfer helpline and on the ground help to members struggling to understand the implication of unlocking the transfer treasure chest.

The headline about advice should not be about the failings of Active Wealth, but about the failings of the Trustees to prepare their members for Time to Choose.

The complacency of the Trustee’s advisors was pointed out to Caroline Rookes by me and I will continue to argue that it is the support mechanism that failed the Trustees – not the Trustees’ judgement.

In my opinion , professional consultants- whether working for the employer or trustees, have become complicit in the transfer frenzy that hit Britain in 2017 and the first part of 2018. It is hardly surprising. Senior consultants were often busy transferring out their own DB CETVs on highly advantageous terms. The prevailing opinion in the press was summed up by Merryn Somerset-Webb who told her readership in the FT that if she had a DB benefit – she’d transfer it.

Until Port Talbot, DB transfers were perceived as the prerogative of the wealthy and not something that the working man could indulge in.

Contingent Charging and the part it played

Oddly, the report barely mentions contingent charging and the part it played in the transfer of nearly 20% of the deferred BSPS members to personal pensions. It would have been a useful contribution to the W&P Select’s call for evidence, if the Rookes’ review could have estimated what percentage of CETV’s taken, resulted from advice offered on a “no transfer – no fee” basis.

My guess would be way over 90% of the 8000 transfers made.

We can only guess at what percentage of transfer reports would have been commissioned if they had been commissioned on a non-contingent basis. Those reports would have had to have been paid for out of taxed savings and not out of a tax-exempt fund, they’d have been subject to VAT and most importantly of all, they’d have been paid for in cash from a bank account owned by the transferor.

It may be contentious , but the questions surrounding contingent charging are too important to be ignored. It is a shame that the report cannot be explicit on this matter.

It’s good to see Al Rush and Chive recognised

One of the very best things to have come out of the BSPS saga has been Chive- the affiliation of pension transfer specialists committed to raising the game of advice in this area.

The report explicitly mentions Al several times which is absolutely right. When the world watched, Al took action and brought the fate of the steel men to the public’s attention. Jo Cumbo must also be praised for seeing what was going on and taking the initiative.

I doubt that there will be another BSPS and to a large degree that is down to Al and those like him who insisted on fair play for steel men who were vulnerable to the point where most should have been deemed unsuitable for taking on the burden of managing their own money. I saw at first hand Al tell people he knew they had done the wrong thing. That takes a lot of courage- but courage has never been Al’s short suit.

A fine piece of work but…

As Paul Lewis would say “the report is delivered to the resounding thud of stable doors shutting”. It is nearly two years since the RAA was agreed, 18months since the action plan for communicating to members was finalised and over a year since the end of the Time to Choose.

The big elephants remain in the room and they continue to stink the room out. Pension consultants continue to consider transfers as meretricious to a scheme’s funding position and tacitly comply with the culture that has seen over £50 billion transfer out of DB schemes in the past two years.

Financial advisers continue to argue for the practice of contingent charging (with a few honourable exceptions). The only thing that is curbing transfers at present is the price of Professional Indemnity Insurance.

The soft measures put forward by Caroline Rookes are good measures, but they need to be accompanied by tough action by the regulators. Pension Consultants advising trustees must be proactive in organising proper advice be in place from proper advisers – the report points to Chive as a way forward.

Financial advisers need to be protected from themselves. Contingent charging should be the exception not the rule. The SFGB , if it is to play a part in all this, should e commissioned to set up a review board where cases of financial hardship preventing the payment of upfront fees, can be reviewed. It would help if advisers putting such cases forward should underwrite the process on a pro-bono basis. That would ensure that cases of hardship were limited and nobody tried it on.

Action speaks louder than words

The comments from regulators that accompany the press release are longer than the press release. It would seem that regulators are falling over themselves to be involve after the fact.

All these words cannot hide the fact that the Regulators had to be woken up by Al, Jo, Frank Field and others.

Now we hear that these multiple regulators and the guidance bodies and the Government departments are working together. But the fundamental problems around advice remain unsolved – and unaddressed.

The finger of blame points at certain consultancies and IFA firms who have behaved weakly and without due regard to the long-term interests of members. I do not have to mention them, I have done so repeatedly in this blob since I first started writing about BSPS in the spring of 2017.

My words led to my personal actions and I hope that my continued calls for a ban on contingent charging and changes to the way advice is offered to trustees , will be heeded.

Action speaks louder than words.

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Will master trusts go CDC?



We have become a nation of pension savers without a clue what we are saving for

This became apparent to me and I hope the audience of a recent DC event , when a senior representative of NEST told the audience that his 7m members tell him they are saving into a Government pension scheme and expect a Government pension at the end of it

This is not the plan – at least not for now it isn’t. NEST does not pay Government pensions , nor does it pay a pension at all. It is able to return your savings to you in a number of ways – depending on your specification, but none of them include a lifetime income- for that you will have to go buy an annuity.

Last Week, Darren Philp of Smart Pension became the first person from a major master trust to explicitly support the CDC. You can read the article here.

The article stops short of suggesting Smart will go CDC, but that implication is there. The DWP consultation cites the large workplace master trusts as obvious candidates to convert to CDC and it’s not difficult to see why.

NEST has around 7m members, Peoples Pension 4m, Now around 2m and Smart just under 1m. While some people may be members of more than one, that still tots up to well over 10 million people who may well be expecting their pension plan to pay them a pension.

As importantly, these are  10m people who generally do not have financial advisers or the means to do the detailed cashflow modelling to make their money last as long as they do. Not only do these people not have a plan, the trustees don’t have a plan either. To talk of any of these master trusts as “pension plans” is to over sell their utility. Right now they are doing no more than collecting and  investing contributions in a tax free way.

Time to speak

So far, the plans put forward to help people spend their money have either been rejected or ignored. NEST proposed a solution that defaulted people into an annuity when they got too old to do drawdown, People’s have employed LV to provide a similar service, several of the smaller master trusts use the Alliance Bernstein Retirement Bridge, but none of these ideas has caught on, and NEST were told by Government that they could not implement their plan.

So it is time for someone representing the interests of these 10m + savers, to stand up and be counted and I’m glad that it was Darren who did just that.

His article takes the John and Yoko chant “all we are saying..” and asks that CDC be given a chance. No doubt it will, and that won’t be entirely thanks to Smart Pensions. However, the support of Smart Pensions to the CDC debate, shouldn’t be underestimated.

It is time we heard from other master trusts and indeed their trustees.

Is this a business or a trustee decision

Darren spoke as an employee of Smart Pensions. Master trusts are commercial entities (other than NEST which has a business plan to repay the £1,2bn it plans to borrow from the tax-payer.

The critical commercial consideration for all the master trusts is that they hang on to their big pots and lose the small pots. Pot consolidation will undoubtedly come, and will be hastened by the pensions dashboards, the big pots will either result from consolidation or from consistent saving into a single pot. We are years, perhaps decades away from master trusts having the size of pots to make them self-suffecient. For now they are eating money in the expectation that profitable big pots will come.

The critical consideration for master trust trustees, is not so much the profitability of their provider, but the welfare of those who invest with them. It is odd that to date we have not heard anything from the trustees of master trusts about CDC.

Shouldn’t master trustees be involved in the debate, shouldn’t they be sharing their thinking on how they expect their members to spend their savings in retirement and shouldn’t their be a dialogue between provider and trustees on the opportunity presented in the CDC consultation, to upgrade their “pension plan” to CDC in due course?

We save but we don’t know what we’re saving for.

I can understand why both master trust providers and their trustees are keeping their heads down. They are going through the hard work of getting master trust authorisation and are still digesting the massive slug of new business that has arrived through auto-enrolment.

Even the consultancy master trusts set up to consolidate failing individual DC plans have a lot on their plate.

But the deafening silence from the master trust community regarding CDC seems a failure of nerve.

It has been left to a few activists (the Friends of CDC) to write the articles and promote the subject. The master trusts have been silent.

That is until Darren’s article.

I hope that – assuming we get the anticipated pension bill and that CDC legislation forms part of it, more master trusts will have the courage to step forward and enter the debate.

Let’s finish with Darren

I .. think that master trusts could be key delivery vehicles for CDC in the future, especially in helping manage volatility up to, and through retirement. People just want help!


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Let’s get back to those three pillars – promising us certain pensions.

three pillars 2

There are at least three uncomplimentary ways of thinking about “pensions” in the UK . So disparate are these three that it is hard to talk (or blog) about them in the same place.

For a small number of people, pensions remain, what they were supposed to be when the OECD dreamt up their three pillars, a combination of a state floor (keeping everyone from destitution),  a second pillar sponsored by employers which offered up to a two thirds replacement as a wage for life and the option of third pillar private savings.

But this simple and sensible way of thinking about pensions has been seriously undermined – principally by the shift of second pillar pensions to second pillar savings schemes. To begin with, the move from guaranteed pensions (DB) to savings schemes (DC) was dressed up as “giving people the money to buy their own pension” , shortened to “money purchase”. But people grew tired of having to buy a pension with their savings and their frustration led to the pension freedoms, where tax barriers were removed and people could spend their savings as they pleased.

Pensions as a tax-wrapper

Even before the arrival of these “pension freedoms” , increasing numbers of the wealthier in society had cottoned on to pensions as “tax-wrappers” and dispensed with an idea that they would have to have their lifestyle circumscribed by such plebeian phrases as a “wage in retirement”.

The tax  simplification of pensions in 2006 was the spur for this new way of looking at pensions, It meant that people could put 100% of their earnings into a tax-efficient holding pen – equivalent to an offshore trust. It spawned numerous wealth management companies who offered fund platforms and discretionary fund management services.

Since tax-avoidance, rather than retirement provision, was the principal attraction, this new view of pensions was adopted by IFAs who’s traditional business model was turned over by the Retail Distribution Review in 2012. RDR meant that there was now no money in savings plans since they could no longer pay commission. RDR plus changes in tax legislation has totally changed the nature of pensions advice in the retail sector

The launch of universal retirement saving through auto-enrolment

Compulsion on employers offering PAYE to also offer and fund a pension saving scheme has brought 10m new savers to the party. After years of decline (partly due to the failure of DB pensions to adapt to a low interest rate environment), pension savings is on the increase again – through the second pillar. But it is not a very satisfactory sort of saving as it no longer offers the prospect of a wage for life in later years, merely the complexities of pension freedoms – without the wealth or advice.

While auto-enrolment proves to be a success, the ultimate aim of the second pillar system is not to create a savings culture, but to supplement the first pillar  with meaningful occupational pensions. This simply isn’t happening at the moment.

Those reaching retirement today

Most people who get to the point where either they have to or want to wind down, have three very different visions of “pensions” to consider, and as I said at the top of this blog, it’s very hard to get your head around all three.

The Government pension – the state pension pays out at a distant point but without a single state pension age.

Occupational Pensions are increasingly being switched to wealth management (where their is an IFA) or being paid by an insurance company or the PPF. The original idea that you are paid a pension by your employer is becoming less and less common. The vast majority of people in works schemes have been auto-enrolled into workplace savings plans which bear little in common with pension schemes other than that they enjoy similar tax treatment on contributions

Private saving for retirement remains in retreat. Without an entrepreneurial salesforce of financial advisors fuelled by commission, sales to the self-employed have fallen away. While employed people have auto-enrolment, the self-employed are expected to provide for themselves, and they are not doing so.


What of the OECD’s three pillarsthree pilars 3

The clear vision of the three pillars has been smudged by the realignment of Government incentives and the opportunism of  wealth managers, insurance companies and fund managers.

This is not a criticism of the opportunists, they are in the business of making money out of money and they have adapted to each change in Government policy with flair and aptitude.

What is currently missing in our pensions system is not opportunity – but certainty.

Ordinary people are being enrolled into plans they don’t understand without much clue of how to use the freedoms they have been given, Their legacy savings are remote and often lost to them and the vision of a two thirds of pay , final salary scheme – is no longer even a vision.

Everything seems to have changed except one important thing. People still reach their sixties and expect to be able to stop work and rely on their pension. That expectation will not be met – for most people. We know the reasons – too little in – too little out, but it’s more than that.

We are encouraging people to use the third pillar of private savings to pay themselves a wage for the rest of their life and most people haven’t got a clue how to do that.

three pillars four

There is a difference

We must get back to providing strong second pillar pensions. We know we cannot afford the guaranteed system that did for DB pensions and annuities alike. We know that people cannot manage pension freedoms with a lot of help (that generally isn’t there). We must find ways to give people back their pension – and an expectation of retirement with much greater financial security.


Posted in advice gap, annuity, pensions | Tagged , , | 1 Comment

A controversial consultation on pensions dashboards



How far to DC?

We are midst-consultation on pension dashboards and there’s public enthusiasm for the project There’s industry consensus that the Single Financial Guidance Body (SFGB) will incubate its dashboard in a controlled environment and that commercial dashboards will follow. But proposals to tender the data architecture , putting one organisation or consortium as sole pension finder – is proving controversial

The Consultation proposes following a conventional procurement process. Unsurprisingly this is  supported by the consortium that built the “dashboard-protoype” using the procurement model proposed in the consultation.

But a second proposal has emerged that would replace a single pension finder with a devolved obligation on each pension provider to build their own dashboard integration services, or cluster together around a new market of outsourced ‘integration service providers’.

Advocates of this second approach argue it would encourage innovation, create competition, be delivered faster and would not need a central procurement budget. They claim that by adopting the  accepted data architecture of open-banking. this approach would avoid another  central IT project for Government  to stumble over.

They liken this devolved approach to the way that railway companies competed and collaborated with each other to produce Britain’s rail network in the 19th century.

The dilemma the Government faces is that having proposed dashboards it is reluctant to deliver them. Keeping  the first dashboard and governance within SFGB keeps governance tight,  but does the infant SFGB want to manage the largest data integration project the UK financial services industry has ever seen?

The second proposal actually reverts to  the original vision for the dashboard (outlined by then Treasury Minister Simon Kirby) who advocated in 2016  devolving responsibility to commercial providers and “delivering a prototype within months”.

Kirby may well have approved of calls from todays “Pentechs” that providers agree sign up to open their data to whatever standards are generally agreed (in return for getting  access to that data themselves).

Pentechs want instant commercialisation, so that whatever they build, they get to use at once.

they point out that having built a prototype, it’s time for the main event. They see the vetting of pension finders as a matter for the FCA who could use the  existing Account Info Service Provider permissions. Co-ordination of these permissions could be put in the hands of the Open Banking Implementation Entity

Since the dashboard was handed to the DWP, Kirby’s proposals have been reversed into a siding. The hope is that after the consultation , the dashboard will be back on the mainline. There is some hope that this will happen Speaking at the launch of the Dashboard consultation, John Govett (CEO of SFGB) stated his intention to deliver at high speed.  The SFGB must realise that the process laid out in the consultation is quite the opposite of Kirby’s “dashboard within months”.  Procuring a single pension finder risks perpetuating recent frustrations.

The industry consensus will undoubtedly be for a conventional approach, it is the line of least resistance for providers who will not be challenged with compulsion for at least three years.

However, consumer expectations are changing, and having been promised a dashboard – they are unlikely to be patient with the speed of delivery proposed in the consultation. The political imperative is to meet the expectations of the public and avoid another IT procurement shambles.

Speaking at the TISA conference, shortly after taking her new role at the DWP, Amber Rudd told her audience that she intended this to be a genuine debate with the Government in listening mode. She will certainly get that debate.

This article first appeared in Professional Pensions and the original can be read here

For further reading on this subject , read Pension Bee’s three excellent blogs which can be found here.

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Managing pension expectations – are we doing enough?


This is one of those blogs where my focus is on big Government – or policy – rather than the little things that go into making political strategy happen.

For a long time, as long as I’ve been working, there has been an expectation that the wages we get from our pensions and investments would cover around two thirds of our salary. This was what our parents and grandparents were told and though it didn’t always work out, it was what was on offer for a lifetime’s work in public service or from a private company with a pension scheme.

So I read this tweet with the shock that comes from listening to an old friend who you’ve been ignoring a while. Andy Young is an old friend and I have been – well – ignoring what he’s been saying. But I can’t for ever- not only has he been right throughout his career as one of the Government’s senior actuaries, but he is growing older with no loss of his acuity.

Why we can’t save enough is clear. There is not enough going into our bank accounts from our wage packets to let us live the lives we’ve promised ourselves and spend enough on our retirement to meet the promise bought by our parents and grandparents.

Either we get a lot more productive while we work so that we can afford to spend more on the future, or we change our futures to meet our diminished financial resource.

“I won’t be able to afford to retire” is a common theme from working people. Unpleasant as it sounds, pushing out retirement beyond that other great misconception – retirement age – is generally accepted by the working class (by which I mean the class of people still working).

But for those who cannot work?

The problems become acute when people stop working. I was alarmed to read this news from the ever-reliable Paul Lewis.

Of course yesterday, people were looking the other way (apart from Paul) and surprisingly the Daily Mailhomeless 2

It’s no surprise to see the benefits for those below state pension age being eroded. The DWP get their money from the Treasury and the Treasury do not look kindly on anything that smacks of moral hazard. So those sleeping rough the next few (cold) nights should remember that they have no one to blame but themselves.

If you read those last two lines and thought that I’d turned into some far-right Gradgrind, then I’m a better impersonator of some of the Treasury mandarins I’ve met – than I thought!

It’s no laughing matter. If you have lost the will or capacity to work because you’ve become mentally or physically sick, learning that there is nothing coming your way by way of pension credit till you reach the state pension age is very bad news indeed. That what you had, may be taken away from you, because your partner is still to meet this arbitrary retirement age, will be doubly depressing.

Hard times?

These should not be hard times. For most of the people who read this blog – they are not hard times. This year will mark the 80th year since the outbreak of the last meaningful way this country waged. Since then we have been enjoying an extended peace dividend.

It worked for our parents and grandparents and if your are my age – it’s working for us but it doesn’t seem to be extending to the generations coming behind and the peace dividend doesn’t seem to be spread to those claiming benefits, who are seeing those benefits being eroded cut after cut.homeless 5

I am asking myself – is this the society I want to be in? Do I want to see people’s expectations for older age being managed downwards. Do I want the threat of destitution on those who have saved nothing?

The answer – and this will appall many people – is no I don’t. I would rather see more spent on benefits than less and I would rather target my tax on alleviating destitution – which I see 30 yards from my front door on cold mornings like this, than return to a Victorian value set.

Managing pension expectations?

It seems that the pension expectations of pension millionaires can be understood and campaigned for by the Treasury.

It would seem that  we still see pensions as important for some people – even if the 1.2m people who in 2019 will not get promised help with pension contributions – are to be ignored by the Treasury.

It is almost impossible to square this circle unless you believe in that Victorian value set which rewards the worthy and deplores the poor.

That is not how I want this fine country to manage pension expectations. We must look very hard at the way we are distributing the wealth of this country and make quite sure that the curse of destitution in old age does not spread.

homeless 3

Posted in advice gap, age wage, pensions, religion | Tagged , , , , , | 2 Comments

The only solution to the net-pay pension problem comes from HMRC



Last Thursday, there was another meeting of the group of us, determined to keep up pressure to sort the problem of net-pay pension contributions this side of auto-enrolment’s next big phasing hike in April.

Just to rehearse the problem, if you are low-paid and in a net-pay pension scheme, your pension contributions could be 25% more expensive to you than if you are in a scheme where contributions get relief at source.

More than 1m people are expected to fall into this category and it could mean you paying more than £5pm to be in your pension. That may not sound a lot is you are full time and on a typical wage paid in the financial services industry but it is a significant extra cost for those on low earnings.

The discount on pension contributions was originally branded the “Government Incentive” to those not paying tax. That changed in 2015 when Government dropped the 4 +3 +1 approach to auto-enrolment – because it recognised that many would not get  the “+1”.  One of the reasons for this was the gap that was emerging between the minimum threshold for auto-enrolment (£10,000 from April 2019) and the minimum threshold for paying income tax – (£12,500 from April 2019). If in any tax year or any pay period in that tax year, your earnings exceed the pro-rated minimum threshold for auto-enrolment – you will be enrolled.

The discount was designed to ensure that the tax-system – which gives up to 45% off pension contributions for high-earners – gave back to the poorest savers. Net pay is financial inclusion in action and it’s working very well for most low earners

For instance , the incentive is paid out to members of occupational pension schemes like NEST and People’s Pension – which operate relief at source, as well aa to contract based personal pensions run by insurance companies and SIPP providers.

But it isn’t paid to you if you are in the vast majority of occupational schemes, that – mainly for administrative reasons, can’t afford to switch from net pay to relief at source. You don’t choose your job on the basis of the pension contribution structure it offers.

So whether you get the incentive or not is now a total lottery, it all depends on what type of scheme you are in.

It’s not right that over 1m people will not be getting their incentive in 2019 and the campaign group is led by Ros Altmann and includes Adrian Boulding of NOW and a number of organisations keen to right the wrong.

Latest developments

Some enlightened employers have recognised that if they run an occupational pension scheme that discriminates against the low-paid, then not only are you running the scheme inefficiently (by not picking up the free money from HMRC),.

This Thursday we heard an excellent presentation from Tesco, who alongside their pension partner, Legal & General, have created a system that means that everyone maximises out the tax advantages of pensions available to them as individuals.tesco workers Higher earners can get their higher rate tax-relief paid to them up-front through salary sacrifice, while lower earners get their incentive through relief at source. There are complex triggers in place at payroll to make sure that those on low earnings don’t lose out from salary sacrifice (or that Tesco doesn’t accidentally pay them a nominal salary below the minimum wage.

This complex system can be put in place at Tesco because it has a workforce of 300,000 that makes it worth designing a bespoke solution. Tesco employs some of the best brains in Britain to make sure that everyone gets the right deal for them and this has meant a lot of bespoke coding of systems – especially around auto-enrolment and salary sacrifice.

Tesco’s pioneering approach could be adopted by other large employers with a large number of employees working part time and/or on minimum wages.  It means disruption and expense but Tesco reckoned that it could bear that cost rather than see unfair discrimination against its low paid staff (the majority of whom are women).

But not every employer is a Tesco

What became obvious during the presentation , is that Tesco are at the top-end of good practice, they are in the right place. Many smaller employers do not have the resource to implement the system of triggers described to us by Tesco. Complex benefit structures aren’t cheap to design or implement.

This is the reason for the title of this blog. There is no solution to the net pay problem other than for HMRC to take the bull by the horns and create the coding that gives employees the incentives they have earned in a pay coding adjustment. The group is currently putting the final proofing on a proposal that will be re-submitted to HMRC which explains how this will work.

Practical steps to help Government out of the problem

Now is a particularly good time to approach Government as HMRC has already committed to making pay-coding adjustments to Scottish people paying income tax at the Scottish rates. We argue that if HMRC can do it for the Scots, they can do it for all UK tax-payers.

It may be that HMRC can do things by halves, which would make the bill more palatable for them. A very high number of those affected by the net-pay anomaly are in Government pension schemes. These could be carved out of any settlement and dealt with by separate negotiation.

It is no good pretending this problem isn’t here. It’s a big problem today and will get a lot bigger in April. It is no good Government departments passing the buck, the DWP and Treasury both have skin in the game and should both be involved in discussions on how to fix things.

The long-term impact of the net-pay anomaly are

  1. the low paid may get priced out of auto-enrolment
  2. the low paid will remain enrolled but not be able to afford to live properly
  3. the low paid will be mobilised, either by private organisation or by some future Government to demand what they were promised and couldn’t get

Right now, the Government seem to have put this problem in the “too-hard” box and it seems that most employers running net-pay schemes have followed suit.

Well done Tesco for looking at this problem and putting in place a bespoke solution.

Come on HMRC, we are not all Tescos, you cannot rely on the private sector to get yourself out of this hole, you need to do some work on the net-pay anomaly right now.


tesco workers 2

Posted in accountants, pensions | Tagged , , , , , | 3 Comments

Inquiry on contingent charging for transfer advice? Bring it on!



The Work and Pension Select Committee is holding an inquiry into the way that pension transfer advice is charged for. This may seem an arcane subject but it’s not. As this blog has said many times, contingent charging was the lube that made the transfer market deposit up to £36.8bn into SIPPs and insured personal pensions in 2017 and over £10bn in the first quarter of 2018 alone.

The committee is calling for evidence of a link between contingent charging and the alleged mis- advice to over 50% of the estimated 200,000 people who transferred out over the past two years.

I know people who read this blog who took £1m + transfers from gold-plated de-risked DB schemes – some of which they de-risked themselves. They paid for that advice with their own money – and paid the VAT too – both of them. Why? Because they didn’t want to lock into some crappy advisory deal (one of them used that phrase), when they could manage their money better themselves.

That’s heroic stuff – those people make their money managing other people’s money, why shouldn’t they manage it themselves – one paid £10k + VAT and the other £8k +VAT – the VAT would not be recoverable.

Compare this pair with the people who transferred on average £400k from BSPS, they were not getting such good CETVs (typically 25 rather than 40 times the payment forsaken) but they paid nothing to get their money out – their fund paid it for them. They transferred out on a system called contingent charging which lubed the process and made it all “oh so easy”.

The W&P Select is calling for evidence. I can’t evidence myself. I refused to transfer my DB pension – I refused to take tax free cash – I am a Zurich Pensioner and I have no gilts!

My evidence is simple. If you can do better than a DB pension scheme, pay to have your head examined and pay the VAT – you may be right but the chances are you are deluded and a good adviser like Phil Billingham or Al Rush will tell you so.

If you have no cash but a big fat pension – like most of the people who were approached by Active Wealth, you should not be allowed to be seduced by a no win no fee transfer deal – promoted with a sausage and chips dinner. If you can’t pay the advisory charge (and the VAT) – you can’t have all your money in a CETV.

I know that Al Rush disagrees and points to special circumstances like single people with reduced life expectancy and a need for cash now. I have no doubt that there are people like this and no doubt that some have no money to pay for an upfront fee. But they are exceptional and I have no worry for exceptions to be dealt with via an exceptional process by exceptional advisers like Al.

There should be a process for quick release in dire circumstances and it’s the kind of process that could run through FOS, FSCS or even SFGB – a hardship committee could be set up.

But the exceptions cannot drive the process. Read my recent blog where I called on Government to take positive steps to reshape the transfer market.

Bring it on

I welcome this initiative by the Work and Pensions Select Committee who I know read what I write (from time to time!).

Here is their call for evidence – I will of course be sending this blog and those like it.

To help the FCA with its next steps, we want to hear from anyone who has been affected by this issue.  Have you, or someone you know, received taken advice about a defined benefit pension transfer? Did you have a good or a bad experience? Do you think this was driven by the financial adviser’s charging structure? If so, please tell us your story by Thursday 31 January 2019.

If you do not have personal experience of this issue, but have views on banning contingent charging, the Committee still wants to hear from you. In particular, relating to the following questions:

  • Does contingent charging increase the likelihood of unsuitable advice?
  • What would be the impact of a ban on contingent charging on consumers and firms and how could any negative effects be minimised?
  • Are there any alternative solutions that would remove conflicts of interest but avoid any possible negative impacts of an outright ban on contingent charging?


Posted in pensions | 3 Comments

One for Mum


My Mum doing good stuff

Although she doesn’t read my blogs, my Mum inspires many of them.

On Wednesday she had her second new knee in six months and is now an 86 year old bionic woman.

Thanks to the NHS, she has not just new knees but the incentive to go out and do what she has been doing longer than I can remember – be the rock that she is.

She lost her husband last year and she had been his rock, her social circle in Shaftesbury are in slow decline and cling to her for everything from a free taxi service to a listening ear when they are lonely. Her family adore her – for good reason – she is our rock.

The good news is that she was out of bed and walking around (just a little) yesterday. Her aim is to be ready to ramble in April – when  we expect to see her “knees up mother Tapps”.

mum - window

Cleaning her house

Another generation

The generation that preceded mine, lived through the war, my mother was evacuated to America and saw boats in her convoy perish, she was spared and saw life beyond the confines of Welwyn Garden City and Hitchen where she was born and schooled. It has always amazed me that she never talks about her years as a child away from her mother and father, except with gratitude for the family that looked after her.

We are losing that generation that lived through the war and we should not let them pass on without thanking them for the stoicism that they’ve displayed when young and the magnanimity with which they pass on the lessons that those tough times taught them


Bernard Rhodes

In May , I am going to be talking with Bernard Rhodes at First Actuarial’s client conference. Bernard, like my Mum lived through the war years – he was evacuated to the East End of London from Europe and had it even tougher. If you are a First Actuarial client – you’ll be able to hear the man who founded the Clash, talk about how the war shaped him – and punk!


But a generation with more to do

You do not go through the pain of integrating your 86 year old body with two new knees unless you are optimistic about your life ahead.

My mother started her new life this morning , as she does every morning – I’ve never come accross anyone so darned optimistic. I think that – like Bernard – her fortitude was born out of struggling through those early years.

My Mum’s not giving up, she’s starting over – with new knees. Today or tomorrow she will be coming home to Shaftesbury, to the house she has lived in since 1960 – to be looked after by Rupert and Gregory – my two brothers – and by Albert- my youngest brother who lives not far away.

olly and Mum

Mum and Olly

Also my son Olly – of whom my mother is most proud.

Dr Tapper

In my thoughts

Knees up Mother Tapps!

I am proud of my mother and father. I am particularly proud today of my mother. I’m also proud of my brothers for filling the vacuum in my mother’s life – after my father died.

How we look after our older friends, defines us.

I work in pensions, there is a social responsibility in what I do, to make the lives of those who like my mother – have every expectation of living to 100, to do so with the means to enjoy those later years.

At 86 – my mother is starting out again – with new knees – intent on doing good things and leading a good life. May that be a lesson to me and to anyone else who holds him or herself out as a pensions expert!


At Sherborne Abbey this Christmas

Posted in pensions | 3 Comments

Sleepwalking into a dozy dashboard monopoly.


The Government is minded to tender a single contract to run a pension finder service. This is a regressive strategy which we need to say NO to.

Giving control of the pension dashboard’s central piece of architecture to a single organisation or even a consortium, will not be in the public’s interest. It risks one entity controlling not just the price of the service, but what the service delivers. It risks outage of the service with no back-up and it denies potential competitors the chance to innovate.

The only reason why Government would grant a monopoly to the provider of the pension finder service were there to be no demand for competition. There is demand for competition and there are plenty of competitors to the current front-runner for the pension finder contract.

Not only is there demand for competition, potential competitors but there are clear advantages to Government in not granting a monopoly. Just as at the start of auto-enrolment – when the DWP fervently wanted NEST to be given a monopoly as the workplace pensions, so today. The reason NEST was not given a monopoly was so that insurers and master trusts and even SIPP providers could compete for workplace business and create a dynamic innovative market. That is exactly what we’ve got.

One of the glories of the UK pension system is its diversity. Public and private pension schemes still provide defined benefits. We have a vibrant market for personal savings, a well developed wealth management industry. The large insurers operate master trusts and GPPs that compete with NEST and the non-insured master trusts, many of which are run by consultants.

To suppose that a single pension finder service will harmonise the competing forces is naive. There is no such harmony today nor is there likely to be tomorrow. Despite the opportunity to do so, most third party administrators have not signed up to the Origo transfer hub, they are showing no signs of wanting to be bullied into line for a single pension finder service.

There are local sensitivities at play which make the arguments for a single pension finder service untenable.


A better way of doing things

There is an alternative approach to the pension finder service which I am promoting. I call it the “tech-sprint” approach and it allows any competitor for the job of finding pensions to set out in a race for success.  A tech-sprint would do away with the need for a central tender and would replace it by a genuine competition to get total coverage of the UK pension genome in the shortest possible time.

Let me make this a little less abstract. Let’s say that one particular data service has strong connections with insurers, then that data service provider naturally plugs into the APIs at the insurers, encouraging their adoption using its particular knowledge of that sector.

Another service provider is familiar to third party administrators and does a similar job in that sector

A third service provider works best with SIPP providers and the IFA community.

Each provider builds up expertise in its sector and is given the all important verification certificate to collect information that finds pensions and that later can deliver the more complex information that will populate dashboards.

An inquiry from a consumer may be initiated with a pension finder who is expert with insurers but may be passed on to other pension finder services. All the data is fed initially into one dashboard operated by the Single Financial Guidance Body. Once the concept has been proven , the commercial dashboards can use this diverse infrastructure in the same way.

One critical advantage of this approach is that it gives the weakest links in the dashboard project – those with the poor data and poor systems , the chance to work with pension finders who are sympathetic and can help.

Another advantage is that it keeps the threat of cartel-pricing at bay. A monopoly can too easily create a cartel (a rigged-market). It is human nature, if you’ve got a monopoly to sit back and stop pushing. Indeed my experience of these central tenders is that they are so exhausting – they leave all parties – winners and losers – disincentivise to push for better going forward.

sleep 2

An example of this was the procurement process that happened for the dashboard prototype in 2017. The winner excluded all the losers and then sat on the prototype which has gone nowhere.  We are in danger of delivering exactly the same thing again in 2019.

The pensions dashboard is exciting – it captures the public’s imagination, it’s potentially a fantastic win for everybody. But to properly deliver it needs to be adopted by all providers as quickly as possible (ok we can let SIPP and EPPs opt-out if they choose).

But the timeframes envisaged by the industry are ludicrously long. Even if SFGB’s dashboard is up and running by the end of 2019, pension finder won’t be fully functional for 2-3 years after. We all know what happens to these timelines, we’ve already seen it happen with the feasibility study, just look at the delivery of CrossRail.

Where things get delivered to time is when they are powered by private sector innovation and competition. Look how the private sector found ways to auto-enrol 10m new savers through 1m new employers.

I am not having a go at those who want a single pension finder service, I thoroughly understand where they are and where they are coming from. I’ve had good meetings with Origo and suspect that it will be top dog  where multiple pension finder services are in play. But I can’t support Origo, or any other single pension finder.

The biggest danger is that we will sleep-walk into a monopoly; which is why you’ll be hearing a lot more noise from me and my mates on this!

asleep at the wheel

Posted in pensions | Leave a comment

State of the pension blog (keep reading and I’ll keep writing).

happy new year.png


My first blog was in January 2009.

Has there ever been such a start to the year. Freezing temperatures and frozen bank accounts. May I start my blogging career by wishing anyone who reads this a little warmth!

It was only a headline as I hadn’t learned you had to add text.

10 years on and with well over a million reads, it’s time to take a step back and work out what my blog is actually about.

The masthead says it’s the blog of the Pension PlayPen and it’s about restoring confidence in pensions. The Pension PlayPen was something I devised with Marianne Elliot (now MD of Redington) back in 2007 and was conceived as an online club for people who wanted to pay their own way in corporate entertainment.

In the meantime, the Pension PlayPen has become a means for companies to choose workplace pensions, has entered into t tripartite arrangement with Sage (along with First Actuarial) and has built into a linked in group of some 10,000 of us – interested in making pensions better.

I’m asking myself two questions, whether independently of Pension PlayPen , people have the prospect of better pensions now , than they did ten years ago. I don’t think there is anyone asking that question in academic circles – perhaps one for a PHD or maybe best left to the PPI. The second question , which is one to ask myself, is whether the blog and the activity behind it, has restored any confidence – made things any better.

What has got better?

There are a whole lot more savers today than there were at Christmas 2008 – auto-enrolment has seen to that. The current AE saving rate isn’t great- still not much more than the contributions we made to SERPS. The rate will go up in April when most of us will pay 4% – about 1m of us will bay 5% because they have low earnings and won’t get the promised tax incentives. Clearly that kind of economic injustice is acceptable in 2018, which shows that while coverage is better, the taxation on pension contributions remains the same – pretty shabby.

We have a genuine alternative to annuities for those who don’t have the money for income drawdown. A great number of the blogs I wrote in the first five years were about the fate of people who were buying into annuities at artificially depressed rates. I contributed to several radio and TV programs which insisted on calling this an annuity rip-off – it wasn’t. The large annuity providers opened their books and showed that margins on guaranteed annuities weren’t high (in fact value for money on annuities was good). The damage came from negative real yields which people were buying into as the default.

The major change in taxation did not come (as expected) on contributions, but on claim. We can now spend our retirement savings as we like and we have a strengthened Government guidance system to help us do this wisely.  The apparatus that was put in place over the period to give people help – is bing merged in the new year into the Single Financial Guidance Body. The major task for SFGB- other than integrating the disparate parts of Pension Wise – will be to deliver a pensions dashboard to people’s expectations.

The change in taxation and the introduction of auto-enrolment have both been policy successes. The delivery of the Pensions Dashboard has so far been an unmitigated disaster, though we now have a chance to turn things around.

One area where we have seen genuine improvement is in pensions governance. The Office of Fair Trading Report into workplace pensions published in 2014 painted a picture of poor governance among insurers, if they had looked harder – they’d have seen poor governance among occupational DC schemes – including master trusts.

Over the past five years we have seen a number of initiatives that have improved governance

  • The establishment of IGCs and GAAs to oversee the behaviour of insurers and the managers of SIPPs active in providing workplace pensions
  • The extension of the Master Trust Assurance Framework into what now looks like a proper governance framework for occupational DC schemes.
  • The work of the IPB in getting to grips with legacy charges
  • The consultations on cost transparency leading to the delivery of reporting templates by the IDWG
  • The CMA study into the working of investment consultants


What has deteriorated?

Apart from calling for an alternative to the annuity trap, a change in contributory tax relief and promoting auto-enrolment, this blog has also been concerned with the state of defined benefit pensions. I come from a DC background, I was self-employed for my first 10 years as a financial adviser and the hansom pension I get from Zurich is a fluke.

I have held since I took out my first savings policy when I was 17, that long-term saving is best. I cashed in that policy to pay for the deposit on my first flat when I was 25. When I started this year I had around £800,000 in retirement savings, around half a million in pensions- I finish the year down around £200,000 but still cheerful. Because I have the security of a DB pension in payment and the prospect of a state pension in only ten years, I am comfortable to ride out the financial storm of 2018.

I would not be so comfortable if I’d taken a transfer value, as I thought of doing before taking my pension in November 2017. I could have added to the £36.8bn transferred out of DC. DB schemes have deteriorated in the past ten years. Whether through employer sponsored “de-risking” or through member initiated transfers, much of the benefit has been exchanged for what Steve Webb used to call “sexy-cash”. I don’t think there is anything sexy about what is happening to defined benefit schemes and I see problems piling up down the road for the transfers taken in the past three years. The majority of those transfers should not have happened. There has been a sustained failure by the Regulators to get to grips with defined benefit pensions, the current plans to slice and dice benefits so that we can have super funds – looks a pretty feeble response to the demise of our once proud pensions industry.

Where there is hope is in the prospect that we may be able to convert some of our DC saving into non-guaranteed scheme pensions through a mechanism we call CDC. Though the first CDC scheme will actually replace both a DC and DB scheme (Royal Mail), I see hope for savers down the line – especially if schemes can be set up to exchange DC savings for CDC scheme pensions. While these scheme pensions won’t be as secure as annuities or defined benefit pensions, they’ll be a lot more secure than DC drawdown.

Right now the deterioration of DB schemes (other than in the public sector) has not given rise to the expected innovation for DC savers – certainly in how they spend their savings.

In conclusion

Despite attempts (thanks Aon) to turn off the Tapp, no-one has been able to shut me up  and I’m not done with blogging yet.

But I will be moving my AgeWage related blogs to my new website – which is going to be much more about helping people with pension problems (we call it our digital TPAS).

In terms of changing the world, I’d like to think that this blog has supported what I have been doing at First Actuarial, Pension PlayPen and latterly at AgeWage. I hope that it may have nudged some policyholders and regulators into better places – especially regards the taxation of DC claims (freedoms), the impending legislative changes on CDC, the coverage of AE and the improvements in DC governance.

We can look back and see genuine improvements – the abolition of active member discounts, the adoption of the 0.75% charge cap on workplace pensions and the introduction of the RDR have all given consumers a better deal from their pension savings.

But there are still big holes in pensions policy. The central questions of the FAMR and the Retirement Outcomes Review remain unanswered. The SFGB will not fill the gap in advice that leaves 94% of us unadvised on what to do with our pension savings.

We have no answer to the disqualification of over 1m people from promised savings incentives due to the “net-pay anomaly”. We still have a system of contingent charging for transfers which results in advisers being incentivised to say “yes” to pension transfers that shouldn’t happen.

Defined Benefit schemes continue to close and to set their sights on buy-out (or the PPF) when they should be staying open. The system of best estimate based funding promoted by First Actuarial is largely ignored in favour of gilts plus valuations marking liabilities to market and creating phoney pension deficits.

In conclusion there is still much to do – and far too little done. We have an opportunity in 2019 to nail pension dashboards and deliver better information to people sorely in need of proper help in sorting out their pension arrangements.

We have the opportunity over the next ten years to stem the tide of closing defined benefit schemes and we can start re-building collective pension schemes from the money invested into DC workplace plans through auto-enrolment and properly funded  employer schemes. We can stem transfers by banning contingent charging and we can start building on the great work done by TPAS in the past ten years in providing proper mass-market pension advice.

All this is yet to come. Keep reading – and I’ll keep writing.

happy Christmas


Posted in pensions | 1 Comment

Affordability – is the NHS pricing people out of its pension scheme?



Perhaps we are getting a little complacent about opt-outs?

The FT has published research showing that opt-outs from the NHS pension scheme are running at 5 times the rate of opt-outs from the Local Government Scheme. When I first read the article, I thought of a group of Harley Street consultants  I’d presented to in November, many of them had opted out of the NHS for tax reasons, they had issues with the annual allowance and lifetime allowance. Rich people’s problems don’t interest me that much -I’d talked with these people about investing in EIS, the person before me had gripped them with a presentation on how they could hang on to wealth in a divorce.

But opt-outs from rich doctors are only a part of the story.

It’s easy to sympathise with Oxleas who made an attempt to gain a competitive advantage over other NHS trusts by offering more now for less tomorrow.


But this is a very trappy argument. The NHS is Britain’s largest employer and the universality of its pension scheme has for generations held firm.  Allowing individual trusts to compete for labour on higher take home is deeply irresponsible if it means those on low incomes are deprived of later life benefits. The principle of pension solidarity is strong in the NHS. Oxleas didn’t run this campaign for long and for good reason.

Opting out on “affordability grounds” is bad news

There clearly is a point where people cannot afford to be a member of a pension scheme. If you want to follow the affordability argument through, here’s some data from a chap I haven’t come accross before – who’s talking a lot of sense on linked in.

He’s called Vinay Jayarami – here’s what he wrote on a post started by SteveWebb on the NHS opt-out issue.

Proof that we have an affordability problem – not just a savings problem

I read Adam Carolan‘s post “How to plan your income” on Medium. I really liked his simple yet effective approach, and felt it could help a great number of people live better futures.

It got me thinking — just how many people might such a framework apply to? So I did a bit of work.

I started with the £5,000 per month net income “straw man” Adam used. I went here to see what that might equate to in terms of pre-tax annual income. This is what I found.

So it would take a pre-tax annual income of £92,000 to create £5,000 per month in net income.

Then I asked myself, how many people in the U.K. have a pre-tax annual income of £92,000 or more? I went here to find the answer, and this is what I found.

So it turns out less than three people out of every 100 people in the U.K. have a pre-tax annual income of more than £92,000.

I do realise Adam used the £5,000 figure only as an example.

So I said, what does this look like for a median Millennial in the U.K.? I assumed a 30-year-old male, because I discovered here that a 30-year-old male is likely to earn more than a 30-year-old female. I used the median because I figured:

(1) this would make the analysis relevant to at least 50 of 100 people, instead of just 2–3 out of 100 people, and

(2) if I used the average (the “mean”) it may be skewed by people who are very high earners

Drawing from public sources of information on median income and median expenses by category, I used the Money Advice Service’s online Budget Planner and came up with this:

This confirmed my belief that for a vast majority of U.K. households, the problem isn’t just a savings problem, it is an affordability problem.

People aren’t (only) saving too little because of their behavioural habits, but for the most part they are saving too little because it turns out there simply isn’t enough left after they pay what’s due in Adam’s first bucket, “fixed costs”.

This problem cannot, in my opinion, be solved for most people by addressing the savings and budgeting side of the equation alone. Even if you look at the investing side, the problem remains, because if you cannot save, you cannot invest.

Clever approaches such as the one Adam describes (and I really like it) can help 2–3 people in a hundred (i.e. those in the top 2–3% of income) save more intelligently to provide for their future. But for the rest of us, I believe it needs a dramatically different solution.

That solution, in my opinion, requires a fundamental re-think of policy around these four key pillars:

(1) the individual or household

(2) the financial services industry

(3) the employer (in the case of those who are not self-employed), and

(4) the government

I will write about my view on this in more detail when I can. Until then, thank you to Adam Carolan for making me think.

Pricing pension contributions out

Here is Steve Webb commenting on Linked in.


The rate of opt outs from the NHS pension scheme is a real worry – and most workers may not realise quite how much they are giving up. I strongly suspect female employees in particular are jeopardising their retirement prospects.

Steve Webb hints that the victims of high contributions are those most vulnerable – low-paid females who have traditionally opted-out of  pensions. From the FT article, I suspect that the Royal London research cannot prove the link to high female opt-outs, but it is – more than probably – here is what Jo Cumbo actually reports

Royal London, a pension provider, has calculated the opt-out, or quit, rate for the NHS scheme is about 16 per cent, based on the 245,561 people who stopped saving into it between 2015 and 2017. This compares with an opt-out rate for other schemes of 3.4 per cent for teachers, 1.45 per cent for the civil service and 0.04 per cent for the armed forces, according to data obtained by Royal London through freedom of information request

I suspect that the 7-9% contribution rate is indeed jeopardising people’s retirement prospects – especially those who are finding budgeting a problem. More bad news is on its way as the Government Actuary demands a greater contribution from NHS employers to meet what it considers a greater strain on the national exchequer.

Something has to give and if it’s not HM Treasury – it has to be the total reward of the NHS employee, more of the reward will have to be paid to pensions, less to wages.

The only way out of this is a restructuring of the benefit basis of the scheme itself, something that would take years to achieve and would require some pretty robust negotiation. I am not sure we are at this stage yet.

A wake up call

The news of increased opt-out rates from the NHS pension scheme is a wake up call. As I started this article, so I’ll finish – perhaps we are becoming a little complacent, auto-enrolment cannot nudge people into personal insolvency (“Oh dear – you’re spending more than’s coming in”).

A scheme design with a 16% opt-out rate is a failing scheme . The cause of the failure may be under-promotion, deliberate action (see Oxleas) or just a badly designed scheme.

I hope that the work done by Royal London (and the promotion by the FT) will lead to employers, unions and those who manage the scheme itself, looking at this problem with some urgency.

If they want some ideas on how to kick off that debate, they should look at the debate on social media – which is posing some fundamental questions by way of an agenda.


Posted in NHS, pensions | Tagged , , , | 4 Comments

Do we need to pay to get our money back?

apple pay cash

Imagine going into a bank to withdraw money and being told to get advice before doing so. Imagine being told that the cost of that advice would run to many thousands of pounds. I very much doubt anyone would be prepared to pay the bank’s or an independent adviser to make regular or irregular withdrawals, If I was faced with that bill – I’d exercise my right to close the bank account down and withdraw the lot.

“Withdrawing the lot” is what a lot of people over 55 with drawdown pots are doing. They are doing so because being landed with a socking great advice bill  is what will happen to them  when they ask for their money back. In cashing in their pensions- they are usually donating money unnecessarily to HMRC.

People feel they are facing Hobson’s choice – pay an adviser or pay the taxman – many are choosing the latter. It doesn’t need to be so – people could in future chosse to be paid a pension – that’s what the Royal Mail workforce did.

It’s not just us punters who are getting confused!

This comment posted one of my recent blogs demonstrates how hopelessly mixed up pension experts are becoming over the  freedom of choice.

“You make a separate point about access to advice. This is interesting because one of they key differences between CDC and DC with drawdown is (I thought) the need for advice. The latter gives a lot of choice to the member, including the all-important draw rate and the dependent risk approach. These choices require the involvement of an an adviser (preferably the investment manager itself) in developing collaboratively and iteratively the right definition of the individual utility that the retirement plan must seek to maximise, including any constraints, time preferences and valued optionality. The whole point of CDC is that it proposes to trade off this rich customisation, and its advice requirement, for a collective definition of utility and for a single set of constraints that operate for all. If CDC itself generates a need for advice, that affects the trade off significantly.

It would be interesting to know what advice you think is necessary, at what points it arises and whether this is regulated personal advice requiring a recommendation.

The point of the last question is that we are very much interested in the concept of informing personal selection without making a recommendation. This is currently incompatible with EU regulation which, because of the cost implications, is a key obstacle to supporting personal responsibility economically for all.”

For the record, I don’t see a CDC scheme as generating any need for financial advice, people get paid a pension – simple.

For what is a CDC scheme other than a pension scheme? I’d say that a pension scheme is a way of providing pensions and that a pension is an amount of money paid regularly by the government or a private company to a person who does not work any more because they are too old or have become ill

There are no personal decisions to take about an “all important draw rate”, no “dependent risk approach”, all the things summed up the phrase “rich customisation” aren’t part of a CDC pension scheme – or any pension scheme for that matter. The collective approach is one size fits all and proud of it.

If you want “rich customisation”, I guess you’ve got to pay for it. You’ve got to pay an adviser to tell you how to get your money back – it’s not hard to see why no more than 6% of us are paying advisers to calculate the draw rate under the dependent risk approach.

apple pay three

Five reasons why advised drawdown cannot work for the mass market.

  1. There aren’t enough advisers – the RDR decimated adviser numbers when it became impossible to make a living flogging commission based products. What was left were about 25,000 advisers who want to get paid to advise – not enough to advise the millions needing help with spending their savings over the next few years
  2. The remaining advisers are typically wealth managers – the last thing that the 25k advisers want is to be advising on draw rates under the dependent risk approach. They want to be managing wealth, typically for the next generation. While most do cash-flow planning – it is typically for the wealthy.
  3. The fixed  cost of advice is prohibitive – the opportunity cost of providing “rich customisation” is enormous, advisers are making big money out of wealth management and pay large regulatory fees , payments to FSCS , software licences and the like – the fixed costs of advice make it a minority sport.
  4. The advisory business model is ad-valorem; to keep costs down, advisers charge your drawdown fund, not you. You pay out of an untaxed fund and the payment’s “VAT free” – the trouble is you need a six figure drawdown pot to pay an adviser’s retainer – the average drawdown pot is around £40,000.
  5. People don’t want advice – they want a pension. This trumps the lot, people do not want to have regular meetings with an adviser (even if they were free) because people want a simple wage in retirement that comes to them every month till they die.

Rich customisation – my arse.

The reason why more than 140,000 postal workers voted 9 to 1 to ditch their individual DC plan in favour of CDC was that they saw their job as coming with a pension. They did not buy rich customisation or the dependent risk approach.  I very much doubt any of those 140,000 postal workers wants to pay for financial advice on how to draw down the money due to them in retirement.

Even if there were advisers to help them, even if the advice was within their means and even if they had built up enough in their pots to enable the adviser to take them on under “ad-valorem”, the postal workers would rather have gone on strike.

The postal workers turned down choice and if they’d been able to understand this sentence- they’d probably have quoted it as the reason why

“These choices require the involvement of an an adviser (preferably the investment manager itself) in developing collaboratively and iteratively the right definition of the individual utility that the retirement plan must seek to maximise, including any constraints, time preferences and valued optionality”.


apple pay 2

Posted in CDC, pensions | Tagged , , , , | 1 Comment

Launching CDC into a bear market.

bear 2

The paper below is one of two that models what happens when CDC hits bad markets. I guess this one could be likened to launching a lifeboat into a stormy sea. CDC makes headway – but it’s tough. Imagine you’d put to DC in a less robust craft….

The modelling reinforces work produced by Aon illustrated in this chart (thanks to Kevin Wesbroom)kevinw. jpg

CDC – Early Days

This note considers the early days of a CDC scheme, the first ten years. It commences with just ten active members, but rises to a total membership of 13 by year 10. Contributions of 15% of pensionable salary are paid by each member and the award is 1/60th of final salary from age 65.

In particular we are interested in the effects of poor returns arising in these early years.

The contributions made, and the value of the total members’ equitable interest based on these awards are shown in table 1.

Con CDC 1

The rate of return on these targeted pensions is 5.57%. This is the objective rate to be achieved or surpassed by the investment portfolio. Next, we choose a set of random returns for the portfolio as we are most interested in the effects of poor returns, we choose the sequence shown below in table 2:


Con CDC 2

This sequence has an arithmetic average return of 4.58% and volatility of 17.7%. This sequence would not usually be considered adequate to achieve the required 5.57% of the target promises. The unpromising nature of this return sequence may be further illustrated by inspection of the evolution of both the arithmetic and geometric returns over the period – table 3.

Con CDC 3

Certainly, there are grounds here for considering replacing the fund manager as throughout this period trustees were consistently making new awards at rates of return in excess of 5%.

The extent of this mismatch between award rates and investment returns may be illustrated by comparing cumulative value generated by the rate of growth required (5.57%) with that achieved by the portfolio. Table 4

Con CDC 4

However, the scheme benefits from pound cost averaging, as contributions are made in each year. Table 5 illustrates these effects. This shows the actual deficits experienced together with the internal rate of return to that point in time. The averaging effect drives the experienced rate of return up to 7.25% in year ten. The table also shows the cure period associated with a deficit value

Con cdc 5

The simple rule for cutting is that the benefits must be cut if a deficit has not been cured within a period calculated as 1/deficit, expressed in years. In this case the deficit arising in year 3, 30.6% has not been cured after three years have elapsed. This triggers a cut in the interests of all members in year six equal to the deficit at that time (19.8%). This brings the fund and portfolio back into equilibrium. This is shown as table 6.

Table 6

Con CDC 6

It is clear that the cut could be fully reinstated after year 10, and still leave the scheme in surplus. However, if this reinstatement is effected, pensioners in payment would have lost out in terms of the pensions they had received during the period when the cut was in effect.

Implementation of risk-sharing is discussed in a separate blog.


Posted in CDC, pensions | Tagged , , , , , | 1 Comment

4 Steps to finding a pension ; PensionBee

This post’s by PensionBee. I know it’s an advert but it’s exactly what is needed right now. I wrote earlier today about how we can make pensions more interesting and fun and that’s exactly what Romi, Clare  and their  beekeepers are doing . I look forward to doing a lot of work with them in 2019.

In just over 30 years, the government estimates there’ll be around 50 million dormant pension pots, worth over £750bn. That’s a hell of a lot of money in forgotten pensions for Brits to be leaving to their pension providers! Unfortunately people don’t always know that they’re missing a pension, especially if they don’t remember to take a pension with them whenever they change jobs.

If you think you might have money scattered across different pensions, there are a few things you can do to track them down. Follow these four simple steps and avoid being one of the millions to miss out on your hard-earned money.

1. Contact your former employer(s)

The best place to start is at the very beginning. If you’re unsure if you’ve started a pension and left it behind when you’ve moved onto a new job, it could be worth contacting your former employers to enquire what pension schemes, if any, they had set up back then. To keep things simple, work through your CV, from your oldest positions to the most recent, and get in touch with the respective HR departments.

Get in touch with the respective HR departments

You should expect to be asked some questions about when you were employed and potentially your employee or payroll number which you should be able to find on any old payslips or correspondence. Your former employer won’t be able to confirm that you were part of their workplace pension scheme, but they will be able to tell you if one existed and who manages it, which will take you nicely to step 2.

2. Contact your pension provider(s)

Hopefully you’ll have found out the details of some pension providers from your old employers, or you may already know that you have an old pension with a specific provider. You can give them a call to confirm if you are a member of any pensions that they manage. It’s likely they’ll ask you for information like your date of birth and National Insurance number to confirm your identity, however additional information may be required for security purposes such as an address history.

3. Use the Pension Tracing Service

If you have an old workplace or personal pension that you’ve lost track of there’s another way you can try to track it down. The government has a free database that lists the details of companies and personal pension scheme providers. You can search the Pension Tracing Service to find the names and contact details for your pension providers. The Pension Tracing Service is available online, by telephone or by post.

4. Get a new pension and enlist the help of your new provider

Once you’ve established where your pensions are, it’s important to consider how they’re performing and if you could be doing more with your savings to increase the likelihood of a higher pension when you retire. To find out more, consider asking your pension provider the following questions about your missing pensions:

  • What’s the current value of my pension pot?
  • How are the funds being invested?
  • What charges or management fees am I paying?
  • How much income is my pension likely to pay out at my predicted retirement date?
  • Are there any penalties payable if I move my pension to a different provider?

If you aren’t satisfied with the responses, you might want to consider looking for a pension that more closely matches your savings goals and attitude to risk. Bear in mind, though, that if you’re thinking about moving a defined benefit pension worth over £30,000 you’ll need to get advice from an IFA first. If you have a public sector pension that you’ve found through a teachers pension missing service, for example, you may not be allowed to move it and should check with your current provider for more information.

PensionBee can help you locate all of your old pensions

Some pension providers will offer to help you find your missing pensions, when you choose them for your new pension. This can be a relatively straightforward way of tracing missing pensions, without you having to do very much work yourself. All you’ll need to do is provide a few details and make up for lost time by catching up on any missed pension contributions.

PensionBee can help you locate all of your old pensions and transfer them into one simple online plan when you sign up. All we need is some basic information like a pension number or provider name and we’ll start looking, keeping you updated with what we find.

The benefits of combining your old pensions

If you have old pensions with different providers it’s a good idea to consolidate them into one new plan. That way you won’t have to worry about forgetting about them in future and will have peace of mind that all of your pension money’s in one place with one clear balance. You’ll also have just one management fee to pay which could save you money overall.

And, if organising pension paperwork isn’t your strong suit, it makes sense to consider a digital pension that you can manage entirely online. In theory it’ll be harder to lose as it’ll be linked to your email address and with the most modern pensions, such as those offered by PensionBee, you can download an app straight to your phone. That means you’ll be able to see your current pot size and manage your pension contributions in just a few clicks.

Risk warning

This information should not be regarded as financial advice. As always with investments, your capital is at risk.

Posted in advice gap, pensions | 2 Comments

People don’t want to be #engaged or #educated – keep it simple and fun!

educate and engage

we learn naturally- if it’s fun

I enter into the final days of the year, hoping to hear less of the e-words in 2019.

“Education” has been appropriated by the financial community as a way to endorse a value set that suits the financial community. Put in its simplest guise – financial education is “save – don’t spend”.

“Engagement” with this message has become the key purpose of everything from the zealots of financial well-being to the technocrats of the pension dashboard.

We engage to get educated and the result is supposed to be “financial well-being”. One thing you notice at Christmas is that people love to spend – especially on others, we are about to hear the debt counsellors who emerge every January to remind us of our folly. They’ll have us all  burning calories in their financial gymnasium, exercising our austericals.

Thanks to this friendly tweep – who read this blog and posted this- couldn’t agree more!

Adult education is not something that’s done to you.

There are ways of getting money savvy that don’t involve being educated. At the First Actuarial conference in May, we’ll hear from impresario Bernard Rhodes, someone who manages his money as well as he managed The Clash and Dexy’s Midnight Runners.

Bernard reminds me that what he knows about money is what he’s taught himself. He’s keen to talk about how growing up in the East End, he prospered by getting smart. The conventional approach “engage and educate” didn’t apply to a Jewish refugee growing up in post-war Britain.

The truth is that saving is in the nation’s DNA, famously we are a nation of shopkeepers, keen to balance the books. That we have a low saving rate is because historically we have sunk our savings into meeting mortgage payments. To blame a working person for wasting their earnings not paying into pensions and ISAs, is to forget that much of the past thirty years, people scrimped and saved to have the security of their property.

Consequently we have generations at or in retirement with considerable financial security and with the means to set their families up when the time comes to pass the equity on.

These financial strategies are not taught but are learned. The financial savvy of the baby boomers has created mass affluence. We are not numpties for not saving into pensions and ISAs.

Simple is best


If the financial strategy of the boomers seems a bit simple, then remember that it has led to mass affluence and financial security in Britain as we have never seen it before. For those who “have”, Britain is a good place to live. It is those who do not have property rights who suffer.

The simple truth is that if you don’t own a property in Britain, you have to be smart on your feet. The prospect of property ownership for many millennials is based on inheritable wealth, Thatcher’s vision of property cascading through generations. The chances of buying your own property are limited for those on low incomes. Gone the days of easy credit, no deposits  and high income to loan multiples. The entrepreneurial impulse to home ownership has been replaced by a sullen acceptance among the young that they’ll never have it so good.

In place of the home-owning dream, we are feeding people the lack-lustre dream of a well-funded workplace pension, of a security in retirement based on accumulated savings fostered in frugality. It’s not much of a vision.

Simple is best and pensions aren’t that simple, especially when you are expected to be your own actuary and investment consultant.

If simple is best – why make it so hard?

There is a mindset amongst those who rule the roost  in financial policy that doing things for yourself is dangerous. The ideas of self-managed (non-advised) drawdown and of bringing all your little pots into one big pot are disturbing regulators and policy makers.

People are warned off “rules of thumb” and pointed towards financial advisers who will show you how complicated your decisions are.

The implications are that you need to be engaged and educated to understand the complexities of your financial position. Far from enjoying your wealth (as those building extensions to their now purchased houses are doing), we are told to worry about the minutiae of financial planning.

And it’s true, unless you have your wits about you, you will get conned out of much of your savings. That’s what’s happening to over a million people caught by the “net-pay anomaly”.

Many people’s drawdown payments in December and January will unwittingly involve encasement of units at well below true value as the stock-market lurches through a period of high volatility.

Put aside the perils of those deliberately trying to scam you our of your wealth. for most people, pensions are a financial minefield which they cross without guidance or self-confidence.

If simple is best – why do we make pensions so hard.


Mass market strategies need to be blindingly obvious.

The reason Martin Lewis says so little about pensions is that he specialises in the blindingly obvious. What he tells people is evidenced based – uncontroversial because it’s blindingly obvious.

“Save more for tomorrow” is a mass market strategy so long as it’s evidenced by older people enjoying spending more tomorrow. But the simple pensions enjoyed by my generation and those older than me, will not be enjoyed by those saving into workplace pensions. Unless – that is – we make those workplace pensions as easy to understand and as easy to spend as the pensions that get paid to our parents and grand-parents.

The success of occupational pensions was that the concept was blindingly simple, sign up and forget about it. This simple philosophy is exactly the opposite of “engage and educate”.

Young people I speak to are resentful not just that they aren’t on the housing ladder but that they don’t see any pension at the end of the saving, just a lot of confusion and very little that is blindingly obvious.

If we are to have retirement saving for all – we need that saving to translate into something as blindingly obvious as a wage in retirement – pay for life.

94% of us aren’t taking financial advice

Ask people if they are on top of their pensions and you won’t get many saying “I leave all that to my financial adviser” – very few do. Those who do are generally well served but they are the 6%.

If you are lucky enough to be expecting a pension , or being paid a pension -whether by an insurance company or by an occupational pension scheme – then you don’t need advice.

But if you aren’t that lucky – you probably do need advice, advice that is simply not available in a cost effective manner for the average working person.

It is these average working people who are being told to engage and get educated. They don’t want to, they don’t see the point and they don’t see getting engaged and educated about pensions as any fun at all.

Why the dashboard works

The one thing that everyone agrees on – the one mass-market strategy that genuinely gets people excited is the prospect of someone finding their pensions, listing them on a dashboard and giving them the chance to do something about their fractured and broken retirement arrangements.

Believe it or not – people think of a pensions dashboard as fun. They like it because it allows them to get savvy about what they know is an important part of their lives.

The dashboard works as a concept, it is as simple an idea as ideas get – it works for the mass market – for ordinary people who don’t want to have a degree in financial planning.

Or should work….

It is quite possible that we will not listen to the enthusiasm people have for the idea of a pensions dashboard but instead impose our own ideas about engagement and education on those who use it.

People simply want to know where their pensions are, what they’re worth and how the money has been getting on since they gave it away to a pension provider.

They do not want to be bashed about the head with messaging. They don’t want to be told about replacement ratios or shortfall calculations or all that guff that’s aimed at they’re giving more of their money to pension providers.

That can come later and if they want to explore that stuff.

Right now, people have been starved of information about their savings and have no way of telling what’s happened to their money – even where it is.

Let’s focus on giving people what they want and then see how they choose to take things forward.

educate and engage 2

The pensions dashboard will work if we let people work things out for themselves, it will fail dismally if we shoe-horn them into our idea of “engage and educate”.

Above all, the pension dashboard should be fun – like its title – it should be a simple tool to manage things for themselves. They don’t need your engagement – nor your engagement neither.

educate and engage

If you want a couple of examples of making pensions easy to engage with – easy to learn about try this blog from Pension Bee or listen to Quietroom’s latest podcast

Posted in advice gap, pensions | Tagged , , , , , , | 1 Comment

We can’t reopen closed railways or pensions – but we can build anew

When I wrote this blog on Boxing Day about “coping with falling markets” – I did not explicitly make the link with CDC. The chart at the bottom of John’s tweet talks about the cost of closing open collective pensions and this is what John is picking up on.

Over the Christmas period I walked along several sections of the Somerset and Dorset Light Railway, some of the track closed down by Dr Beeching in the 1960s. It was a line that carried families down from Manchester to Bournemouth on the Pines Express.Pines Express

Alan Pickering told me of travelling on to Weymouth and so to Jersey by pubic transport. Today we look to drive or fly, we have closed the rail option for good. Houses now are built where the lines were, stations converted or destroyed. It cost a lot to close the railways but the cost of getting them back as they were is too high to be considered.

I am nostalgic for the days when you could buy back your DC benefits for what was called a “scheme pension”, you either bought added years or you just swapped your DC pot for a pension , the rate of exchange being determined by trustees with the help of actuaries.

The cost of doing this is as prohibitive as reopening the lines Beeching shut. Some things are gone and no amount of nostalgia can bring them back.

But how does CDC help a saver in a falling market?

The reason why a trustee will not grant a guaranteed scheme pension for a cash input ( a transfer in) is because the grant of the guarantee is made at the expense of the scheme sponsor who will pick up the cost of the guarantee if things go wrong. This isn’t what employers are for- they provide jobs – they do not act as pseudo insurers, there are limits to the liabilities they will take on and universally employers have stopped paying scheme pensions on transfers in.

However, the same need not be said of a DC scheme, which can take transfers in without increasing the liability to the employer. In individual DC arrangements , a member currently has the choice of individual buy-out – swapping the pot for an annuity – or individual draw-down- where the individual is on the hook for managing the “nastiest problem in finance”, an income for life.

This is where CDC could help. CDC could pay scheme pensions to people transferring in DC pots. The scheme pensions would not be guaranteed by anyone, not by the scheme or a sponsor or by the member, the CDC scheme pension is prone to fall as well as rise – though by judicious management – the CDC trustees can protect members from the most heinous risks of drawdown and the scant annuities offered by insurers.

In direct answer to John’s question, CDC can continue to provide scheme pensions at times of falling market on the mutual principles on which it is set up. The mechanism for paying scheme pensions is typically the allocation of cash in to pay pensions out. Cash comes into a collective pensions from dividends, bond coupons, rents and new contributions. Cash flows out of CDC plans through the payment of cash sums (commutation) , the payment of transfer values and the payment of CDC scheme pensions.

Professor Leech is making the same point in his comment to the blog John’s reposted

The answer is that asset prices are characterised by excess volatility. Market prices – determined by the irrational exuberance of the stock market rather than economic fundamentals – are many times more volatile than the economic fundamentals such as dividends. An open pension scheme can ride out (short term) market volatility because it is the economic fundamentals in terms of investment income flows that matter.

This fundamental principle of collectivism, is what makes an open collective pension scheme so attractive. As with Dr Beeching and his railways, the problems for open collective pensions is when they become closed collective pension schemes.

life cycle open

The only time that assets would need to be realised from a CDC arrangement, was when there was insufficient coverage from cash-in to meet payments out. This is what’s known as a run on the fund.

We will not see CDC schemes taking transfers in any time soon.

The Friends of CDC are a patient lot. Some of us (Derek Benstead in particular) have been voices crying in the wilderness the best part of 20 years already.

The CDC consultation – on which many of us are working – does not allow for transfers in or the setting up of schemes specifically to pay scheme pensions from DC pots. Both John and Andrew are right.

It may be that savers like me have to wait a decade to have scheme pensions paid from our DC pots. We may never get there!

But if we do not going on pointing out that at times like this (the S&P 500 was up 5% yesterday and has fallen many times that in the first part of December), people are being ruined by drawdown. CDC pensions , paid from a CDC fund at a rate determined by trustees on advice from actuaries are a half-way house between the perils of individual drawdown and the perils of a sponsor taking pension guarantees onto a balance sheet.

We may not see transfers in , any day soon; but logic suggests that the we will see them within the next 20 years. Anyone who is following the debate about default decumulation options from DC, will understand that the alternatives aren’t much more palatable than what’s on offer today.

Keep on pushing

Despite the obstacles to achieving CDC legislation, I am hopeful that in 2019 we will see the writing of the rules that in the next decade will allow the Royal Mail to run a CDC scheme. It is a start – and a decent start- but it is not the end.

There is no end – that is the message about pensions. We do not have to close collective schemes and when we do so – we cannot reopen them. We will keep on pushing to keep those schemes open – which are open, and open new schemes to replace those that are closed.

In the meantime we will keep on pushing to make sure that DC schemes run effeciently and they they are as well funded as can be.  We do not just need need dramatic reform, we need better practice with what we have got.

A recognition that there is necessary risk in pensions

We cannot afford to run pensions on the yields we get from gilts – we can’t now – we never could. Providing pensions is not risk-free.

We need to find the correct balance between risk and reward. right now we are offering people only the binary choice of annuity and drawdown, we are not offering a balanced option.

For people to take a balanced pension, they must accept some of the risk, and market risk is part of it – but they do not have to suffer the extremes of annuity penury or the pounds cost ravaging of drawdown gone wrong.


(but you’re on your own!)

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Coping with falling markets

coins falling

It is a blessing that the first five years of auto-enrolment have seen world stock and bond markets rise. Low interest rates have had a lot to do with it, but we’ve also been in a period of comparative peace, the global risk register has been less to the fore, there has been plenty of money in company coffers, we have all done well.

But 2018 looks like being a poor one for investors and the year is ending in as state of chassis, brought on by a realisation that the phrase “we’ve never had it so good” uses the past tense.

Falling stock markets are historically a rich person’s problem, (the problem’s none the less real for that).

But increasing numbers of those who would not normally consider themselves investors – are investors now. I’m looking forward to the Radio 4 Moneybox Special on Saturday (29th Dec), when we’ll be hearing from the people from Port Talbot who have come into “wealth” by swapping a pension for cash – will be talking about what it’s like to become an investor overnight.

I suspect that many of those who will be on the program will have been learning financial resilience in the same way they have learned to cope with the rigours of working in heavy industry. But some will be struggling with the idea that they can lose more in a week than they take home in a year.

There’s no rationale to risk tolerance.

I have stood on the lawns of Cheltenham and watch Irish farmers blow a year’s savings on a horse that should have won. Value at Risk =100% and they know it- coming back year after year – for the year when they walk away with a fortune.

I’ve sat with people who’s entire savings are in cash, for no better reason than they’ve no appetite for risk and some of these people are those best placed to take it. The FCA report that the self invested personal pension market is awash with reckless conservatism, long-term money sitting in deposit accounts, smug to have got tax-breaks but useless in any economic sense.

People are not rational in their decision making, the national lottery distributes from the poor to worthy causes that include rowing – a past time of the rich. Part of this is moral hazard, as Springsteen sang  “Mister one day when my numbers come in, I ain’t ever going to drive a used car” – my financial adviser friend- John Mather will advise me that neither the lottery of buying cars first hand – makes financial sense. That song has however summed up working class aspiration in the States for thirty years.

The impact of falling markets

£36.8 billion was turfed out of defined benefit pension schemes and exposed to market volatility in 2017, the first quarter of 2018 saw over £10 billion follow it.

It’s not a question of whether but how we cope with falling markets. My worry is that many won’t and that those least prepared for the shock of losing money will not be able to cope. But that is the middle class liberal in me. I know that people are tougher than my    bleeding heart would have them and that the steel-workers who’ll read this will have thought this through.

I’m not writing this from Tai Bach but from comfortable Shaftesbury in North Dorset. I have no reason to worry for myself and no (economic) reason to worry for others. And yet I do – some would say too much.

I know that there are many in Government who worry too. I have met them. We have promised people the freedom to do as they like but have given them a knife to catch- when markets fall.

If people are drawing down after Christmas to pay for Christmas spending, they will draw down from markets in crisis and at prices that may not reflect the under-lying assets. In short they may be forced to sell low. The impact on the cashflow plans put to them by their advisers may be calamitous as “pound -cost – ravaging” sets in.

Coping together

In my church we pray for the vulnerable. It is an entirely irrational thing to do, but we’ve always done it and always will.

Being concerned together seems to get results. Practical help arises from collective meditation and our collective articulation of the problem.

This is the way that people cope – by coming together. Ironically it is exactly how occupational pension schemes provide help – they bring people together.

That is why people like Derek Benstead, Hilary Salt and those others I work with at First Actuarial campaign for open collective pension plans. They help people to cope with periods of financial adversity.

As I look forward to 2019 and back on the past five years, I am increasingly convinced that they are right. We do not cope well on our own, we need to do things together

life cycle open


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We Need Breakthrough Business Models, not Breakthrough Technology

I found this article on Linked In. You can find the original here.

It makes a lot of sense – not just of why we get bubbles, but how- succesful businesses can be created out of the vacuum when a bubble bursts.

When people invest in Tech – including Fintech, they are investing in the technology – not the business model. When a business adopts the technology to deliver to a societal need – then you have a sustainable business and a sustainable business model.



Technology doesn’t transform markets, business models do.

We Need Breakthrough Business Models, Not Breakthrough Technology

When humanity encounters a shiny new technology and senses its potential, we usually glibly assume that the world will instantaneously jump aboard and surf the resulting wave of change.

Anyone who has experienced at least one of these wave peaks knows what typically happens next: We crash into the “Trough of Disillusionment.” More than a couple of times over the decades, we have turned up at the doors of once-unstoppable businesses to find their founders sitting among the smoldering debris.

It may seem an idiotic question, but why, time and again, is the Gartner Hype Cycle–a theory of technology adoption developed by advisory firm Gartner–correct? The answer, of course, is that our species keeps falling into the same trap.

The Gartner Hype Cycle. [Images: Olga Tarkovskiy/Wiki Commons (infographic), Jolygon/iStock (pattern)]

Why do we keep getting this wrong? The answer seems clear. We favor technologies over business models, imbibing the Kool-Aid a long time before the hard slog to turn the concept into something customers will actually buy has begun.In a previous article, we explored the entrepreneurial mindset needed to solve the world’s largest, most mind-numbing problems. Those who rise to the challenge, we conclude, will claim a generous slice of future markets.

And yet, a good deal of effort is still needed to turn most emerging technologies into sustainable wealth creation engines. In our experience, anyone who still wants to kick off a discussion about long-term wealth creation by focusing on the business case for addressing the world’s biggest unmet needs is likely to find themselves paddling along well behind the next big wave, very likely missing it entirely.

By contrast, tomorrow’s market leaders are the ones already sketching a new business model on the proverbial napkin. Business models are what connects a technology’s potential with real market needs and consumer demand.

Simply put, business models eat the business case for breakfast.

Recall how solar panels took off. True, the price of photovoltaic cells had been falling exponentially since the 1970s. But it wasn’t until 2008 when the concept of “zero-money-down” solar (leased and managed rooftop solar) was introduced that we saw an equally exponential increase in the number of solar roof installations. The new model gave solar power the edge over grid energy.

To get a better grip on the implications, we have been talking to some of the world’s top change agents as part of our Project Breakthrough Initiative for the UN Global Compact. Some of the insights on breakthrough business model innovation are distilled in this video:

Here are three takeaways:


Generally, unmet needs are unmet for a good reason: People aren’t able—or willing—to pay the market rate for a solution. That fact may be easy to overlook when you’re dealing with a few hundred people in a rural community or an urban slum, but when you’re dealing with billions of people around the world, Houston, we have an opportunity.

Clayton Christensen’s theory of disruptive innovation highlights that needs are often left unmet not because they can’t be met, but because the incumbents have been innovating at the high end of the market, chasing ever larger margins. It is the role of the disruptor, then, to meet the needs of those who have been ignored–and steal market share from the incumbent.

As digitalization proceeds at unprecedented speed and scale, the marginal cost of delivering a whole range of goods and services will plummet. This opens up a huge opportunity to create affordable solutions to huge, previously overlooked market needs.

One example is the insurance company BIMA, featured in the video. BIMA specializes in using mobile technology to bring potentially life-changing insurance to the previously uninsured, worldwide. Today the company reports that it is registering over 600,000 new customers a month.

[Image: Jolygon/iStock]


Big business is struggling. At the current churn rate, 50% of S&P 500 companies will cease to exist over the next 50 years. But where there are losers there are also winners.

So what will the next generation of winners look like? Will they be clones of Facebook or Uber? Maybe, but it looks increasingly likely that many of tomorrow’s business success stories will have sustainability at their core.

A recent report by the Generation Foundation (the advocacy arm of the investment firm cofounded by Al Gore) argues that sustainability has become fundamental for growth.

The two key opportunities are to make goods and services accessible to those who hitherto didn’t have access to them—and to replace resource-intensive products and services with ones that are radically more efficient.

In practice, this often requires companies to rethink where they draw their own boundaries. When we interviewed Francesco Starace, CEO of the multinational energy company Enel, he told us that they had for too long viewed energy as a stand-alone value.

But as he went on to say, “energy alone is nothing. This means we should understand what other people, and other pieces of society, need from us. That part is more difficult. You have to understand the many missing parts, that, for decades, you have ignored.”

Today, Enel is the world’s leading renewable energy producer, but it acknowledges that modern energy systems, like modern data systems, do not work best when centrally managed. So, through their Open Power approach, they are exploring the role they will play in a future where their customers produce, store, and manage their own energy.

[Image: Jolygon/iStock]


There is good reason to believe that the change we have seen over the last decade will be dwarfed by what happens next. One key feature of what’s headed our way is a shift away from ownership. As the Internet of Things grows exponentially, it will become ever easier to share resources in real time.

Rachel Botsman, a leading expert, told us, sharing-economy business models take a wide range of unused assets and unlock their value by matching “needs” with “haves,” radically boosting both efficiency and access.

And the process has only just begun. As Botsman continued to say, “in terms of impact, and in terms of different sectors realizing that this isn’t just a technology trend, but a transformation in how we utilise assets and the flow of value and trust, I literally think we’re on day one.”

The pace of change could take us all by surprise. Take transport. Think-tank RethinkX predicts that, once ride-d is combined with autonomous electric vehicles (AEVs), the costs of accessing mobility services as and when you need them will be so much lower than the costs associated with owning a car that consumer behavior will shift very quickly. Within 10 years of regulatory approval for AEVs they predict ‘transport-as-a-service will account for 95% of U.S. passenger miles.

So those hype cycle charts are great at indicating where we are on the various tech cycles. But remember that business models are they key to determining which technologies take off–and which crash and burn.


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2018 – goodbye and good riddance

Goodbye 2


2018 was a mixed year for those looking for better pensions.

On the plus side, we are finally getting auto-enrolment. The predicted increase in opt-outs didn’t happen, when member contributions tripled, we look forward to 2019 with eqanimity.

On the plus side – we now have the possibility of a queen’s speech with meaningful reform from the DB White Paper and the CDC and Pension Dashboard consultations.

On the plus side, DB schemes appear better funded, though only at the cost of massive employer contributions which might otherwise have been deployed lifting the country out of austerity.

But I will look back at this year as another wasted year.

Austerity is still here – look to the streets.

I am in Shaftesbury where I was born, my father died this year, dying in Salisbury, a town that was in virtual lock-down at the time. We live with the threat of terror around us, Gatwick is closed by a drone, a crime with a million victims and no perpetrator.

Homelessness is reported to be at record levels.

The sole Christian institution in Shaftesbury that is growing, reaches out to the community through a food bank. Even in rural north Dorset, there are signs of poverty everywhere. The old and those on benefits have less, there are less police, less ambulances, less school places per capita. The library, such as it is, has few new books.

After 8 years of austerity the fabric of rural towns like Shaftesbury continues to deteriorate. In real terms people are poorer than they were ten years ago.

2018 was supposed to be the year we turned austerity off, but what I see in Shaftesbury , I see in other British towns small and large – and I see it most of all in London, where the divide between those making money and those squeezed for money is greatest. The disgrace of Grenfell lingers on our conscience.

Instead of tackling destitution we argue about BREXIT

In the little things of pensions to the great disaster of social inequality, the conscience of our country has been turned off.

It is apparently acceptable for over 1m people to be denied a promised Government because the Treasury cannot be bothered to put in the software to pay it – I refer not to the net-pay anomaly, but to the net pay scandal.

Equally – it is apparently acceptable for people to be sleeping rough on our streets this Christmas – in greater numbers than ever.

My friend – @GlesgaBrighton has been collecting examples of the current state of the nation. Here are a few from his timeline.

and again

and again

He catches the Zeitgeist. There is a deep unease in this country at present and it’s founded in our failure to tackle the inequality that has grown since the financial crash of 2008.

The poor have paid and are still paying for the behaviour of the rich. Meanwhile our Government is locked in an internal argument which is irrelevant to the problems of poverty.

I am a Christian – this will not do

Whether you come at this question with Christian faith – as I do, or with other religious faith – or with no faith at all (like Paul Lewis), our common sense of decency to our fellow men and women commands us to cry out against social justice and do what we can to right it.

I have tried it from all political angles, in my youth I was a Liberal Party Agent, my political hero(one) is Angela Rayner, I am a member of the Tory Party because I thought I could be most effective from within. But I realise that if I have influence it is through my blog.

Ten years old and still campaigning.

Next week, my blog will be ten years old, I have posted over 3,500 times and the blog has been read over 1m times. There are better writers to read, but I like to think that my voice has become my own and authentic.

I’ve actually found myself through my blogging. I mean by that – that when I re-read stuff I’ve written over this period of my life – I start to make sense of me.

I’m a f@*ked up idiot like everybody else – I’ve fallen from grace many times and there are many who’ve pointed that out.

But I’ve found my authentic voice and that’s important to me. I have an identity – I know who I am and people know what it is that I stand for.

Goodbye and good riddance?

2019 may well be worse than 2018, things can get worse before they get better. As I write, I see no way out of this BREXIT mess, nor do I see how we can close the food banks down and get people off the street.

In parochial terms , I see no way to reform the pensions system to make it work for those who have less till we accept we keep our promises on things like Government incentives.

I don’t see a way forward for the pension dashboard unless we rest it from the oligarchy of dasboard-istas who would centralise control around a single pension finder service controlled by the usual suspects.

I don’t see a way back to fully funded collective pensions, till people recognise that DC is not right for the mass of this population who cannot turn capital into an income for life (the process of paying a pension).

I want to say goodbye and good riddance to all this but I can’t. We can be shot of 2018, but its baggage is carried into the new year.

But it’s Christmas and it’s time to wish each other well

Those people who read this blog, and go to TTF meetings, and come to Pension PlayPen lunches are a proper community of people who do give a toss about making things better.

We may not be able to change the big things- BREXIT being the biggest – but we can attend to the little things.

goodbye 1


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Regus v WeWork – which works better?

flexible working.png

I guess I’m spoiled for choice.  When I go back to work on 27th December, I can choose to go to a First Actuarial office, work in an IOD workspace, check in with Regus or use one of the two WeWork offices I have a card for.

Which will I choose? WeWork has commissioned an independent piece of research on the economic impact it has had. These are my personal thoughts which happen to coincide with the conclusions of the research.

WeWork is making a difference to the way I work and the way my businesses work.

On grounds of convenience – WeWork, situated adjacent to Boris Bike stands within 5 minutes cycle of home and 2 minutes from the gym, WeWork Moorgate and Devonshire Square do the trick

On grounds of cost – WeWork – I am currently paying around £450 pm to host meetings – get high-speed broadband and have a desk in the heart of a city. The comparable costs of setting up my own office or renting workspace from Regus are off the scale.

On grounds of service – people who arrive to meet me at WeWorks inevitably have a smile on their face, that is because WeWork staff treat me and my guests as VIPs – and they do that to all the 300 or so companies with whom I share space.

On grounds of fun – the people I work with are hugely productive. We are a boot-strapping start up and we live in WeWork not just during the day, but well into the evening and early in the morning, that’s because it’s more fun to be at work than be at home. Oh and we work week-ends to – because we can!

we work pool

Olly and Ritesh in WeWork

On grounds of pets – WeWork encourages people to bring (well-behaved) animals to work. I bring my son. Many people bring dogs, cats – tortoises and rabbits. Why not?

WeWork is an experience like no other. It allows me to share my skills with thousands of people who need to get to know AE and pensions, I get help from other start ups and a few established companies about GDPR, wrapping Christmas presents and raising money. I go to talks in the evening and lunchtime, I have breakfast with people I don’t know and I drink beer with them when I know them.

This immersive experience does not restrict me wearing a suit to work when I need to, nor doses it stop turning up in my gym kit (before not after).

I just read this article that suggests WeWork is over valued compared to other property companies (like Regus). I can’t comment on the numbers, but I have this to say. The valuations of organisations like WeWork are ultimately driven by customer experience. My experience of WeWork is good, better than Regus – much better than IOD – much much better than sitting in an old school single office environment.

On the 7th Floor of WeWork Moorgate (where I work) is Citibank. If I move to the new WeWork offices in Wilson Street , I will work alongside Microsoft developers. These large organisations see that they can attract and keep brilliant graduates by offering them a workspace that works for them.

We Work differently these days, we work from laptops and phones with data that sits not on physical servers but in the cloud. We meet people for coffee or drink beer with them.

We want to enjoy our work and feel good about our workspaces. The people I work with do just that – but they do it much more easily at WeWorks than elsewhere.

I think the valuation of WeWorks is based on people like me turning away from traditional workplaces and for replications of those workplaces (as Regus offers). People like me – and there are many 50+ workers in both our City offices – are voting with their feet.

we work.png

It’s just nice


Posted in pensions | 2 Comments

Railways and dashboards have a lot in common!


rail network 2

Yesterday I wrote about the importance of delivering a dashboard competitively. To sum my argument up, I think that those prepared to supply the technology needed to find people’s pensions should not compete for the work through a Government led “procurement process” but through a tech-sprint, where they prove to themselves, to Government and to their key customers – us pension savers – they can do the job accurately and at a competitive price.

I am not arguing to sabotage the concept of a single not for profit dashboard set within the new Single Financial Guidance Body, that is a useful first step. Nor am I arguing against a governance body set up by the SFGB to establish processes and controls to minimise risks of things going wrong. I accept the SFGB as the initial home of the dashboard and governance committee. But I am going against the consultation suggestion that there is just one pension finder service.

In this blog, I explain the benefits of competition between pension finder services to consumers and set out the principles by which these services can work together to deliver us our pension information, quicker, cheaper and with greater focus on the needs of ordinary people.


There is nothing so laborious as a Government led procurement process. Things happen consecutively, not in parallel, once appointed – the pace of development is dictated not by competition but by timelines agreed by all. Inevitably these timelines are conservative, they do not encourage entrepreneurship, things arrive late – or to deadlines which are way too slow.

Consumers are keen to find their £20bn lost money, to see all their pension pots on one screen, to get on with managing these pots to provide them with financial security in later life. Having wasted a lot of time already, they will not tolerate yet more buraucracy.


If anyone is under any illusion that the pension finder service will be free, then they are nuts. The cost of development and of management will be passed on to those benefiting from the dashboard. In the first place the costs will be picked up by levies on the industry, but these will be passed on to ordinary consumers. It is easy for these costs to be worked into Annual Management Charges or the hidden costs of managing pensions, but that doesn’t make them costs born by the consumer.

Transparency is the best disinfectant, if we are not to have a scandal down the line we need to be open about costs incurred.

Giving the pension finder service to a single organisation risks giving that organisation the right to set the price. If the price is set by Government, the price will either be too high or too low, if too high, the single service will plead it cannot do the work and force a change in pricing structure (see what is happening with price controls in the energy sector). Alternatively, if the price is too high, the pension finder -even if not for profit – will be as happy as Cedric the Pig.

The only way to ensure a competitive price is to put competition to work. This is why NEST is not the only workplace pension provider. Competition is thriving in workplace pensions because NEST were not given a state monopoly.

Greater focus

As I wrote in my blog “no man cometh unto the dashboard but by me“, restricting the plumbing to just one organisation assumes only one way to deliver information. It’s the pension finder’s way or do it yourself – with the pension finder able to tell providers to refer all private requests to them.

People have different needs – they want to find different things. Similarly, pension providers need different approaches. A defined benefit scheme’s administrators see dashboards in a different way to those of a self invested personal pension. The problems of providing data from a legacy insured system are quite different than from a modern database run by a recently started master trust. Different pension finder services will relate to these problems in different ways, some better than others.

In time, the dashboards will become more or less relevant to differing groups of consumers as dashboard focus on their needs and the needs of the pension administrators who supply the data. This focus needs innovation and that innovation flows from diversity and competition. It is unlikely to happen because of a single approach which is inherently generalist and unfocussed.

We can have competition and collaboration

It’s often noted that we have in Britain a very complex pension system with people having a lot of different pension pots and pension rights.

Some people think that we need a single pension finder service to bring everything together. But this is not what happens in other areas of competition. The introduction of open banking is a case in point. Banks now collaborate and compete in equal measure. The customers are well served by this, getting data more quickly, more cheaply and with much greater focus on their needs. We are already enjoying faster payments and integrated statements (Lloyds and Scottish Widows for instance).

Agreeing to work with open data standards, the retail banks have opened competition to Challenger Banks who they are now working with – and learning from. This is because the Challenger Banks are doing things quicker, cheaper and with greater focus.

When I see PensionBee and People’s Pension join Orio and the ABI, I see a willingness from those who challenge traditional ways of doing things in pensions wanting to work with traditional providers.

I want to be a part of a revolution not an evolution in pension information. We cannot move forward at the pace people want by doing things as we always have, that means repeating yesterday’s mistakes. Instead we need to move forward by working together competitively.

The way it can work

A long time ago, Britain built a rail network which we still use today. It was based on common standards (track width etc) but it spawned massive innovation both in terms of network coverage and in the delivery of “customer journeys”.

The innovators sometimes had to bite their lip and accept second best (Brunel’s broad gauge for instance), but for the most part- the innovators won through and it is they who we remember today.

The dashboard can work through a similar combination of innovation, consensus, collaboration and consensus.

I am quite sure that if we had set up in the 1830s a single rail network to deliver a rail system, most of the magnificent lines that we enjoy today would not have been built. A Government appointed railway governance body would not have accepted the challenge of a tunnel, a viaduct – of building a railway accross a bog like Rannoch Moor.

People do crazy things and often screw up. But in screwing up, they learn and do things better next time.

The way the dashboard can work is by letting people loose, by allowing them to sprint towards a target and sort each other out. By helping them to help each other so that everybody wins.

This is what we mean by open pensions.

rail network


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Your pension – your rights!

magna carta

Governance is an interesting word.

the action or manner of governing a state, organization, etc.
“a more responsive system of governance will be required”
    rule; control.
    “what, shall King Henry be a pupil still, under the surly Gloucester’s governance ?”

It has morphed from “rule or control” to a “manner of governing” in an etymological fudge-slide.

One of the things that happened in 2018 which scares the life out of big corporations was the Data Protection Act. Among other things it gives ordinary people to have the data others hold on them made available to them in machine readable format.

In terms of “rule and control” , this means putting us back in charge of what is rightfully ours. That is why GDPR – for all the moaning – is fundamentally good news for the consumer.

When it comes to pensions, what DP18 and the GDPR do, is to give us the right to our data in the way we want it presented.

What the Pensions Dashboard does is make the provision of that data easy, so we can see all our data in one place at the press of a key, a swipe of our screen.

 Governance and freedom of information are uneasy bedfellows.

It is natural for those in Government to want to control and rule. It is natural that they will side with organisations that will help them control and rule. This is why the Government is reluctant to give us free access to our data.

Instead of allowing the market to get on with the solution, Government is inventing elaborate systems to rule and control the provision of our data to us – the data we have a right to under DP18.

Here is the current Governance plan

dashboard governance model

If you read the Government Consultation paper which doubles up as a feasibility study, you see that the plans for “Rule and Control” involve setting up a single dashboard with a single data transmitter – the Pension Finding Service or PFS.

In time, and only after the PFS has been allowed to dictate its terms, other dashboards will be allowed to ask for data, but those requests must be through the PFS who authorise them.

In short, the consumer gets very little say in what he or she asks for, everything is determined by the Chair of the SFGB and its constituent parts.

This is how bureaucracy stifles innovation.

How governance was rested from an oligarchy

Britain long ago recognised that giving absolute power to one entity (the monarchy) was a bad thing . Through a series of insurrections, power was rested from an absolute monarchy and distributed to the people through a process now known as democracy.

Britain’s success has always been founded on our pragmatic distribution of power and devolvement of authority to the people who do the work. So when we had an industrial revolution, it was bottom up. France and others tried to impose an industrial revolution from Government down and it didn’t work. The people didn’t buy it, industry was stifled, the entrepreneurs fled to England and prospered!

In today’s terms – the oligarchy is not so much the Government but something called the pension industry. You can see them lined up at the top of this picture.

dasboard suspects.jpg


At the top of the tree – owning the dashboards are the big beast providers – and the Government’s Money Advice Service (soon to be the SFGB). These are the guys who rule and control. To their right are the financial advisers who those who rule and control may allow to share in the spoils.

Nowhere in this picture is there any representation of the consumer. That is because in the technical architecture and the governance of the pension dashboard , the consumer is represented by those who rule and control.

Your pension – your rights!

If you allow this “governance model” to happen , then the pension dashboard will not be about what you want to see – your right under DPA18, it will be about what the dashboards want you to see. The dashboards will control what you see because they will control the governance and they will control the single pipe through which data requests flow – the Pension Finder Service.

Not only will they control what you see, but – as the only player – they will control the price you pay to see your data. They will have ultimate control of when the dashboard is working and when it is down for maintenance so they’ll also control opening hours.

The pensions industry would have you believe that this is “open pensions” but it is not. There may be open data standards – but they are only open to the Pension Finder Service and the organisations they sub-contract to – to do the dirtier plumbing

The big fib in all this is contained in the promotion of Open Pensions

  • The Pensions Dashboard architecture introduces a central trust anchor and authorisation server component that enables the consumer to control consent to access their data and also delegate access to third parties.

This may sound like putting the consumer in control but it isn’t. The consumer authorises  just once, but has no real choice about who are his or her agents in this. That choice is determined by others, people who know best.

The only choice that a consumer gets is the choice of having their data delivered – it is that stark – take it or leave it.

Why this matters.

There are a number of things that people want to know about their pensions.

  • The first is what they are worth
  • The second is how to get their money back
  • The third is how much they’re paying to have their money looked after
  • The fourth is what is happening with their money while it is away
  • The fifth is how their money has done in terms of interest earned.

When these questions are answered, consumers (like you and me) then may ask the question what do I do next and this may result in them concluding they would like their money back, it may even result in them wanting to put more money away.

But that is for the consumer to decide.

The current thinking of all those with whom I speak on the dashboard from the pensions industry is that we need strong governance so that people make the right decisions and those decisions will be about saving more into the pots managed by the pensions industry.

Which is why all this matters. If you want any kind of independent view of what you have got, if you want straight answers to your real questions, then you need to have a dashboard independent of the pensions industry, a dashboard run for you and not for them.

We need genuinely independent governance – genuinely independent pension finders and dashboards which play to the ordinary person – not special interest groups within the pension industry.

We need to rest “rule and control” back from the pensions industry and give it to those who are genuinely on the consumer’s side.

We have only a few weeks before the consultation ends – this is why I am writing this blog and the blog I published earlier today. 

magna carta 2


Posted in age wage, Dashboard, pensions | Tagged , , , , | 2 Comments

“ No man cometh unto the dashboard, but by me”.

the way

This is the vision of the dashboard we sign up to – if we accept the Government consultation


Close inspection shows that the pension finder is infact the only game in town, it is the way , the truth and the life for pension savers.

The diagram is not the one that appears in the Pension Consultation to describe the dashboard architecture, that one’s sanitised.

Dashboard cost model

Here the architecture does not appear so brutal but it is the same.

Because the Pension Finder incorporates the identity service, no data can flow to the dashboards from the providers (down the bottom unless the request has been verified by the identity service . This is what is meant by  the interface that “authorises subsequent access”,

The biggest land grab since Lebensraum

But the grand design of the single pension finder service is seen more ambitious. According to a document I was provided by one of candidates for the pension finder service (PFS), its key features will include

  1. A single point of integration for Dashboards, Providers and other entities that are approved to participate in the Dashboard System
  2. A trust anchor for consumer and delegate authentication  , (a trust anchor is an authoritative entity for which trust is assumed and not derived- Ed) in this instance the PFS authenticates who is sending messages.
  3. A cost effective and and effecient service for orchestrating the “Find of Pensions and authorising subsequent access to the Pension data that has been found (eg for valuations) 
  4. A centralised consumer consent process for authorising access to their data for both Dashboards and delegates (e.g. Financial Advisers) who request access to the consumer data
  5. The foundation for an Industry Attribute Hub that will initially provide the “find” of Pensions and atomisation services and which would also be extended to cover other long-term savings produce and business processes where attributes need to be found and shared

Let me re-word these points to make it clear just what they imply

Those awarded the PFS contract will

  1. Be in control of the integration of all parties participating in the dashboard
  2. Control the messaging between them
  3. Have control of all data requests for values and other consumer information
  4. Control delegated authorities (note these are already defined as to Financial  Advisers)
  5. Have rights to unlimited scope creep into ISAs and anything else that the PFS wishes to annexe.

There are many more pages of bullets outlining the Proposed Approach  how the Trust Anchor would work, how delegate authorities would  be controlled and how a single PFS is “robust, flexible and future-proof”. I would share the presentation but I was only handed it in paper format.

The presentation ends with a number of diagrams that show how untenable anything but a single pension finder service is. There is even a table showing feature by feature how open pensions are incompatible with open banking’s architectural features.

It is clear that as much distance must be placed between open banking and open pensions as possible. If we were to apply the experience of open banking to the pension dashboard we would not start with a single PFS but with multiple comprehensive PFS’.

Come off it!

I don’t pretend to understand all the technology at play here, but I can see a land-grab and I know what happens when you grant a licence to control everything to one organisation.

The arguments put forward to support a monopoly are all spurious – all taken from the project fear manual and none based on the evidence of Open Banking.

A single PFS would speed things up

Remember the space race? The only way you get a race is with runners, giving one organisation a monopoly wouldn’t make for a race, it would make for a CrossRail style cock-up.

A single PFS would be more secure

The presentation suggests that a single PFS would provide the “narrowest attack vector” and that increasing the numbers of PFS would “widen the attack vector”. I have no idea why this is, it simply appears to be ripped from the “Project Fear” manual.

A single PFS would be cheaper

Multiple PFS would multiply the costs , the cost of assurance would increase as there would be multiple costs of assurance, multiple consents would increase complexity and therefore cost. Again I can see no reason why any of this should be true

A single dashboard would be more complex

This is based on there being a phased approach to the introduction of dashboards, There is also an argument about consistency – where one dashboard could produce different results than another, there is another argument that proliferation of dashboards would present issues for funding . All of these arguments come from deep within the manual of project fear but don’t stand up to any scrutiny in a digital world.

Freedom from Complete Control

If you think that giving one organisation total control over all the data that flows through the dashboard you have a different view of competition and markets to me.

Doing so risks

  • being held to fortune on delivery timescales
  • outage of the service with no back up
  • no protection over cost over-runs
  • being at one organisations mercy over what data you could get
  • having no say in the development of the dashboard.

In short we would be handing Complete Control to the Pension Finder Service. If you want to know what that feels like, you should watch this video from the Clash

Posted in Dashboard, pensions | Tagged , , , , | 3 Comments

The self-employed do themselves and the rest of us NO PENSION FAVOURS

self employed 7.PNG

In addition to safeguarding the rising state pension, we will continue to support the successful expansion of auto-enrolled pensions, enabling more people to increase their retirement income with help from their employers and government; we will continue to extend auto-enrolment to small employers and make it available to the self-employed  (Conservative Manifesto 2017 – p 64)

Here are the preferences of the self-employed – the output of the study the Government commissioned on the self-employed

self-employed 4

As Jo Cumbo reports on twitter – this breaking news is not news at all


The reality of the report is that the Government are going to duck the thorny issue of auto-enrolment for the self-employed.

Statement of the bleeding obvious

The work done by Ipsos-Mori is good enough. It follows the well-trodden path of segmenting the self employed into various types from the “can’t get a proper job” through to the professional elite. There are plenty of useful charts which no doubt will be inserted into power points delivered by pension professionals who have no more will to change things than the Government.

I am not surprised that most self-employed see saving into a pension as not a very clever option.


self employed

Nor do I find it surprising to see the thinking behind these numbers

self employed 2

The question of framing comes into this. If you frame a question , as Ipsos-MORI seem to have done – so that “pension” becomes “wealth in retirement” – you get answers that respond to that framing. People who see retirement in terms of what has happened to them or their parents, will see property as a good deal.

self employed 3

But you can’t buy a sausage with a brick, something that is pretty important if you consider retirement as an extended period when you are not receiving an income from work.

An ill-defined problem

If the exam question Ipsos-MORI set out to answer was “how do we give the self-employed” what they want, then the report goes a long way to answering it.

If the exam question is re-set as; “are the self-employed doing themselves any favours” then the answer might be quite different.

And if the question is “are the self-employed doing the rest of us any favours” the answer is different again.

  • The self-employed are  major beneficiaries of the Single State Pension. Many will get the benefits coming from SERPS without paying the national insurance contributions.
  • They exist in a tax and NI advantaged bubble which those with the skill-set to exploit it – exploit. Those who know their way around – use pensions to increase their wealth
  • The poorest self-employed can’t save as they have no means to save – either financial or in terms of an auto-enrolment mechanism.
  • In the middle are those who – having gone their own way on employment – see no reason to be part of the private pension system either.

None of which makes much sense in answering the question “are they doing themselves any favours” – they are where they are.

But it makes it clear when answering the question “are the self-employed doing the rest of us any favours” – that they aren’t.

What should be done?

If the self-employed are allowed to go their own way, they will – in my opinion – become a burden on the tax-payer in years to come (and indeed today). The reliance on houses and businesses to pay replacement income in retirement seems to me – misguided. Their perception of pensions – and I’ve read the report in detail – seems often to be wrong. Their grasp of financial planning seems – overall- to be weak. On almost every count I see the majority of self-employed as doing themselves no favours – nor the employed any favours.

The Government remedy seems to be feeble in extreme. Despite the recommendation’s of Jamie Jenkins, Steve Webb and Matthew Taylor for real action on the self-employed, it seems we are left with a few nudges as Government strategy. Nudge doesn’t work as a way of getting people into pension saving unless the default position is “save”.

Doing it the other way is like trying to push a van up a hill – with the handbrake on.

self employed 6



Posted in pensions, self-employed | Tagged , , | 2 Comments

“They’ve got Charles Counsell – he’s one of their own”


Charles Counsell – tPR’s new CEO


As a kid I always preferred home-grown, beat the expensive imported stuff.  So it seems does the Pensions Regulator – who’ve eschewed the great and the good and gone for one of their own.

Those of us who have been involved in auto-enrolment know Charles as the quiet man who made it happen.

Not one for the limelight, there is little known of Charles before he joined the Regulator in 2011. Here’s what he’s put about himself on Linked In

“Charles was appointed Chief Executive of the Money Advice Service in June 2017.

Charles spent six years prior to this as Executive Director of Automatic Enrolment at the Pensions Regulator (TPR) where he was responsible for the successful UK roll-out of this programme, working alongside DWP. In his time at TPR, the automatic enrolment programme led to over 7.5 million workers newly saving into a workplace pension from over 500,000 employers.

Charles was awarded an OBE in 2017 for services to workplace pension reform.

He has spent much of his career setting up and leading major change programmes in both the private and public sectors in the UK and overseas.

Charles is also a trustee of South Somerset Citizens Advice.”

Although Charles is from Bath (a neighbour of Steve Webb) he has a flat in Brighton and when he left tPR for the Money Advice Service, it was felt by those who knew him – that he’d be back.

A man to manage change

Like John Govett at the Single Finance Guidance Body, Charles is not a pensions geek. Indeed his qualifications are as a management (change) consultant.  He speaks feelingly of his time setting up tPR on the blog he wrote when leaving tPR to (temporarily) manage the Money Advice Service as it was subsumed into the Single Guidance Body.

It was as I was coming back to Brighton from my home in Somerset last weekend that it finally dawned on me.

This would be my last Sunday commute back to Brighton as an employee of TPR, a place I feel proud and passionate to have worked at for over 10 years.

To say TPR has changed since I started would be something of an understatement. When I first set foot in Trafalgar Place in 2005 as part of the team that would create TPR out of its predecessor organisation OPRA, there were around 200 members of staff – about a third of the people we still house in the same building complex today. After a short spell working elsewhere I returned to TPR in January 2008 to bring the Employer Compliance Regime team, who were then part of DWP, down to Brighton. Our remit? To set up and launch a programme that would give all employees access to a workplace pension. It would be called ‘automatic enrolment’.

There were six of us in a ground floor room at Napier House, faced with some enormous challenges. The first of these was to support DWP on what the legislation would actually look like. The fact that over half of the original team still work at TPR has been a real positive for the organisation, giving us a real understanding of the intricacies of AE law (I honestly believe there is nothing that Gillian McNamara does not know about workplace pensions and automatic enrolment), and a solid continuity of knowledge as the team has expanded.

The biggest challenge, once we had got our heads around the legislation, was how we were going to roll it out. We had many discussions with our stakeholders, NEST and the DWP, and were all in agreement that the implementation could not be a big bang with all employers going live at the same time…this was certainly going to be a disaster.  We would need to introduce the changes in a controlled and measured way. But how? I believe that the staging approach which was ultimately adopted, starting with the largest employers and setting the tone, was the single most important decision we made – and, even in retrospect, the right one.  Yes, it created a profile that looked like a mountain range to climb, but with careful planning and great care even the highest mountains can be climbed.

With change of the size of the AE programme there are always large risks, the biggest of which was how small employers would behave. Because of this unknown quantity, we insisted on the creation of a test group of employers – known as ‘pathfinder’, who we would monitor throughout the process to see how they fared and from which we could refine our approaches. It was from this learning that we developed our duties checker and five simple steps. This was hugely beneficial to employers.  It was also hugely beneficial for the industry – the pension providers, advisers and payroll bureau all of whom could understand how employers would react to AE and then adapt their processes.

Subsequent employers have all benefited from this, and those employers in this test group also benefited from the huge attention that was placed on them.

The fundamental building block of AE is known as ‘nudge theory’, and we’ve worked hard with the government’s behavioural insights team to make it work for our programme. It doesn’t just involve harnessing inertia – although that is a key element of AE – it’s also about getting the tone and messaging right in our letters, so employers feel like they’re doing the right thing, and that everyone else is too.

Rarely does someone leave so unassumingly. Charles is someone who puts the work first and himself second, this is his strength and he will need it.

An immediate challenge from Frank Field.

If anyone believes Charles’ current low-profile can be maintained, then they need to understand the nature of the role he is taking on.

Charles’ predecessor, Lesley Titcomb is the object of Frank Field’s opprobrium and many feel that it was Field’s implacable hostility to the Pensions Regulator that led to her resignation. As a tPR lifer, Charles is clearly going to have no easier time from the Work and Pensions Select Committee, than did Lesley.

I am not sure whether this approach is either right or fair, but it is the reality that Charles Counsell faces and the issues around DB funding and in particular the Regulator’s behaviour towards failing DB sponsors that will be most under public scrutiny.

One of our own

But tPR is not just about DB funding. To the world outside the DB bubble, the Pensions Regulator is about workplace pensions and their management through auto-enrolment.

To the 1m +  employers who participate in auto-enrolment, the Pensions Regulator is the boss.

This subtle change in pensions dynamics is missed by many who are close to DB.

To those who work in and with payroll, to the business advisors of the SMEs who drive auto-enrolment and to the workplace pensions themselves – Charles Counsell is “one of their own”.

A boring choice?

Appointing Charles Counsell as the CEO of the Pensions Regulator is a safe choice. Charles is not contentious – as Steve Webb is and would be. He is not a “new broom”, as Frank Field wanted and he’s certainly not the headline grabber.

Like John Govett at SFGB, Charles Counsell is a change management man. Someone who works from the inside to make things happen well.

Whether he can break from pupae to butterfly and promote the Pensions Regulator as Lesley Titcomb has, is his and tPR’s challenge. His appointment should give David Fairs space to get on with his agenda of policy change ,  I am sure he will need the support of those within Napier House and will get it. Charles Counsell will lead a well-functioning management team.

I expect that he will get the support of those who know how effective he has been in establishing auto-enrolment. I notice he has already garnered some support from Adrian Boulding (see comments).

But whether he will win the support of the wider pensions community – is still to be tested.

He can count on my support.

Posted in pensions, Pensions Regulator | Tagged , , | 1 Comment

“Deliver me a world without work”!

In almost every conversation I have had about the purpose of a pension dashboard, up comes the word “engagement”.

Engagement has become the horse to the savings cart, “you can’t expect people to save more unless you’ve engaged them with their savings” is the usual cry of the dashboard-istas.

But all the evidence is that we engage with our pensions not when we’re saving, but when we want to spend our savings. The crudest examination of TPAS enquiries shows that most people are querying claims – not asking for help on how much to spend.

It is only in the marketing departments of the pension saving institutions that dashboards are seen as a means to get people to save more. Government happily subscribes to that myth as it gets them out of worrying about the auto-enrolment rate, the demise of properly funded DB pensions and the ongoing worries over the state’s in retirement liabilities – most particularly issues to do with long-term care.

But it simply isn’t the case that the dashboard is there to help people save more. The prospect of a pensions dashboard is appealing  because it helps us to spend our savings.

We are not helping people spend their savings

If you speak to pension pricing actuaries, they will refer to paying you back your savings as a “claim”, they will tell you about the “cost of claim” and they will look bleak.

Frankly, reducing the cost of claim, is greatly to be desired – if you are a pensions pricing actuary. The easiest way to reduce the cost of claim is to reduce claims. It is unsurprising that we are now hearing about the advantages of pensions as inheritable wealth, the cost of claim of paying a pension as a death benefit is very low, and the value of maintaining the pot under your management till death do it part – is very high. You do not need to be a behavioural economist to see that pension providers are rather keener to promote saving than spending and rather keener to promote pensions as a source of inheritable wealth than as a wage for life.

We are not helping people to spend their retirement savings because it is easier and more profitable not to.

The dashboard needs to come with a steering wheel

I will persist with my mnemonic AGE.

A is for Assist (helping people find their pension), G is for guiding people to sensible spending strategies and E is for equipping people to get their money back. The point of the dashboard – for anyone over 50 is primarily to get you retirement ready. AgeWage will get people ready for retirement, it will assist, guide and equip to spend.

People are not mugs, they know the value of compound interest, they know that they should do their saving when they are young and that is why the highest level of AE opt-out is among the over 50s, the over 50’s – who are prime customers for the dashboards are not playing catch-up with pension saving, they are thinking about making the most of what they’ve got.

To extend the metaphor, they aren’t interested in the dashboard so much as the car – they want the steering equipment and they want a financial satnav and they want it now.

It is not irresponsible to meet this need. It is deeply responsible. One of the biggest causes of pension mistrust among ordinary people is the fear that they won’t get their money back. The sooner the pensions industry stops talking about paying people their money in negative terms (claim) and starts promoting the value of what people have – the better.

Making spending easier

In case anyone hadn’t noticed, we are in an era of “faster payments”. If you want to pay someone money, you can request a same day transfer from your bank account and that money will arrive in someone else’s bank accounts that day.

But “faster payments” aren’t talked about by pension companies. When I visit pension admin centres, I am shocked to see customer’s birth certificates being used to verify a payment. We still talk of service standards to pay a claim of 10 working days – that’s no faster a payment than happened 25 years ago. Insurance companies and master trusts have spent a fortune on modelling tools to help us save more, but invested very little in making it easy to get our money.

What is more, when I read the IGC reports every April, I see very little attention being given to “claims experience”. The IGCs seem to be as blind to the problem as everyone else. When I talk to DC trustees about how they promote “claims”, they look at me blankly, I am talking about tomorrow’s problem.

But paying people back their money is not tomorrow’s problem, it’s the problem that most people have with pensions today.

We have got to make it easier for people to spend their pensions – it’s a matter of trust.

If we make it easy to spend, people will choose to save.

Mark Scantlebury and Vincent Franklin, the people who started Quietroom, tell the story of working with the Halifax through the credit crunch in 2008/9. The bank called in Quietroom to arrest the outflow of savings following the collapse of Northern Rock and Bradford and Bingley.

Quietroom turned the situation round, not by making it harder for people to take their money, but by training Halifax staff to make it easier. The perverse consequence was that people stopped trying to withdraw their savings and started trusting their bank a little more.

The pensions dashboard is likely to improve engagement and trust in pensions, but it will do so because it will make pensions accessible for people to spend. As with the Halifax, so with Pensions, a simple and open approach to helping people spend their money should result in people seeing the point of pensions.

Promoting pension spending

We’ve just come through ten years of austerity. The watchwords have all been negative “prudence”, “belt tightening” , “caution”.  Whether it be the corporate balance sheet or our pension savings account, there is plenty of cash around.

We have become so risk-averse over the past ten years, that this article is probably considered treacherous!

But I believe that now is the time to promote the pension dashboard as the way to learn to spend our pensions, not another ruse to get us to save more.

The joy of having a regular monthly income to pay the bills is mine. I have a pension, I chose to work- I don’t have to. I still save and though my savings have gone down in 2018, I still invest for the future. I can honestly say that pensions make me happy and allow me to live life the way I want to. That is because I have financial independence from work – my pension makes me self-sufficient.

We aspire to a world without work!

We save to get this self-sufficiency – we want the freedom not to have to work.

The pensions dashboard can assist, guide and equip us for a world without work – which is what most people want!

world without work.jpg


Posted in advice gap, age wage, Dashboard, pensions | Tagged , , , , , , , , | 1 Comment

The price of being sick in the head

sick in head


“Sick in the head”? The phrase doesn’t quite work for Tina – a 38 year old Mum who suffered from post-natal depression and then found her life and critical illness insurances 30% more expensive than if she hadn’t declared it.  (£26 per month became £34 per month).

Tina came across as self-aware, articulate and yes – self-confident. Anyone less sick in the head you couldn’t hope to listen to. You can test my judgement by listening to Moneybox (Tina’s is the first item).

Tina’s objection was to being declared potentially sick in the head, when she had made a full recovery. The provider (s) she approached were explicit in why Tina had to pay more for her policy. Her beef was that she hadn’t been warned of the risk (and I guess that she’s now on a register of “impaired lives” – though the program didn’t explore this).

Tina made a wider point that the lack of transparency is unlikely to increase take up of life and critical cover by those with ” pre-existing mental health issues”.  I’m with her on this, people need to know whether they’re more likely to be sick again and if so – accept that they need to pay more for cover. If the answer is “no” – the solution is not to avoid the issue – but to underwrite and treat Tina as having a “clean bill of health”.



Tina and baby Dora

Transparency in life insurance

Increasingly the underwriting of insurance is becoming more mechanistic and less discretionary. What that means is that you should be able to test your likely premium online (as it seems Tina did). Critically, you should be able to  declare your medical history anonymously and find out which insurers are prepared to underwrite you for what you’ve declared.


Johnny Timpson

Johnny Timpson, a friend of this blog, came on Moneybox, representing the insurers. He explained that this question is currently under review by the insurance industry. He pointed out that without underwriting (declaring this stuff), premiums would go up for everyone. The question is whether Tina should have been able to shop around anonymously and get the best rate for her.

It seems that price comparison sites cannot do this (yet). To repeat a statement from the program by another insurance spokesperson

“It’s better to speak to a specialist insurer or broker direct , something that price comparison websites are far less able to do”


Where the program became contentious was over this question of signposting.

Johnny also referred people like Tina to specialist risk advisers (a type of financial adviser) who can guide people through the particular risks.

I must say, I didn’t pick up on the matter to which some very good IFAs took offence

Being sound in mind and body, Tina probably felt that she could guide herself through the minefield of applying for life and critical life-cover online.

The question is whether the fault lies with Adam Shaw as the IFAs are suggesting, or with the application process of comparison sites.

Here I have a dilemma that touches not just this debate- but the more general debate over life expectancy.

What is the price of being sick in the head?

Back in the day both Eagle Star and Allied Dunbar were owned by British and American Tobacco. Though Eagle Star’s advertised life insurance rates were generally worse than Allied Dunbar’s , smokers found they got cheaper cover from Eagle Star because Allied Dunbar applied a 30% rating (increase of premium) , if you declared you smoked. The shareholders of BAT were up in arms about smoker ratings as they implied cigarettes could harm your health. Ultimately, this was one of the reasons BAT sold on the life companies to Zurich.

In the short term, brokers may be able to navigate people who have a history of mental illness to insurers who don’t “rate” them. Because of the less strenuous underwriting, the premiums (like Eagle Stars back in the day) are likely to look more expensive – but they could turn out the cheapest (as Eagle Star’s did for smokers).

Tina, being totally recovered and feeling that her depression was a “one-off” would no doubt want to go for the lowest premium for her circumstances. She is effectively waiting for the price comparison sites to catch up to the standards of the IFAs who can apply the human judgement needed to avoid Tina’s predicament (she is now known as an impaired life to all insurers).

But in the long-term, as we understand data better, post natal depression of the type Tina suffered will get better understood – as will its signposting risks of future illness with the life-threatening properties that some mental illnesses carry.

The truth is that we don’t know the price of being sick in the head and so long as we don’t, people like Tina can insure with insurers that don’t rate them and avoid insurers who do. Or at least they could if they had the information upfront.

Insurance works the other way too

If Tina was applying for an annuity – rather than life insurance – she might find some annuity providers taking  a view on her medical history and giving her a better income for the rest of her life as an “impaired life”.

There is however a cogitative bias in our DNA which stops us telling people some aspects of our medical condition and I fear that declarations of mental conditions is right at the top of the list of undeclared conditions. That is because people are ashamed of being sick in the head.

Anyone who watched the brilliant article on mental illness in the horse racing industry, will understand how hard it is for professionals of any description to declare mental illnesses and society is doing exactly the right thing today, in getting rid of the stigma of being sick in the head.


Transparency works both ways too

If we are to take mental health issues seriously, we are going to have to work out the price of being sick in the head , not just today, but on our future mortality and morbidity (the chance of getting sick in the head again and the chance of it killing you).

If some mental conditions (Tina’s may be one) are acute but not chronic – those conditions can be excluded (as Tina wants). If they are indicative of a chronic (ongoing) condition, then they should not be excluded.

The minefield of impaired lives (referred to by Dennis Hall) arises from there being no certainty on this – and this arises from their being too little research on the long-term prognosis for people like Tina.

In the short-term , so long as the opportunity to arbitrage against insurers is around – then using an insurance broker is cost-effective. But I suspect that in the long-term – most people will want to compare the market using well “compare the market”.  After all, if you can get this sorted out without the heartache of discussing sensitive matters with a stranger – you probably would.

Should the price of being sick in the head include extra financial advice?

Which puts the ball in the court of the comparison sites to get their underwriting more transparent and more user-friendly. If they did, then Tina and many like her, would be able to get on with insuring their and their family’s futures  a little easier.

As with pensions, requiring people to pay advisers to tell them what to do, is more likely to exclude people from advice than anything else! 94% of us choose not to pay for financial advice – which suggests that on-line solutions are the way forward.  The price of being sick in the head need not include the cost of using an insurance broker.


Posted in advice gap, annuity, pensions | Tagged , , , , , , , | 1 Comment

Finding our pensions

find a pension 2


In a vigorous debate at DWP HQ, two quite different approaches to finding pensions emerged. This blog helps people to understand what the debate is about and why it matters to everyone.

It matters because there is some £20bn. lost and because much of the rest of the money in DC seems so distant from its owners – that it might as well be. Putting people back in touch with their money is what makes the pension dashboard such an attractive thing.

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The received idea

The Government is minded to award a contract to a firm or consortium of firms to deliver the pension finder service that is a key part of the pensions dashboard.

While the department recognises the commercial opportunities created by multiple dashboards, it believes that there should only be a single PFS which, as a matter of principle, is run on a non-profit basis and with strong governance. The industry delivery group will need to decide how best to deliver a PFS and how it can adapt to changes in approach over time.

The arguments for a single (closed) pension finder service are four

The proponents, principally the organisations who have been expecting to be awarded the contract to deliver argue that a single pension finder service would be

  1. Less expensive
  2. Less complicated
  3. More secure
  4. Less burdensome on pension providers.

All these arguments are intuitively right. When I say “intuitive” I mean they feel they are right without conscious reasoning.

Those who argue that the market will dictate the right number of pension finder services, do so from a more cerebral position.

During the meeting it became clear that the intuitive approach, attractive as it seems, has logical inconsistencies and the potential  to deliver a second rate service at a high cost.

Arguments against a single pension service

Pension Bee 8

There were a number of people in the room who were expert on the development and delivery of open banking.

There was no credible argument as to why a single pension dashboard would be more secure.

They pointed out that the pension finder service is not in itself a dashboard, it just points to where people’s pension rights exists. For a pension finder service to really work, it will have to authenticate (verify) who people are and then ask all providers whether they have pension rights for that person.
This means building what’s called a “technical architecture” that allows a message to be sent to all regulated pension providers included by compulsion from Government legislation.
This interrogation does not need any manual intervention , the request is made electronically through an API – which is a digital gateway to the data a provider holds secure. Think of the API as a password protection system which once passes gives free access to search.
The argument against a single pension service is that you do not have to restrict the number of people looking for data (pension finding) – the market will do that. But whether the search is by Pension Finder A or Pension Finder B makes no difference to the security of the system.
So long as any pension finder service adopts the protocols and data standards laid down at outset,  it is hard to see what a single pension finder service delivers in extra-security.

Less complicated

Arguments were put forward in the meeting that the number of pension providers and pension pots made pension finding very complicated. This is currently true, but that’s because there is no way to search the pension genome for people’s records. What you are actually searching for – (a combination of name, national insurance number and date of birth for instance) is very straightforward.
The hard bit is to get every data manager to adopt the API and allow the pension finder services in to have its look around. Actually, finding pensions should be very simple as long as a single data standard is adopted. So it has proved in open banking.
Again, the intuitive argument – “pensions are complicated- let’s not make them more complicated”, sounds good – but it’s not based on any rational argument. It is no more complicated having four search engines looking for data than one, it is only more complicated if they look for data in different ways.

Less expensive

Again – intuitively you’d think that building one big search engine to find pensions would be cheaper than building four or five. But again there is little logic behind this. What is expensive is the adoption of the APIs and the cleansing of the data needed to make sure pensions are findable.

And there are important arguments here in favour of a number of pension dashboards.

Firstly, granting a monopoly to one national service is precisely what Governments don’t do.  We don’t have one Gas Company, one Rail Network, one Internet Provider one Workplace Pension. If we did – the public would demand its break-up. These monopolies happen only when there is no alternative – for instance there is no alternative to one lifeboat rescue system.

It is very hard to see how granting a monopoly to one pension finding consortium can be in the long-term interest of the consumer.

It is also very probable that the one provider will for some time fail to deliver value for money. We know that things go wrong with all Information Technology and that outages occur in service, Sometimes these are planned, the pension finder service would need to go offline for maintenance and upgrades. Sometimes outages are unplanned, as happened recently to 02’s internet service, When things go wrong for a national provider , such as a single pension finder, things would go wrong in a big way,

Not only does a single service risk people having to pay more (through levies) but it risks delivering less and creating frustration.

find a pension 5

Less trouble for providers

This fourth argument – which overlaps with the argument about complexity, quickly falls away when you fully understand that what is proposed is a straight through process.
Providers will no more know they are being searched for data than I know that you have read this blog!
The trouble for providers comes when people discover mistakes in the data they see or when they can’t find the data because it is mis-recorded or because the search engine is down.
What I think is behind this concern is that providers feel more comfortable dealing with a pension finder service run by their own. It is true that a single pension finder service would be run by “the usual suspects” rather than “challengers”.
To name names, the usual suspects in the room were Origo , Equiniti and ITM and the challengers were Pension Bee, Pension Sync and Altus.
Amusingly – one of the usual suspects referred to the challengers as “any old Tom, Dick and Harry”. You can guess how this went down.


Mood music

Normally  consultations are pretty boring – take the CDC one. Most matters have been decided and the consultation tweaks the tail of legislation.

With the Dashboard consultation I am not so sure. The debate on a single pension finder service gets to the heart of deliver, asking questions of who the dashboard is for and what protection the consumer really has.

In the fascinating debate had between the Fintechs , I saw precisely the dialectic I had expected. On the one hand, the established players looking to  deliver as they wanted and on the other – the challengers – looking to move things on.

The mood music within the DWP is I sense changing, the Pensions Minister has been spotted in Pension Bee’s offices, the DWP are opening itself up to these debates and genuinely listening.

If I was wanting to take a bet on this , I would keep my money in my pocket. The Consultation has given the single pension finder service a big tick – based on intuition, but momentum is with the challengers  – who are mounting better arguments and delivering with greater fire-power.

The argument is far from over.

find a pension 3
Posted in Dashboard, pensions | Tagged , , , , , , | 2 Comments

Assistance, guidance and equipment for the future – that’s what we all need!

I am off to Westminster this morning to meet the new boss of the Single Finance Guidance Body. We’re not going to be talking dashboards – he’s in dashboard purdah till the consultation’s over. My agenda is AGE – Assist-Guide-Equip.

I don’t presume to think for everyone, or talk for anyone but myself, but personally I think we’re rather ignoring the role the state has and will play in helping ordinary people figure out their financial futures – especially the part of the future where money stops coming in from work and starts coming in from pensions.

We  underestimate the importance of this transition, we believe because we feel we can work for ever, that it will always be thus. But it isn’t. Many people find in their fifties that the opportunities and will to keep making money diminish. As John Cooper-Clark wrote of ageing bikers “Tyres are knackered, knackers are tired”.

Preparing for the longest holiday we’ll ever take

The realities of our older years are difficult to think about. The deterioration of mind and body is complimented by the joys of reminiscence, the peace of final years that should be devoid of stress – a time to enjoy families. While we have been mentored by parents and in the workplace, in retirement we are the mentors, the people others turn to.

It’s difficult to think about because there is no career path – all of us are on our own. Which is why a little guidance along the way is very helpful.

In my current thinking , I’m interested in how we help people into this new stage of life and particularly how we prepare them for the financial side of things.

I am sure that the majority of us will not be well-prepared, we’ll muddle through and look back and regret financial decisions we took that were not thought through. The decisions we take in our fourties, fifties and sixties about debt, savings and protecting ourselves and our families can and should last us a lifetime. That’s why I’m interested in simple concepts like the AgeWage- the replacement income we provide ourselves in our later years.

Bringing the Single Financial Guidance Body into being

We are now but a fortnight away from the arrival of a new name in financial guidance. SFGB doesn’t have any obvious resonance, it is a name not a brand – it inherits the brands of MAS and TPAS and most of the people who worked there, but it has to forge a new identity and relevance – which – it’s hoped – will make it the obvious place for us to go for assistance, guidance and to be equipped for later life.

John Govett is the new CEO, I want him to know that I’m rooting for him and for the SFGB. It’s a national resource and I want it to be known nationally. I will promote it.

At the same time, I will need it- as I needed TPAS – for myself and for the many customers of Pension PlayPen and AgeWage who need personal financial guidance and help for staff who often turn to their employers first.

John Govett has the job of making SFGB the next step for millions of us – who may start our exploration of the future tentatively – needing the kind of mentor that they’ve had all their lives – but won’t have in the future.

John has a lot of responsibility on his shoulders and he could do with support. I will be speaking with him this morning about how he can rely on mine and how I hope I can rely on his organisation.

The need for universal relevance

The Government has made some changes to the way we can organise our futures.

  1. We have a state pension that pays out a single amount from a different time. Understanding how this fundamental building block of the AgeWage works is a challenge for us and for SFGB
  2. We have new ways to spend our pension savings – PensionsWise (or whatever it will become) was set up to help us understand what pension freedoms mean and give us next steps in using them
  3. We have matters we don’t like to think of, the implications of failing health, the changes to the way we plan for this are yet to be announced but the strain on the NHS and younger generations is getting greater – the SFGB can help us here too.

I haven’t mentioned the dashboard , and I won’t in this piece any more than to say that the DWP’s current plan is that SFGB is where the dashboard will sit, at least for the first few years till commercial dashboards are unleashed on the poor unsuspecting public!

The current thinking appears to be that the Pension Dashboard becomes the first new deliverable of SFGB. This should make it universally relevant as Pension Freedoms should have made PensionWise relevant. That only 1 in 10 of us use our shot at PensionWise is a mark of failure not success. The dashboard (and PensionWise) should do better.

We need SFGB to be universally relevant, pensions and pension saving and debt management and long-term care funding should be things that all of us think about and prepare for. Of course not all of us will, but we can and should do better.