On our front door – the trial of Manita Khuller.

Manita Khuller represented herself in court yesterday taking on  on FNB International, which she claims is responsible for the loss of a £170,000 pension pot.

She is up against lawyers Carey Olsen , originators of the Carey SIPP who are representing FNB International Trustees , a part of South African giant First Rand, which has fingers in a number of British pies, including challenger bank Aldermore, which it bought to get a slice of the £350m of tax-payers money from an RBS sinking fund.

The Trustee Investment was into an offshore bond wrapper offered by Royal Skandia, now part of Old Mutual International, another organisation with a South African heritage and a history of fronting failed investment funds.

Manita Khuller is a single Mum,

manita khuller

She was advised to transfer CETVs from her UK DB Plans when today’s protections weren’t in place (2011) .

Her CETVs were invested into the Plaiderie QROPS advised by Professional Portfolio International in Bangkok, where she was living for a short time.

The destination of her money had provenance, the trustees of Plaiderie are FNB International – part of  First Rand .

First Rand is a household name in South Africa, Guernsey a financial services hub governed by the Guernsey Financial Services Commission with strong links to the FCA.  If she didn’t have enough protection , the bond wrapper was supplied by Royal Skandia which had been bought by Old Mutual in 2006 (and became fully integrated in 2014).

In short, she was being sold a very superior product that had everything about it to trust.

Except that is, the investments.

Manita is an ordinary investor with a ‘moderate’ appetite for risk. But more than half of her pension money – around £170,000 – was put into LM Managed Performance Fund, run by Australian-based LM Investment Management. This company is now in administration, its licence revoked.

It was a risky fund, unregistered with the Australian regulator and invested in a few residential properties on the Gold Coast.

Some advisers had issued warnings about the health of the fund before it collapsed in 2013, dismantling the finances of 4,500 people with more than £200 million invested.

When this fund collapsed, Manita decided to look into her other holdings.

What followed was the discovery that her pension pot, worth more than £300,000, had been split between three high-risk, unregistered funds designed for sophisticated or professional investors.

A quarter of her money had been invested in the Mansion Student Accommodation fund, where her money remains frozen as the fund is being liquidated.

Speaking to the This is Money Manita commented

‘No one with a moderate or low tolerance to investment risk should have had their money put into such funds.’

Then she found out her adviser, Professional Portfolio International (PPI), was not licensed in Thailand

The human cost of the story is told in an excellent article by Laura Shannon in the Mail on Sunday,

But there is another casualty in this, which is the reputation of pension investment which once again takes a battering. We are left wondering

  1. How she lost two guaranteed DB pensions with strong employer covenants
  2. Why PPI continues to operate throughout Asia under MD Eric Jordan
  3. Why Old Mutual and Skandia have yet again been found wrapping dodgy investments
  4. How a South African and now UK bank is owning  a Guernsey Trust in the first place
  5. What Geoff Gavey, Alan Glen and co were doing at FNB international to claim “trusteeship”.

On our front door

Guernsey is a front door to Britain, OMI and First Rand are all very much part of the UK financial services ecosystem.

Manita Khuller is left, fighting her case against the one part of the chain of entities that has let her down – FNB International.

But the others cited above have contributed in different ways to her impoverishment. It seems almost impossible that over a sum so small to these financial behemoths as £170,000, the Royal Court of Guernsey will be sitting over what is in effect a test case.

For Manita, the prospect of losing the case means financial penury, but for FNB and others there is the financial backing of the South African financial services industry and indeed rich parents such as Quilter and First Rand.

This money originated in UK DB pension schemes and has only travelled in trust to Guernsey, but it has been lost through what have every semblance to investment scams.

None of the people directly involved in her story have ceased trading and she now faces the full weight of what the Channel Islands can throw at an investor.

Though she is bringing the case, she will no doubt be put in the dock for “not knowing better”.  It would be nice to think that people now do know better (though there is little evidence for this).

I think it is a disgrace that Manita Khuller is having to go through this. Even more a disgrace that she’s going through it alone . I hope that some of the people I know, involved in the various organisations listed above, will come to their senses and recognise simple concepts such as “fiduciary duties” and the need to “treat customers fairly”.

Thankfully Manita has well-wishers, among them one who sent me details of her predicament. I wish her well.


Posted in advice gap, age wage, pensions | Tagged , , , , , , , , | 1 Comment

“Evolution not revolution” as important for what it omits as what it says.

I finished reading “Evolution not revolution – five years of freedom” sensing something had been missing. That something has just come to me.

No mention of MaPS, TPAS or Pensions Wise.

In its 62 pages , this excellent document does not mention MaPS, TPAS or Pensions Wise. It talks a lot about regulators but it does not mention these “arm’s length bodies a single time.

This is frankly rather more worrying for MaPS than for the “investment firms and selected other industry participants”. A year ago it would have been unthinkable for TPAS not to have contributed to this work. It is a matter of deep regret that in such a short time our public sector guidance function has been so dislocated and downgraded.

The same can be said of the other great pensions publication of 2019, the PLSA’s Retirement Living Standards. It would appear that MaPS has retreated into purdah , not just for the period of the election , but for the first year of its existence. This is deeply regrettable. As Evolution not Revolution points out , the level of  engagement with pension choices in the target group for Pensions Wise and TPAS – the fifty year old +, is poor and the advantage of getting engagement very great.

Unless Ignition House are being selective with the publication of the vox-pops, I haven’t heard a single member of the public refer to MaPS, TPAS or Pensions Wise either.

If the private sector has abandoned MaPS , they are not alone. In my conversation with the FCA chair Charles Randell last summer, I sensed that he saw the future for guidance and advice in the private sector’s grasp. A former pensions minister wrote to me yesterday of MaPS as follows…”That organisation seems to have a death wish.”

This is not me making a cheap political point. It is me bewailing the waste of public money on MaPS, for the value it is currently giving. The cost of MaPS , TPAS and Pensions Wise is currently met by the financial services providers and passed on to savers through the costs they pay for pension management. We are getting poor value for money from MaPS, who are currently out of the pensions loop.

I hope that the pensions minister we have with a new Government will address this issue. MaPS must be accountable to someone, and it’s accountable first to the pensions minister.

No mention of the dashboard either

The pensions dashboard does get a brief mention in Evolution not Revolution but is dismissed for being tomorrow’s tool. This fiercely practical document is looking at what can be done now and accepts that the five year time horizon that most savers and providers are working to, cannot include something that is unlikely to deliver in that period.

Nor mention of collective decumulation

To my sadness, the concept of CDC as a default retirement option to put alongside annuities, drawdown and cash-out, hardly merits a mention. I suspect that this is in part for the stated reasons in the document – that collective decumulation does not cater for the nuances of individual circumstances, but mainly because no proper work has been done to look at CDC as a product that could be adapted for this post pension freedoms world.

The longer that CDC is focussed on the specific issues of Royal Mail, the less relevant it will seem to savers and providers. It is beholden on those who call themselves Friends of CDC to think about how CDC could be made relevant and I urge those like Con Keating, David Pitt-Watson and Kevin Westbroom to reconsider their thinking in the light of this excellent work.

Public and private pension agendas should be as one

Evolution not revolution is a work funded and created by the private sector that informs on public pension policy.

It  presents a very complicated picture of savers sleep-walking into retirement.

It shows how providers have delivered the pension freedoms so far and points out what’s getting in the way of further progress.

It looks at what savers want and finds they want certainty about their savings while gaming their liabilities – health and longevity

Finally it asks penetrating questions about where next for retirement investing.

The breadth and intelligence of its research compliment the work the FCA has been doing on retirement decision making. As I said in yesterday’s blog, the report is neither as rosy or complacent as its title.

But – like the PLSA’s Retirement Standards report, it shows that the private sector is capable of responding to a change in demand intelligently and responsibly.

With the exception of NEST, who participated in the research but did not sponsor the document, the public sector had no part in Evolution not revolution. That is the document’s strength and its weakness

It is the stronger for being able to speak its mind and not the Government’s and it is the weaker because so little of this document concerns itself with what should be the Government’s pension agenda.

To prove my point by exception , there is a paragraph on page 42 where we see how a dashboard might be used to bring state and private pensions together around the PLSA’s retirement targets

Perhaps more worryingly, overall 17% of our survey respondents had no idea how much they would need, rising to 24% amongst the 55-59 year olds.

Members taking part in the depth discussions felt that spending some time thinking about income needs was very useful in framing their future decisions, and that the PLSA’s Retirement Living Standards would provide a very valuable rule of thumb for them to work out their own situation

Consider somebody retiring today. A household with two adults qualifying for the full State Pension will receive nearly £17,600 a year. They would therefore need an extra £2,400 or so of income to meet their basic needs. If they don’t have any final salary pensions or employment income, then it might make sense for them to buy an annuity with their DC savings. Assuming a current annuity rate of around 2.2% for an inflation-linked annuity from age 66 (yes, it really is that low), they would need £112,000.

The document goes on to explore other options than conventional annuities, but this is precisely the framing of the financials that ordinary people need to engage with the tough choices in the strait of Hormuz,

Revolution not evolution

As I wrote yesterday, I don’t think that evolution is enough. The derivation of revolution is from the Latin “to turn around” and the concept of linear development in “evolution”, supposes that we have made progress in pension provision over the past years.

We have of course democratised savings through auto-enrolment and improved the state pension through the triple lock and simplification. But we have lost our private sector DB accrual and with the Freedoms, lost annuities as the default decumulator.

Though we have a much greater challenge in meeting individual needs, I don’t think we should dispense with the tools of the past. The merits of collective DB pensions can be adapted to a DC world and their guarantees inherited through a revitalised annuity market.

Meanwhile , the benefits of digitisation can be brought to pensions through the provision of data at the swipe of a finger. APIs can bring our pension information together – whether the feed be from the state pension , a SIPP or a workplace plan. We will be able to locate , explore and aggregate our pension pots into a retirement plan, underpinned by pensions from state and second tier DB.

These great advances are still to come and depend on the private and public sectors working together. This means both evolving through this new technology and revolving to ideas which seem unfashionable today but worked yesterday.

Evolution not revolution, would be best “evolution and revolution”. Resolution will come from the synthesis of the two.


My view when finishing this morning’s blog

Posted in age wage, dc pensions, defined ambition, defined aspiration, pensions | Tagged , , , , , , , , | 4 Comments

“Five years of freedom” – is evolution enough?

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The Defined Contribution Investment Forum have commissioned an excellent body of research from Richard Parkin and Ignition House. The result is a packed report running to over 60 pages that provides a new insight on the problems individuals are facing taking decisions at retirement.

My only objection to the report is its title. In the past , DCIF have been firm advocates for radical change , a recent report was entitled “ADAPT OR DIE – THE PENSIONS INDUSTRY NEEDS TO FUNDAMENTALLY RETHINK THE WAY IT COMMUNICATES”

By contrast “Five years of freedom – EVOLUTION NOT REVOLUTION” – doesn’t do justice to the bafflement of the various people who had been interviewed for the project. The digital version of the report – is now on the web. But as I wrote this earlier, you’ll have to make do with my tweets from the report’s launch yesterday.

Five thoughts

1. Pensions used to encourage people to live longer…

2.People are having to game their later life income – their AgeWage.

and they’re realistic about the chances they are taking


3.People want the freedom to get others to do it for them

4.It’s buy now – pay later

5. And what happens if your bet doesn’t pay off?

These aren’t comfortable messages for policy makers and they shouldn’t be comfortable messages for the commercial pension providers and the trustees of the not for profits.


Is Evolution enough?

The Pension Freedoms are revolutionary. They have turned pension planning into wealth management and made a lot of people with inadequate financial resources a false sense of comfort. When confronted with the scrutiny of Ignition House’s interviewers, several of those interviewed cracked, admitting they had no idea what they were doing or what they were to do. I nearly cried when one man of my age put his hands up and told the camera he hadn’t done any planning.

You could see the fear that gripped him and for him – and those like him – the need for help is urgent and acute. Telling him that – five years into the pension freedoms – advice and guidance is evolving , isn’t enough. The study found – as the FCA has found – that the best plan for most without one, is to scrape out whatever tax free cash is available and wait till a better idea came along.

For such people, even the proposed solutions being put forward by providers look inadequate. Two thirds of providers now offer advice as part of the service

But at what price?

Advice cost

What is the revolutionary conclusion?

When Jeanette Weir of Ignition House was asked what her key insight was from the research she had conducted, she said she was shocked by the ignorance of the people she talked to.

This is reflected by the title of the first chapter of the report “sleep-walking into retirement”. I think this would have made a better title for the report than the one chosen.

I have yet to read the report in detail, but have a day off today so I will. I doubt that by this time tomorrow , my opinion will have changed.

DC plans are not currently fit for the purpose of converting people’s retirement savings into a retirement plan. That may be partly because the pots are too small, but there are plenty of six figure pots that remain invested – often in unsuitable life-styled investment strategies, because of lack of product innovation.

There is no default option into which people can transfer their money and get paid an income, other than an annuity. For many “annuity” is still the right answer but for the majority of people who want more for their savings than insurers can guarantee, we need some kind of wage for life solution where the income lasts as long as the saver.

My revolutionary conclusion is that the current choices are not enough, we need a pension option which keeps people invested in real assets and provides mortality pooling. Brilliant as this report is – it points towards there being no evolutionary answer to the pension freedoms.

The inevitable conclusion from reading this report is that – at least from retirement – CDC is the inevitable solution – revolutionary as it is.


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

MAPS frustrate


It’s been a frustrating year for the Money and Pensions Service – MAPS and for businesses that hoped to work with it.

When John Govett was revealed as its new CEO this time last year, I wrote confidently of the Government’s opportunity to build on the success of TPAS and offer ordinary people the help they needed to make the difficult retirement decisions in the Strait of Hormuz.

John Govett was a disappointment; he retreated “for family reasons” from the responsibilities he’d taken up only a few months before and since then Caroline Siarkiewicz has been interim CEO while Chairman Hector finds someone big enough to fill her predecessor’s boots. 

Since the appointment of a new CEO is the matter for the Pensions Minister, it will not be till after the election that we will hear who takes MAPS forward.

I met Caroline yesterday afternoon for a meeting I’d long anticipated. Sadly the meeting was delayed , truncated and relocated from MAPS’ swanky HQ to a local coffee shop but it did at least get me back to where I was in Q1 with Govett.

We expect the publication of MAPS strategic plan – which has been a year in the making – and should be published this month. I sensed that there was some flexibility in Caroline’s expectations of what this month means.

I was proved right only an hour after publishing

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The current hiatus , caused by there being no permanent leader and no strategic plan is worsened by MAPS having now pensions policy person . Indeed – TPAS’ capacity to educate and stimulate has diminished – its social media output is a trickle and though Pensions Wise is getting a consistent TV campaign the P in MAPS is getting smaller, perhaps they should rebrand MApS.

I cannot find MAPS on Instagram. MAS has some presence on Facebook, This is the last tweet MAPS produced. I admit to not having the eyesight to read it – I guess the tweet is a blind spot…

Whatever MAPS is up to- it’s not getting it’s message out there.

We are only five days from MAPS “money and lets talk pensions week” – I’m glad that the Renfrewshire knew about it, I certainly didn’t

Google MAPS – where’s the MAP?

I wanted to get an idea of how prominent MAPS is in the world of search engine optimisation.

Google “MAPS” and this is what you get.

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MAPS isn’t on the map, even on the google map and when you want to google the “money and pensios service”, you get this guy.

Caroline 5

I have the greatest respect for the Renfrewshire Affordable Credit Alliance. They have trumped MAPS to become the acceptable face of Talk Money Week. Crazy guy – crazy image – it’s an Instagram classic.

MAPS’ frustrated – frustrated by MAPS

I left my meeting with Caroline as frustrated as she must be. My offer to work with MAPS was greeted with the suggestion that we might begin to do so when we stopped being a start up – presumably some time after MAPS gets going again after its year off.

If anything sums up MAPS, it’s this image, clipped from a presentation earlier this year, that looks at MAPS’ own governance structure. MAPS may see this as an example of sound governance – I see it as hopelessly overloaded with committees – strangled by bureaucracy

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It must be very frustrating for MAPS to have to look at an organisation such as AgeWage which is trying to help it achieve its aim in terms of risk. It must be very disheartening working in a place which has become such a backwater that this article will probably be the most socialised content it gets in November.

Still more frustrating because the person who made TPAS famous has been made about as welcome in MAPS as I was.

Are MAPS really in listening mode?

Everywhere I look , I see opportunities for MAPS to make its mark. When I finish this blog I will be nipping over Blackfriars Bridge to hear how I can hook my organisation up to the Mum and Gransnet.

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When I’ve met with Mum and Gransnet I asked them how they worked with MAPS. To my amazement – no one in the room had ever heard of MAPS– though they’d heard of TPAS  – some time ago.

Between them Mum and Gransnet host the eyes and ears of over 10m Brits a month, most of them are the Es, D’s and C’s who MAPS needs to reach out to.

One person in the room mentioned that MAPS was probably targeting the A’s and B’s, which is why their paths didn’t cross.

I’d have shared this information with the old TPAS and they would have pressed the invite yourself button and come.

But I didn’t feel it appropriate to suggest to Caroline she came with me to Ogilvy this morning. It would probably have required a risk-assessment for the nearly-new MAPS to decide if this was a suitable input to their information gathering.

MAPS and the dashboard – when I’m 64


MAPS – the Pensions Minister announced – is to be the home of the pension dashboard. The pensions industry welcomed that – the then-new MAPS was being tasked with delivering version one of said dashboard by the end of this year.

We are reaching the end of the year and the expectation has slipped by at least a year. The dashboard steering group is only just getting its feet under the table and the Pensions Bill that would start the mandation of data to the dashboard didn’t make the wash-up.

Whatever emerges in 2020 as dashboard legislation – will not become effective till I’m well into my sixties. When I started planning for the dashboard I was 54- I am 58 now and I don’t expect to see the dashboard fully operative till I am 64.

Frustrated and frustrating

Becalmed and rudderless, MAPS is a bulky containership aground in the gates of the harbour. Until Hector Sants  gets the tugs out , it will continue to block progress.

I feel sorry for Caroline and all aboard who are doing so little with so much resource. We need a strong pensions guidance service in the UK and MAPS should be it.

Let’s hope that as we move towards the end of 2019, we aren’t saying the same things about MAPS in a year’s time.


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

Why we can celebrate 74 years of peace

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Nobody wins wars, the only good thing that can come our of wars is peace and that is what we have  had  for 74 years. That should be celebrated as the lasting memorial of those who gave of themselves in those 30 mad years between 1914 and 1945.


Those of my generation knew of the war from parents who were children and grandparents who were adult – many of whom fought. Those who have chosen to serve in our armed forces have fought and many died but we have had no men conscripted since 1960.

I was born into the world at 10.58 on 11th November 1961, my father was present at my birth, my mother is excused if she broke the silence. My gratitude is to those who have kept peace on these shores in the intervening 58 years.

Yesterday I watched the men and women of the armed forces at the Lord Mayor’s show and applauded them. I was able to return home to a wonderful weekend of sport , time with my family and an opportunity to remember at 11 am today. We are enjoying the peace they gave us.

In the early hours of this morning I watched two men celebrate peace


Why we can celebrate peace.

We can celebrate peace today because we fought for tolerance and achieved a lasting settlement. That settlement has seen people come to our shores first from the Commonwealth, then from Europe and – where they seek refuge – from around the world.

Our nation is part of a global economy which frowns when we assert intolerance. Last week British debt was downgraded by Moodys because world markets see us as better together

We are now an integrated society as we were not in the last century. The diversity we have achieved and are achieving accross sexes, race and creed means that we are less divided inside of Britain and linked to other countries through family work and religion.

I am proud when I worship at my church that the flags of every country where Methodism flourishes are flown from the gallery and people from every country sit beside me in the pews.

We can celebrate peace because those from India and Africa, Germany and Japan are no longer strangers.

Let this peace last

We have given peace a chance and it has been a success. We are a better nation for being a peaceful nation and though many places around the world are still at war, the world is a better place for its great institutions of peace, the UN especially.

Today we can celebrate 74 years of peace and tomorrow I can celebrate 58 years where I did not need to fight as others did for me.

My profound gratitude goes to those who went before and those who serve so that I can live the rest of my life   شاء   in peace.

poppies 1

Posted in pensions, religion | Tagged , | 1 Comment

“Peace of mind” – the new commodity

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“Peace of mind” is the new commodity that can be sold by anyone, anytime, anywhere – especially if  you are a financial adviser. It’s the talisman of “financial well-being”.

Mercer Money has been designed to support better financial decision making and help improve people’s lives today while giving them peace of mind that their future needs are met.  Corporate Adviser – Mercer launches Financial Well-being Platform

IFAs have an endless stream of customers lining up to get some peace of mind from knowing what they’ve got, The cost of these financial placebos is a wealth tax equivalent to around 25% of the expected growth on a portfolio, which – since it’s taken out of the investment, means that the outcomes are under-performing of necessity.  Henrytapper.com IFAs are living the life of Woodford.

It doesn’t much matter if you are a one man vertically integrated wealth manager or the mighty mercer, you can peddle “peace of mind”.

A trouble shared?


Whether with a wealth manager or the Mercer app we are being asked to share our financial and life goals with third parties

As  Chris Budd puts it on the Ovation website

we encourage our clients to accumulate life with their money, not the other way around

This kind of openness is not for all, especially when the third party is your boss.

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What is on sale here is a kind of hand-holding that I’ve seen people like Chris Budd, Al Rush and Charlie Goodman carrying out quite brilliantly. It is undoubtedly worth it and I’ve no doubt that the good people at Mercer thoroughly believe in their product.


But outcomes matter more..

Show me the value

I’m going to be within two years of being 60 tomorrow and my financial wellbeing is dependent on the outcomes of the money I’ve saved, the defined benefits I’ve accrued and my capacity to carry on working.

The outcomes of my saving matter to me more than mentoring, counselling and goal-setting.

Show me the money.

The money I have now  has been  diminished by the various commissions and fees paid to all the people over the years who I’ve employed to help me to the eve of my 58th year and do you know what, I am not of the view that I got much value for all this advice I paid for or the advice delivered me in the workplace by well-meaning bosses.

To all those who want to sell me “peace of mind”, I can share a piece of my mind. Please don’t patronise me – let me be – and show me the money that I have and how  I can use it to get myself a wage in later age.

I have no idea about the overall cost of all the advisers who’ve had a bit of my later life , even less – of the value I’ve got for this money. It would be great if someone would show me this money.

In one word – I want “accountability”

Will Robbins and Charlie Goodman and I sat down in Citywire’s Vauxhall Walk offices to discuss whether you can really sell “peace of mind” as a financial commodity.

After 50 minutes of passionate debate, I was asked by Will to give one word that would convince me that peace of mind could be sold as it is being sold – as a financial commodity.

That word was on my lips from the moment the discussion started.

If you are prepared to be accountable for my peace of mind – today and tomorrow – you can sell me your capacity to deliver it.

And if you are using “peace of mind” as a hook on which you sell me your services , I demand some evidence that my happy today will translate into a financially secure tomorrow.

Right now – I remain deeply sceptical.

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So what’s this “tough new regulatory environment” for DB pensions?

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That’s tough


Next week I’m on holiday – but I’m not – because I’m doing loads of meetings and moderating a session at the DG DB pensions conference.

What you have to do when you moderate these things is get all the people together on the phone and find out what they want to talk about. Which is what I was doing yesterday, in between doing my day job and messing around with Citywire.

It’s been a whole month since I was working with First Actuarial so I can now call myself an ex-consultant and DB something that I get not advise on.


The purpose of the session I have been asked to moderate is to determine how trusters are responding to the “tough new regulatory environment” which apparently has been put in place by the Pensions Regulator.

Tough new regulatory environment?

Social Purpose

From what I could get off the call, the Pensions Regulator is keen that the Trillion pounds plus in funded DB plans is put to work for good. This means that it helps global and local goals to improve our environment, sustain our planet and reinforces good governance.

If it is tough for trustees and the people they employ to raise their game in these areas then they need to explain why. Frankly it is a challenge that any trustee should relish.


The same could be said for the sustainability of a scheme’s capacity to pay the pensions promised to its members.  DB schemes don’t have the capacity to flex their liabilities, but they can improve the means they have to meet their liabilities by sensibly matching what they have to pay to what they have to pay it with.

If it is tough for trustees, with all the help they get from extra contributions from sponsors and the advice from actuaries on liabilities and advisers on their investments they they need to explain why. Frankly it’s a challenge they have known about for decades and if they find it too tough, they have  no business doing the job. The Pensions Regulator appears to be taking a “shape up or shape out” approach, not before time.

If we see consolidation , it will start with the collapse of trustee boards into sole trusteeship, move on to the pooling of funds and finish with the pooling of liabilities. What little diversity of approach left in DB trusteeship will disappear as schemes conform to the rules of the endgame.

The choices around consolidation will be about how and when , not about whether . The Pensions Regulator has come to bury schemes, not to praise them.


What little has come out of the Competition and Market Authority’s review of DB relates to conflicts between those advising on and those managing schemes. These conflicts when they are the same people and this practice is known as fiduciary management or what other IFAs know as vertical integration.

These conflicts are well known and aren’t going away as the consultants have collared most of the available resource and are determined to eat as much of the pie as they can. The Pension Regulator is trying to manage the conflicts and the consultants are running rings around them as they did the CMA.

Frankly – this is a battle lost and the Pensions Regulator might as well accept that in the sorry state that DB is now in, they’d be better off leaving the consultants to fight over the scraps like hungry hyenas.


The tough new regulatory environment  also requires trustees to work out what their long term strategic goals are.

If it hasn’t become apparent from the rest of this blog, I do not have much truck for this “toughness” word. “Tough” can properly be applied to the world that millions of Britains live in where pensions get paid from 66+ by the state alongside universal credit. Tough globally includes countries where living to 66 is an achievement in itself. Tough is seeing your house and land underwater through rising see levels or to live somewhere where it doesn’t rain any more.

Frankly, “tough” doesn’t really come into it.

Trustees are charged with paying the pensions promised to their members till the final day when they are due or to discharge their obligations by handing the scheme over to a third part – whoever that may be.

The long term strategic goals of a scheme may include reducing reliance on a sponsor and improving funding to a point where the scheme can be sufficient. Or it could include running the scheme as an entity intending to stay open indefinitely, as the local government pension schemes intend.

These aren’t really tough choices, they are just choices and frankly they are made for trustees by the circumstances in which trustees operate.If the sponsor of your scheme is no longer willing or able to meet the obligations you set it, then you really don’t have much choice about what happens next.


This tough new regulatory environment?

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I can think of no other area of commerce so cushioned from the tough realities of daily living than DB trusteeship. It exists in a pampered world in which the conference I’ll be attending will be a part.

The Pensions Regulator’s motto “clearer, quicker, tougher” is relative , not to the world in which we live, but previous regulatory regimes.

It is tougher for the Pensions Regulator, many regulators are being asked to take a 30 per cent pay cut – that is tough. It is a PPF style hair-cut which they must either accept or move on.

But for trustees, I don’t see this new world as tougher, nor even less comfortable.

The pain has yet to come and for most – is still some years away.

If you are a DB pension trustee and would like to go to the The DB Strategic Investment Forum – Wednesday 13th November 2019 – The Waldorf Hilton – London

Register here



Posted in de-risking, flood, Henry Tapper blog, pensions | Tagged , , , | Leave a comment

“Degree-educated” most at risk from pension scams….


Higher-educated savers are more at risk of losing their pension to fraudsters than those without the qualification.  That’s what a survey of nearly 2000 people told the FCA and TPR

10% of those without a degree said they would accept such an approach, a lower proportion than those with the qualification. Some 14% of people with a degree told regulators they would accept a review from a company they did not know.

Fraudsters often target those with larger pension pots, but also find a route to their victims by offering “free pension reviews“. It would seem that a higher education is no protection from the alacrity of scammers.

Targeting mass-affluent sophisticates

The new breed of scammers appeal to higher-educated middle class Britain because they are the ones with the biggest pension pots.

And because it’s people like me who appreciate the advantages of a technology-based service. it’s those who think themselves more sophisticated, who can be most vulnerable.

Writing on her blog, Romi Savova explains

Recent analysis from The Financial Conduct Authority and The Pensions Regulator found that over five million people across the UK (42%), could be at risk of getting scammed and the average loss is £82,000 per victim.

Most of these people are normal consumers, simply seeking to make the most of their money in a confusing pensions world. They are therefore susceptible to tactics that – to an industry insider – generally sound too good to be true. 

At the same time, most preventative action in the industry, while generally well-intentioned, has focused on extensive paper communications, images of desolate pensioners and generally the types of things that most consumers would discard in the category of “that doesn’t apply to me” and “it all seems confusing”.

Meanwhile, scammers are known to be helpful, accessible and relatable. It is no wonder that confirmation bias leads people to make financial decisions that can cost them dearly. Timing is also key.

Warning people about scams at the point of transfer is often too late. It is important to raise the level of awareness of pension scams before a consumer is even approached.

Pentechs get ready!

If you are interested in technology and work in retirement planning – you’re a pentech and you should be blocking out 29th November in your diary for the ….

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One way to raise awareness of pension scams is to devise a simple, interactive, shareable online game that can alert consumers to suspicious tactics before they are happening. If we can use technology to solve some of the biggest pension challenges we face as a society, we should also be able to come together as a sector to try and solve a problem that impacts us all: pension scams.

So it is with great hope and anticipation that we announce a Pension Scams Hackathon on 29 November 2019, where some of the most well-known companies in the PenTech space will team up to create the winning concept for a pension scams game, inspired by the “Scams and Ladders” board game.

Screenshot 2019-11-08 at 06.35.30.pngBarclays has kindly agreed to host us at Plexal, the innovation centre in the Olympic Park.  Pension Bee has invited a broad representation from the pensions industry to judge our efforts, including Michelle Cracknell CBE, Margaret Snowdon OBE (President of the Pensions Administration Standards Association), Dominic Lindley (Member of the Financial Services Consumer Panel and Member of the Pensions Dashboard Industry Delivery Group) and Stephanie Baxter (Deputy Personal Finance Editor at The Telegraph), each of whom brings a unique perspective to the challenge at hand.

Want to be involved?

While the concept for the game will be developed on the day, the technology powering it and its full user experience will be built by our friends at JMAN Group, to be launched to the public in early 2020. If you would like to participate in the hackathon or if you would simply like to support our initiative, please get in touch.

This event is all about uniting behind that which makes us strong: our focus on consumers, our belief in technology and our spirit for change.

We  look forward to seeing what we can achieve!

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Register on this link

Stop press*** Stop press***Stop press*** Stop Press

And while we’re on the subject of Romi Savova

Many congratulations to Romi on this, which places her not just as our leading Pentech , but as one of Britain’s leading young entrepreneurs. A working Mum with two young kids shows that there’s no ceiling to talent, application and a thirst to make positive social impact.


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

DWP – should the top topple when the spinning stops?

Screenshot 2019-11-06 at 06.56.21

I can’t remember another occasion when a Government department was stopped from lying to the people it serves by a Government agency. But that is what happened yesterday.

The fact is that the Advertising Standards Agency has banned four of the DWP’s six newspaper ads and the accompanying web page from appearing again in the form complained about.

Six ads for the Department for Work and Pensions (DWP) appeared in the Metro and on the Mail Online and Metro Online websites from May to “set the record straight” about the benefit.

The ASA said it had told the DWP to ensure it had “adequate evidence to substantiate the claims in its advertising” as well as presenting “significant conditions” to its claims clearly.

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Few of us would associate the happy smiling faces of the pair above as the beneficiaries of universal credit. It is not a bad thing that the Government presents the payment of benefits with  positive images, but when the substance of the advertisement turns out to be misleading, the images become those of actors and we begin to doubt the intentions of those who commissioned them.

What are the accusations upheld by the  ASA?

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The ASA said it considered that readers would interpret the wording “move into work faster” to refer to secure ongoing employment, but in fact the 2017 study the claim was based on had included “people who had worked for only a few hours on one occasion during the relevant period”.

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The ASA thought this misleading, saying it was not always made clear enough in the adverts the advance was a loan to be repaid within 12 months, or that the advance payments were not necessarily available immediately.

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The ASA said this was misleading as it omitted significant restrictions placed on the right to alternative payment arrangements, which are in fact available to about one in 10 claimants.

Why would a Government department lie like this?

Lying and spinning are the same thing, if the impact is to create a false impression. This advert lands on television viewers in three ways

  1. To recipients of Universal Credit, it is designed to quell discontent
  2. To voters at  forthcoming general elections, it’s designed to support the incumbent Government
  3. To tax-payers , it’s designed to show how UC is providing all of us with value for money.

Lying to society’s most vulnerable

The political point is time-bound but important, points (1) and (3) are more fundamental. Government has a responsibility to look after those who are jobless, homeless and penniless and that is what Universal Credit was set up to do. It is clearly unpopular because it restricts payments as part of the Government’s ongoing austerity program.

What the complainants against the adverts are saying is that the Government’s claims for UC are untrue and these complainants aren’t UC beneficiaries but their representatives.

The organisations that submitted complaints included the Disability Rights Consortium, the Motor Neurone Disease Association and the anti-poverty charity Zacchaeus 2000 Trust (Z2K).

In a properly functioning society , these organisations should be working with the DWP not seeking to stop it telling lies.

Lying to the tax-payer

I pay my taxes without demur because I know they put the homeless in homes, the jobless in jobs and the penniless in pennies

I do not expect to hear that a Government department charged with spending my money is lying to the people who are in such a predicament that they cannot be secure over a house, a job or the money to pay for life’s essentials.

That the DWP is also the department on which we depend for later life benefits like the state pension and the apparatus supporting workplace pensions makes it worse. It calls into question the probity of DPW quangos such as the Money and Pensions Service and Pensions Wise and it asks us to question why this department is being held responsible for delivering a pension dashboard.

It is a department with “form” for poor communication, but whatever the failings in communication over changes in state pension age, the DWP has never before been pulled up for deliberately misleading the people it is supposed to be helping.

When the top topples….

top topples.jpeg

Regular contributor to this blog – Gareth “the ferret” Morgan spends his life advising on benefits, he has called UC for presentational shortcomings on this blog before.

I expect he will comment on this ASA verdict. Gareth is one of the very few people in financial services who understands how UC works and calls Government when it doesn’t.

I am sure that he will be asking himself the question in the headline of this blog, just who is responsible for the shambles that has led to the DWP being found to be lying to its most vulnerable stakeholders?

My reading of the situation may be wrong and Gareth is better placed than I to comment. But I cannot help thinking that these adverts are the product of a department under pressure from within Government to make a better fist of promoting UC, under pressure from complainants to keep destitution from the door of the needy and under pressure from politicians to pretend that for the poor, austerity is over.

The DWP simply cannot do all these things without it seem – lying.

And here we come to leadership.


We have had a staggering 15 different people acting as Secretary of State at the DWP in the first 19 years of this millenium. They have been split between the two major parties and the revolving door suggests that no one wishes to take ownership of the DWP for any length of time.

The only minister with security of tenure was Ian Duncan Smith who was SOS for nearly a third of this period. He was of course the architect of UC and he is still in Government.

Is Therese Coffey going to be toppled now that the top has toppled? She is more interested in winning a general election and seeing through her vision of Brexit. She will not be held responsible for the ASA decision.

Infact nobody will. The decision will be swept under the carpet as a careless bit of Government – joining the omni-shambles that Universal Credit has become. Other departments will make “thick of it” comparisons and DWP civil servants will have internal inquests.

They will no doubt stick to the party line so far.

We are disappointed with this decision and have responded to the Advertising Standards Authority.

We consulted at length with the ASA as we created the adverts, which have explained to hundreds of thousands of people how universal credit is helping more than 2.5 million people across the country.”

Why should we believe them?


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Posted in advice gap, DWP, pensions | Tagged , , , , | 6 Comments

DC Governance turned upside down

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Everyone acknowledges that defined contribution pensions turns the risk register on its head. Instead of sponsors taking the risk of poor performance, poor information and poor governance, these risks are now taken by savers.

So why doesn’t scheme governance reflect this?

When I look at scheme reporting, whether for multiple employers of a a single sponsor, the format and intent of the reporting doesn’t differ much from the way we have traditionally reported on DB schemes.

In a very abstract sense, DC governance should bypass the sponsor altogether and be focussed entirely on helping savers manage their risks, understand the success or failure of the investment strategies employed and deliver individual metrics meaningful for each saver alone.

This is the reality of individual DC, whether it is delivered through a scheme or a group or personal pension plans, the “pot” is what the member relates to. It is the outcomes that members experience that matters.

A pragmatic approach includes employers

At an abstract level, we might want to do away with scheme of plan level reporting – we can’t. The sponsor – the employer still considers it owns responsibility for what happens within the plan, if only for old fashioned reasons. Employers have infact discharged their duty by choosing a qualifying workplace pensions and are not (in terms of regulatory compliance) on the hook if the chosen provider messes up.

However , in terms of reputation , a workplace pension can create havoc. NOW pensions – in their pre-Cardano days, caused acute embarrassment to employers through poor administration – compounded with a positioning in some league tables that exposed employers to criticism for choosing them. A failure by NOW pensions to address internal problems quickly enough and to come clean with employers lead to many employers moving qualifying schemes.

There are two key areas of risk for employers, performance and data quality. If providers cannot evidence that they are keeping member records properly or that individual pots are showing value for the money invested in them, then employers should consider the basis of their relationship of their supplier.

Providers have to be accountable both to savers and employers

I recently attended an event where the pension manager of a DC scheme with a large employer told a session that DC value for money assessments were an exercise to satisfy trustees and the employer and had no relevance to members. This brutally honest statement demonstrates the failings of current DC governance which simply replicates the DB pecking order.

It does not acknowledge that whatever happens at scheme level, is only an aggregation of what is happening at saver level and it is what the plan participants are getting that matters (not just to the savers but ultimately to the sponsor). If the plan participants are getting shoddy record keeping and poor returns on their money then the impact ultimately fall on the saver.

Employers only have skin in the game so much as poor outcomes can sour labour relations and make HR and Reward decisions on issues like early retirement, a lot harder.

DC Governance turned on its head

At first site , this row of metrics may look to be reinforcing the traditional model

Screenshot 2019-11-04 at 06.22.40

The pink box tells a trustee/IGC/employer that the average value for money score for the participants in the dataset was 52. That’s slightly better than average.

The average return savers got from the pots in the dataset was 7.66% and the average return from the benchmark, was slightly higher at 7.7%, as the benchmark contained no lag for charges , the dataset (net of charges) showed saver experience slightly better than average.

We are finding that these high level metrics encourage those with governance responsibilities to dig deeper and start filtering groups of savers to see who the winners are , who are not doing so well and what kind of things are influencing both value for money and absolute performance (the internal rate of return of the pot).

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We have analysed over 300,000 pots and new data sets are coming in every week, each pot is measured against a benchmark fund into which contributions are theoretically invested to discover the value for money AgeWage score.

The employer/IGC/trustee/provider is then able to generate reports that shows pot performance at any level of granularity he or she chooses (including individual pot analytics).

So, for the first time, fiduciaries will be able to look at things from the savers point of view.

This is what we mean by governance turned on its head.

Where is this going?

We hope , once people have got used to this new way of reporting, that we will be able to report to savers individually. We are still discussing with providers, fiduciaries and the regulators how this can be done in a way that doesn’t disturb people in the wrong way.

Engagement is one thing, but getting people all worked up about their pension could lead to them taking rash decisions with a lifetime of regret.

agewage evolve 1

All the same, wouldn’t you rather know what has happened to your pension pot than not? Is it really fair that you have to take all the risk and “they” get all the information?

Ultimately, we need balance. Most people are interested in their retirement money and our initial testing suggests that people get AgeWage scores and want to dig further to find out how they could improve them. Once people get into one pension pot, they want us to get scores for other pots and to see all the pots in one place (a dashboard).

This is taking governance into new areas, creating the opportunity for people to self-govern – using the super-governance of employers, providers and fiduciaries to open the door,

If you are interested in this form of governance and would like a demonstration, please contact me henry@agewage.com or call me on 07785 377768.


Posted in advice gap, age wage, cardano, corporate governance, dc pensions, FCA, Financial Conduct Authority, pensions | 1 Comment

Could workplace defaults give best value for money?


The results from our first 100 retirement savers are in and our test group averaged 54/100 on their outcomes.

Some of the people who did best are in workplace pensions , including a friend from Port Talbot who has got 78 VFM on his Tata Steel Aviva workplace pension. I managed 63 on my LGIM  fund and many of the other higher scores are from people who had the good fortune to be in a workplace pension default managed by a household name.

Results so far suggest that putting your money in cash has consistently delivered the worst value for your money while the more esoteric strategies we’ve discussed, have seldom scored above 50. The results are extremely predictable, well diversified , well executed low cost funds have consistently provided better outcomes for people than DIY alternatives.

my passive funds


Building governance from the bottom up.

Pension consultants like to measure governance at what they call “scheme” or “plan” level. That means measuring what is going on by aggregating all the little pots and treating people’s experience by looking at one big pot.

The problem with this is that it is not the scheme that is taking the risk, but the individuals within the scheme and telling people they are getting value for money at “scheme level”, isn’t helpful if their pot has underperformed.

This big data approach also misses the granularity you get by treating the scheme as a collection of small pots. By looking at a scheme from “pot up”, rather than “scheme down” you start putting members first.

For most people, the capacity to invest the amount they need to fund for their retirement in a risk free way, is simply not there. Cash is a terrible long-term bet, no matter how attractive it may be from day to day.

We need to take risk with our savings, if we are to meet our retirement goals, because we don’t have the money not to.

Trusting in defaults

For much of my career as a consultant I was distrustful of defaults. I had started selling pensions to people using what were then called managed funds, went on to become three-way managed then multi-asset and more recently diversified growth funds.

The main characteristics of the funds I sold in the 1980s were that they charged active fees to track the index, paid little attention to good execution (incurring horrible transaction costs) and were so big that they were never able to capture value in an agile way. These funds, especially the Allied Dunbar Managed Fund, lagged the market.

The Allied Dunbar Managed Fund made me distrustful of defaults.

Instead I was taught that in investment matters – small could be beautiful so I went through a phase of my career insisting that by using best buy funds, from lists created by fund- pickers, I could give my clients greater value for money. It turned out that I was simply following another herd and doing no more than I’d done earlier with managed funds.

So I decided at last, that picking funds was not something that I was any good at. I might as well leave the management of my own money to the people who I trust and I trust the asset managers who convince me that they are (to a certain extent) on my side.

What I look for in my default manager

Having worked in financial services all of my life, I’ve got to know some fund experts who really do know a lot about getting value for customer’s money. Men and women who are characterised by having high integrity, low egos and intelligence and experience that is both intuitive and learned.

When I meet one of these people, I listen.

One of the people who I listen to is John Roe, who runs the multi-asset funds of LGIM, he doesn’t run my fund but he used to and he manages a lot of money for friends of mine.

Over the weekend I will be thinking and writing about a presentation that John did at the PLSA conference a couple of weeks ago. He did it with Emma Douglas, who’s someone I have worked with – and who dominates the intuitive end of my spectrum of good. John is at the other end of that spectrum, he is a learned man who’s thinking I admire.

Both Emma and John work for one fund manager – it doesn’t matter that it happens to be LGIM, there are plenty of other good workplace pensions that benefit from great management (I mentioned Aviva at the top of this blog).

Where I find the very best thinking and the intuitive capacity to meet customer needs is currently in the management of workplace pensions. I would include the team Mark Fawcett has assembled at NEST in that category, I think the work that Nico Aspinall is doing at People’s Pension as another.

It is not for nothing that these people are working in workplace pensions, they choose to manage money for people like me that do not pretend to know better than they do, but they manage the money as if they were me, in other words they think about my value for money.

How the investment of money in a fund matters.

As I started out saying, most pension governance is at scheme level. The outcomes for individual members are of secondary importance and so long as those who do the governance satisfy their internal processes and can demonstrate they have exercised their duty – the job is done.

I asked a question at another session of the PLSA conference. The question was “what tips do the governance experts in this room have for explaining value for money to members”. I was surprised by the response from a senior governance expert who explained that her value for money work was not for her members but to satisfy herself and other fiduciaries that value had been achieved.

For the 100 or so people who have got AgeWage value for money reports on the pension pots they own, value for money is all about their experience, their investment, the costs and charges they are paying and what they can expect to see when they ask for their money back.

Of all the things that influence the value we get for our money, the return on the money invested is by far the  most important. The investment of our money matters hugely.

And it’s more than just return

When I talk with John Roe and others, I want to know from them what kind of investments my money is funding. Am I helping the world I live in become a better place or is my money adding to the problems?

The people who run our workplace pension funds are charged not just with delivering us a good retirement in financial terms, but to make the world we retire into – a decent place.

Which is why ESG is more than just a box to tick, it is the at the very heart of a fund manager’s job.

Could workplace pension defaults give best value for money?

We live – whether we like it or not – in a world where we must take on the risks of investing for our retirement. But we do not choose our workplace pension provider, or the fund or the fund manager – that is all done by others and we default into the choice that others make.

The fiduciary obligation on those who take those decisions for us is immense. It is relieved to a degree by good regulation – the construction of the master trust authorisation framework, the constraints that operate around contract based workplace pensions and the work of trustees and IGCs should mean that employers and members are protected from bad decision making.

Defaults are everything, over 99% of NEST’s 7.5 m pots are invested in defaults. The results from our initial work at AgeWage, suggests that using these defaults will deliver value for money but we have only just started.

One thing I am sure about, unless we start measuring the performance of the workplace pensions at the level of the individual saver, we will not really understand what ordinary people think of value for money. For ordinary people, the scheme or plan is a concept that means little to them and scheme or plan governance is achingly abstract.

People want to know what value they are getting for their money, AgeWage sets out to do that and the results so far are very encouraging, the people who are doing least are doing best and the people who are trying hardest to beat the market , seem to be coming off second best.





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

SABS in the back – the minister’s last hurrah!

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The prototype statement – needs updating from 2018!

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Simpler annual pension statements (SABS) got a well-needed boost this morning when the DWP launched a consultation into their adoption.

This looks like being just about the latest Government consultation of this parliament and it could be the swan-song for our current pensions minister.

Then again, it could be the presage of his second term as minister – which would be no bad thing. Whether in a majority Government or as part of the coalition, Guy Opperman is the most obvious candidate to take this forward into a future pensions bill (cough cough).

First – commendations.

Well done Ruston Smith for making the statement happen – and for getting a set of standard assumptions into the market.

Well done Quietroom for keeping it simple. This statement could easily have gone the way of statements past but it’s still on two pages and still (mostly) the document we looked at in 2017.

Well done Eversheds Sutherlands for providing the supporting legals that kept the process honest.

Second – recommendations

The key recommendation of the consultation is that the distribution of SABS is through workplace pensions and specifically the workplace pensions used for auto-enrolment.

The Government are in a total pickle about definitions and the best they would best to simplify the scope of the statements to “DC workplace pensions used for auto-enrolment”. I think we all know that DB members don’t get DC statements and that people who have personal pensions (including SIPPs ) have complexity as part of the deal. If they want simple statements – they can consolidate to simplicity.

So I think that simple statements being trialled in workplace pensions is a good thing.

The second most important recommendation is that these SABS just use one basis for assumptions. This will cause all kinds of problems immediately as these assumptions may result in people’s projected pots and pensions going down.

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It will also annoy actuarial practices who have great fun (and make much money) justifying a range of assumptions. Simplification can’t come a moment too soon – chapeau to Ruston Smith.

The third most important recommendation is that (for now), these statements don’t tell people how much is coming out of their pensions. This I don’t support.

Here is the frankly feeble paragraph in the consultation which has probably taken a thousand hours of drafting and should take five seconds deleting.

Finally, we are seeking views on the benefits, risks, practicalities and timing of including approximate member-level charges and transaction costs on the annual benefit statement itself, to make it easier for members to identify what they’ve actually paid. Government supports the fundamental principle that as investors in variable return long-term savings products where the effect of costs and charges on members’ savings can be significant, members have a right to the information in a proportionate way. 

There is nothing – NOTHING – stopping the line that was in previous versions of the statement – telling us how much we paid for our pension – being put back in.

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spot the difference

All the user-testing told Government that this was absolutely what people wanted to see on their statement. The argument that people might take money away if they felt they didn’t get value from its management is bizarre. So what if they do? If people are so energised by seeing that a max of 0.75% of their fund is being spent on costs of running the money and charges from the pension provider, let people find a home for their savings they consider better value for money.

People who have taken the trouble to open the statement, read its contents and taken action about what they read are precisely the kind of people we want more of. To suggest that scammers will use the cost of workplace pensions to save them money with ludicrous alternatives is to underestimate the British public.

Third – expectations of adoption

What are we to make of the progress of this consultation into pensions BAU?

The DWP are not exactly forcing this down the pensions industry’s throat

Achieving change 13.

We would welcome your views on:

a. the advantages/disadvantages of reliance on the voluntary adoption of a simpler statement template; design principles; or descriptors

b. where responsibility for maintaining a template; design principles or descriptors for voluntary use should lie: with government or industry.

c. The advantages/disadvantages of mandating an approach through statutory guidance.


Unless this approach is mandated – we are no further forward. We can already adopt this approach voluntarily.

By stopping short of recommending the mandating of this approach through statutory guidance, the DWP has not moved the cheese.

The expectation , arising from this consultation , is that the DWP either mandate SABS or leaves it to the industry to adopt piecemeal. Having gone to the trouble of identifying the target market for SABS – DC workplace pensions – it seems absurd for us to go through this consultation without making compulsion the expected outcome.

The obvious conclusion to a consultation on simplification is that we will get universal adoption, if we don’t – we simply have what we have today, which is not why we have consultations on the future.

Let’s hope that the only statement in the consultation which talks of action, leads to a swift second round of consultation and early adoption.

Subject to responses, we will work closely with the FCA and others in developing regulation and statutory guidance for consultation. Where we have consulted on assumptions here, we do not propose to do so again as part of the next stage of the consultation

I will be responding with the intent that Government bring this on

I want simpler more engaging statements, have thought SABS the way forward for the past two and a half years and hope that this consultation will deliver conclusive support for mandatory use in the target market at the earliest possible opportunity.

opperman prospect

hello to the future or the last hurrah?




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

Are IFAs missing the wood for the trees?

For those (like me) with weak eyesight, here’s that financial plan a bit bigger

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Dr Bannerjee’s financial priorities were not to maximise the fiscal gain over the taxman but to give him and his wife the financial security he wanted for the rest of his life.

He chose for his retirement plan started rather earlier than his scheme retirement age.

Dr Bannerjee was pressed by third party IFAs to explain what he meant by this criticism.

For Dr Bannerjee , his IFA was missing the wood for the trees. This is a criticism that could be laid at many professionals who are too close to their specialist subjects – tax and tax-law only  being cases in point.

A number of IFA’s press Dr Bannerjee for the planning he has done and he answers them all with considerable patience

As I have noted in some of the arguments that have raged over solutions to client case histories on this blog, objections from IFAs tend to focus on people like me lacking the professional qualifications to give guidance and Drs like Ben Bannerjee taking decisions for themselves.

Dr Bannerjee seems to have had the insight to spot his advisor’s fallibility, contextualise it and then build his plan on the platform of the advice he paid for, without taking that advice.

In my view, far from ignoring the advice, Dr Bannerjee has used the technical input he has got as a platform for the decisions that only he and his wife could take.

This is , incidentally, an example where fees can and should be charged unconditionally. The IFA has, as far as I can see, no role to play in the implementation of the post-retirement  strategy and there is therefore no risk of product bias creating a conflict.

The choices that comes from years of sensible decision making

Reading the part of the thread involving Dr Bannerjee, it became clear that he was in a position to take decisions in his mid fifties so that he could enjoy the lifestyle he wanted for his and his family. He was in this position mainly because he had worked hard and taken advantage of all the pension offers available to him. Not only had he been in the NHS Pension Scheme but he’d bought added years. He had been a model of prudence.

And being a part of a collective pension arrangement

Dr Bannerjee is not alone. We still have tens of millions of our population who have retirement choices open to them because they worked long periods in jobs where the pay was pensionable and the pension provides them with these kind of choices.

As with the state pension, the security that comes from simply participating in these great schemes (whether private or public) is a huge comfort to people of my generation.

It dwarfs the importance of private savings and the decisions we take on how we shape our retirement plans , still relegate our SIPPs , workplace pensions and ISA portfolios to the marginality of “additional voluntary contributions”.

While the immediate tax advice that pension professionals can bring is important, the primary considerations that drove Dr Banerjee ‘s thinking pertained to insurance, insuring that he and his wife were sufficient to the very end.

Security sits uneasily in financial models

I am uncomfortable about the way professional advisers have assumed that their expertise should be at the centre of retirement decision making. People’s retirements are their business and factors such as security are subjective and personal. This is particularly the cased for many women who , because of the pension gender gap, depend for their financial security on their partners.

Understanding the complicated nuances that the complex dependencies that people have both on their pensions and their families takes skills that go way beyond the technical and often they require a professional adviser to give clients space to take their own decisions. It also takes IFAs to accept that while those decisions may be sub-optimal in terms of tax or likely longevity or investment returns, those decisions are right for the client.

And very often, being part of a collective pension provides an emotional support – not least from fellow pensioners, that is lost to private markets. I enjoy being a Zurich pensioner for this reason.

Lessons for me (and perhaps for advisers).

Studying the amazing thread and all the commentary gives me an insight into the things that go on when we are thinking of winding down from work, or advising people of their options.

I am concluding that advice is a platform for people to construct retirement plans but that those plans have to come from the people making them, and not from financial mentors.

Most people end up – as Jo Cumbo feared she’d end up, with a pension pot but no retirement plan. Jo had the good sense to speak with an adviser early in her journey towards retirement and I’m sure she’s worked out what she wants and how she goes about things.

Most of us need guidance at the very least, Pensions Wise can kick that process off, signposts such as the PLSA’s Retirement Living Standards, can give direction, but ultimately what we do is very much our own business and as less and less people have the choices that Ben Bannerjee has today, more and more of us , are going to have to get through the woods ourselves.

Which is why I caution advisers from challenging people like Ben Bannerjee. These people, who can see the wood in their terms, should not be challenged for the plans they have adopted. Advisers should be learning how such people have created their retirement plan, not chopping down the trees.


For all that – most doctors take advice and rightly so


Posted in advice gap, NHS, Pension Freedoms, pensions | Tagged , , , , , , | 2 Comments

Halloween stuff – “Superstition ain’t the way”.

Sun Pension Pot

Six out of ten Americans hold “new age” beliefs and I doubt it’s much different in the UK. I have never- NEVER – heard a financial services firm openly prey on our superstition, but irrational behaviour underpins most of our decision making, my mates who structured CDOs – talked of their craft as  alchemy and – if our Prime Minister is to believe, he will reincarnate tonight from a ditch near Downing Street.

It being Halloween, it is a good time to celebrate the irrational and perhaps we can refer to my favourite image of a pension pot – supplied by the Sun – to remind my super-rational colleagues that most people regard their retirement savings as at best mysterious and at worst a witches brew.

Pension potty

So why are we so mystified. Read the head lines above and see what matters to the Sun.

  1. Avoiding high charges
  2. Avoiding being scammers
  3. Seeing all their money in one place

Mr Money and I did some work on this last year and yes it was around Halloween and yes it picked up on people’s fear of the irrational.

But – and this is what us rational masters of the pensions universe – fail to understand.,,, people see the pension experts as the vampires, and it’s their blood we’re sucking.

Superstitious -or suspicious?

People are in love with the supernatural, halloween is a bonanza for retailers and tonight I will be partying with the best of my colleagues at WeWorks with my wizard hat.

Tonight we celebrate the unknown forces of darkness, the other.

Today on the other hand I will be explaining to my friendly investors their AgeWage scores- which they got this week. Those who have scored well have been keen to publicise their investment genius.

While those who have found their pots have got less than 50/100 on the AgeWage scoring scale have been darkly muttering at me, like I was Gandolph.

AgeWage evolve 2

Actually – our scores are super-rational, they don’t pretend to predict the future, but they tell people about the past. They are the evidence of the costs and charges , the risk and reward and the skill or ineptitude of managers. They are the evidence of the impact of switching funds or sticking with the default. They are the evidence of decisions to use a workplace pension or switching to a SIPP.

In short, we empty the pot to show whether the witches brew is a retirement elixir or the contents of a fetid swamp.

For the superstitious, a pension can be entrusted to the alchemic powers of active management. For the suspicious, a pension must prove itself by its outcomes.

I’m on the side of suspicion and I’m for evidence- based investing, for accountability from those who manage and profit from my money. I am done with superstition and will promote transparency  going forward.

If you want me to test your pension pot and give it an AgeWage score – contact me at henry@agewage.com and we’ll tell you how you’re really doing.

When you believe in things – that you don’t understand

Then you suffer – superstition ain’t the way.

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Brexit? Time may be the healer yet.


A parliament united by what it doesn’t want

Boris Johnson has finally admitted he has abandoned his “do or die” on October 31st Brexit policy, after MPs voted for the Benn Act to secure an extension to the Article 50 process from the EU and avoid a disastrous No Deal.

The Lib Dems and SNP  have tried to pass a People’s Vote in this Parliament, even as recently as last week when Labour refused to support the Liberal amendment to the Queen’s Speech.

But with Parliament gridlocked, and with Conservative MPs, a substantial minority of Labour MPs, and a handful of independent Conservatives currently blocking a People’s Vote as a means of stopping Brexit in this parliament, a General Election seems  the only other alternative route.

The Lib Dems, Conservatives, and SNP only seem united in  waning to sort Brexit by electing a new parliament where  a majority  can emerge to revoke article 50 , hold a People’s Vote or finally leave.

So it looks likely that everyone will agree to hold an election, even Labour who have announced they’d agree to a 12th December date.

Politicians have found some unity in recognising that dysfunctionality cannot persist forever.

What Europe wants

To date , most of us have assumed that what Europe wants is bad for Britain. The idea that what Europe wants is what is best for Britain and Europe is considered naive. Consequently, negotiations with Europe have been confrontational.

Europe clearly doesn’t want Britain to leave, in fact it still clings to a hope that Britain might stay following either a referendum or shake up in Government.

The French prime minister is the only slight dissenting voice in the European consensus. He clearly wants to move on and has rather recklessly contemplated a “no deal” to that end.

The extension of the deadline has been modified to allow us to get out earlier than the end of January, but no one seems to think this likely.

I’m not hearing many British people saying this, but Europe’s united approach and consistent wish to engage in a negotiated solution is in sharp approach to disunited Britain.


Will people change their minds?

The hope is that by rolling the dice with a general election, the British people will create a decisive government where a majority view can be created.

But this is an extremely odd way of doing things. The British electoral system can create massive swings based on the votes of a few voters.

A second referendum would at least test the views of the people on the central matter in hand – the reason that people want a general election.

But there is no certainty that any Government would be able to find a consensus to implement leave if the second referendum confirmed the first. It would of course be easier to remain – which is what Europe wants us to do.

The risk of remaining is the alienation it would bring of large parts of the electorate that voted leave not on intellectual but on emotional grounds.

While I think it likely that you could change the minds of the small number of leave voters who saw it as good for Britain in a cerebral way, the vast majority of voters , take big decisions which they cannot get their heads round, on an emotional basis.

I don’t think that enough people will reason for remain to counter those people who believe in Brexit.

This cartoon from four years ago is horribly prescient.



We are stuck and that is bad

Where we are right now is “stuck”. We have just binned a hundred million campaign telling us to prepare for Thursday – 31st October. Those who did will now have to prepare for something else, though we don’t know what.

We are united in not wanting to be in this place, but we are in this place and the best we can do is to work our way out of the hole we have dug ourselves.

Conventional wisdom says that when you are in a hole, you should stop digging.

We are now so exhausted by all this  that we have lost all perspective on the matter in hand. I really think the best thing for our country would be to take a breather, a moratorium and ask for a further extension, perhaps for a year so that whatever we do, we do with a degree of national unity.

Because I sense that the decisions that will be taken in this current malignant atmosphere will be decisions that will not command any consensus. The purpose of the original referendum has been to clear things up, in fact it’s made things a lot worse. I can see no point in repeating the referendum, changing Government or crashing out of Europe in the current climate.


Time may be the healer yet

As we used to do at school, when there was a fight, we should all leave the playground, go back to class and sort this matter out when heads are cleared.

Perhaps the most difficult decision is the best decision . In this case, the most difficult decision is to put the decision off a year. That’s what I’d do if I had a way of doing it.


Posted in pensions | 2 Comments

How dashboardS manage “the invulnerable tide”.



I mentioned in yesterday’s blog that the Government can no more prevent the proliferation of dashboards as Canute could have controlled the waves of the sea.

A better analogy than Canute is Cuchulain, the mad Irish Warrior who died fighting the sea with his broadsword

Spake thus: ‘Cuchulain will dwell there and brood
For three days more in dreadful quietude,
And then arise, and raving slay us all.
Chaunt in his ear delusions magical,
That he may fight the horses of the sea.’
The Druids took them to their mystery,
And chaunted for three days.
Cuchulain stirred,
Stared on the horses of the sea, and heard
The cars of battle and his own name cried;
And fought with the invulnerable tide.

The invulnerable tide

And that “invulnerable tide” is with us today. It is driven by people who have money in pensions and want to find out where it is, how it’s done and how they can best spend it.

So far these people have had to go to financial advisers and pay them money to find them pensions. Many will already have paid other financial advisers to set the pensions up and most are fed up with the hassle they have to go to, simply to find out what they already own.

That tide is coming in and the longer we delay the establishment of a portal that gives them access to their information, the more likely we are to be flooded by this demand.

Uncontrolled, the demand for information will be satisfied not just by financial advisers but by those pseudo advisers offering people “free financial review” the people the Government warns us about.

The Government monopoly will not satisfy demand

If the Government builds a portal through which we can see all our pensions on a single dashboard, then people will find ways to capture that information by means of a process of data scraping , so that they can replicate that portal on a dashboard of their own.

This is how scammers will behave and it will lead to bad consequences, it will lead to money flowing to the wrong places, either through funds or directly to the scammers. It will lead to money flowing offshore into the kind of monstrous investments that get closed down every week only to reappear in yet more outlandish fashion offering us an  8 percent return on our money.

The reason that this will happen is that the Government dashboard will not be able to manage the secondary needs of people once they have found their pensions.Those need include working out what has happened to their money and taking decisions about the future.

The alternative to a single dashboard is multiple dashboards that get their information from the Government portal in a controlled and regulated fashion. And these regulated dashboards will help people answer the questions that cannot be answered by the Government because the Government neither wants to , nor is able to – advise people what to do next. This demand can no more be satisfied by the dashboard than it can by Pensions Wise.

Eliminating the grey zone

It wasn’t until reading a blog by Romi Savova that the penny on this dropped. Romi has recently joined the industry steering group and is  one of the people tasked with getting the dashboard in place.

In this blog, Romi talks of  a grey zone (the term was invented by Primo Levi for the blurring of victim and accomplice in Nazi death camps). The grey one Romi refers to is one where information is available but can be used to harm and self-harm – as we see in most poor financial decision making today. She concludes

The consumer owns their data and they will wish to share it. It is important that sharing is only permissible with trusted, authorised and regulated third parties. It is a myth that delaying so-called “commercial dashboards” will prevent the free flow of data. On the contrary, if we fail to consider, define and communicate data sharing protocols and expectations with consumers, any scammer will be legally allowed to scrape the data. Scammers thrive in the grey zone.

The view Romi has, and it’s one that I am beginning to better understand, is that a Government Dashboard has a role in finding pensions and that the Government has a role in defining how and to whom this data be shared.

Necessarily people will look to third parties to help them organise, analyse and understand their data and these third parties cannot be the Government – they must be commercial for there is no appetite within or without Government for a state controlled financial advisory service.

What will be delivered when.

In terms of tech delivery , there is always a minimum viable product and I see the Government’s dashboard as just that. It should be delivered by the end of 2020 and Chris Curry and his team should set a hard deadline for that – otherwise we will not get this thing over the line by 2024.

I think the minimum viable product is a pension finding service which is what the Government portal could and should do and I think that the protocols for finding pensions should be in place by the end of 2020. If your database is not capable of identifying who you hold data on and if you cannot link this to another database via an API, then there is something wrong.

I think that concurrently to the creation of the data finding service will be an authorisation process so that in the course of 2020, FCA authorised firms can apply to act as agents for customers who want to access data from the Government dashboard with the help of that authorised firm.

That firm need not access data by scraping, but by direct access to the data that is already available to the Government dashboard. In short , commercial organisations – authorised by the FCA, should be allowed to find people’s pensions to and through the Government portal, which acts as an authoriser – rather than a regulator.

What happens on the commercial dashboards?

There is a separate discussion to be had as to how information that appears on these commercial dashboards is presented. Romi’s view is that we should use the simplified pension statements pioneered by Ruston Smith with the help of Quietroom. I’m pleased to see she is fighting for this information to include the amount we are paying for our money to be managed as part of this simple statement.

There may be other things that might appear. I would like to see the AgeWage score we are pioneering appear as a matter of course. If AgeWage gets authorised, we may well ask to be authorised to run a dashboard, find pensions , help people with how their pensions are done and help people aggregate to the best pension for them.

But that is for the future.

The Bill is passed, let planning now begin.

What has blighted progress in innovating pensions has been uncertainty. We are familiar with the uncertainty of an unfulfilled plan in politics, and Brexit has undoubtedly impeded the progress of pension innovation – not least through the absence of legislation

I am pleased that I am writing on the right side of the reading of the Pension Bill and have this good news to communicate this morning. With so much going on – we should at least be thankful for this.


If you’ve enjoyed the references to Cuchulain, you can hear the poem’s author, WB Yeats – read these lines and more.

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

A genuine parliamentary “pensions debate” – something to be welcomed.


I have not had time to follow the parliamentary debate on the Pensions Bill but I’m grateful for Jo Cumbo’s tweets and will pick up on them. Firstly, it is good that we have a House of Lords with people in it – Ros Altmann, David Willetts, Jeannie Drake and Brian McKenzie who care enough about complex issues like CDC and the Pension Dashboard to debate them.

The Pensions Dashboard

I am on the opposite side of the debate from Jennie here but understand where she – and friends of mine like Gregg McClymont – are coming from. Nationalising the pension dashboard as part of the Money and Pensions Service will be a noble public venture and like MAPS and the combined pension forecast, it will render the pensions dashboard a part of the pensions infrastructure. The Combined Pension Forecast was five years in the failing, MAPS looks like it could out-sprint the CPF , becoming obsolete before it has even published its strategy.

That Said both Jeannie and Brian Mckenzie recognise that there is little trust in the pensions industry not to screw up dashboards.

We have a thriving tech sector in this country. We are world leaders at Fintech and we could be a world leader at Pentech if Government would give the likes of Will Lovegrove, Romi Savova and Sam Seaton the chance. Guy Opperman has given Chris Curry every opportunity to deliver a Pentech dashboard and after four years of miserable failure in the hands of the DWP, it is time they were allowed to get on with it. Which is why I say to Jeannie – and Gregg –

“you’ve had your chance to deliver a dashboard and failed- move on.

That said, Jeannie’s challenge is the right challenge, we need the kind of independent oversite of the dashboard, we had for open pensions. That oversite should not come from a Governance committee packed with the pensions “home guard” but from outside. “Home guard” sounds harsh but the  PLSA conference showed me, there is little understanding of the big dashboard risks within the pension community. Those risks are to do with meeting customer expectations on the big things like finding pensions, not worrying about the minutiae like actuarial assumptions within projections. The rules for Open Banking were created by the CMA, the rules for the standards governing data transfer in the dashboard should equally come from an expert and independent source.


CDC and intergenerational fairness

David Willetts – like Jeannie Drake – hit on the key issue with the Royal Mail’s version of CDC.

Again we have a senior politician getting to the nub of the matter and again the answer to the question he is raising lies in the rules – governance – of the road.

You cannot legislate fairness, fair treatment of the various groups of people passing through CDC is a matter for trustees to devise and implement and I am quite sure that there will be groups of CDC pensioners and savers who will argue that they are losers.

The Royal Mail scheme is as ambitious as CDC will get. It aims to create a single scheme that allows postmen to build up a target level of pension and for that pension to be paid to them and their families for so long as they are on the planet to receive it.

If Royal Mail can get it right, other schemes may find it easier, especially if they restrict the scope of the scheme to the provision of scheme pensions from the purchase of a DC pot or pots at retirement.

As with the Pensions Dashboard, the pensions industry has jumped ahead of itself, worrying about this implication or that, when what is needed right now is a private sector initiative to get off the ground so that others can innovate around it. As with the dashboard, the amount spent on the initial project will be recovered later from adoption by commercial entities – I have no doubt that the multi-employer DC master trusts are already licking their lips.

We should not be worried that CDC falls into the wrong hands, any more than we are worried that the dashboard falls into the wrong hands. The progress of internet banking – the precursor to open-banking, suggests that what is needed for both the dashboard and CDC to work, is for us all to feel more comfortable about our pensions being fungible – interchangeable.

The idea of fungibility

What the dashboard should do for people is to allow them to interchange their pension pots for a wage in later life that suits them. So rather than them feeling they have money with various people, they feel they have control of their money and how it is spent. The pensions dashboard should put people back in control of their later life financial affairs allowing them to create a financial plan with full information on choices.

While the Pensions Dashboard organises our later life financial resources, CDC should become a way of interchanging investment pots into a wage for life.

Both the pensions dashboard and CDC share this transformative capacity, they change what was hard into what could be easy. This is the idea of financial fungibility. The idea is the interchange of a single resource – money – from one state to another – can be beneficial to  its owner without detriment to society.

Welcoming the dashboard, CDC and this debate.

In something so transformative as the dashboard and CDC, there are bound to be fears, fears of detriment to savers and detriment to one generation caused by over-payments to another.

The rules governing the dashboard and CDC need to be put in place by parliament and that is what is happening in the Pensions Bill.

Debate on that bill needs to be had , not just in the House of Commons and the House of Lords, but wherever there is interest.

Sadly there is too little real debate going on, which is why I am writing this blog. I have my position, I am pro the private sector being involved in dashboards and pro the commercialisation of CDC. But in both cases, I want this to happen in a controlled way and not in the way we have seen the pension freedoms implemented.

It is frustrating that it is taking so long to get legislation in place but we have to respect there are other priorities in Government and stand in the queue. However pensions are now at the front of that queue and we are ready to see buttons pushed so that we have a pensions act in 2020 with CDC and a pensions dashboard in it.

target pensions

On target for CDC and a pensions dashboard



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

Learning how to buy pensions.

Screenshot 2019-10-20 at 08.32.01

Mark Ormston who works for Retirement Line has written an excellent blog on linkedin. This is my version of his blog.

Are people taking sub-optimal annuity decisions?

The figures in the circles are  taken from the FCA Retirement income data report for the period April 2018 to March 2019 –  and come as no surprise to Mark and his team.

Mark asks

“Why is the take up of these valuable annuity options so poor?”

His conclusion is

“Simple – Cost”.

Screenshot 2019-10-20 at 08.32.38

Is this mis-buying or could we be “selling” better?

Financial Advisers – who are little involved in annuities – will point out that many people buy inadvisedly and that they’d be better off buying through them. Most annuities are actually bought off the page – or at least via Google and that may be because of product bias amongst IFAs or it may be because people who buy annuities are the kind of people who try to disinter-mediate.

These are typically independently minded people with a decent level of “financial capability”.

I don’t think that anyone is setting out to misinform the public, but after thinking about Mark’s blog, I think there are aspects of retirement decision-making which could and should be revisited. That’s what this blog attempts to do.


Solving the “what if I die too soon” problem

Many people who investigate annuities are put off by the thought that they are disinheriting their family with the annuity purchase. This is a particular worry for people who worry about dying soon after buying the annuity. It is possible to insure against losing the purchase price of the annuity by buying “value protection”.

Mark has done some sums.  His numbers are based on a healthy 65-year-old male with a £100,000 pot.  Here’s his conclusion

Screenshot 2019-10-20 at 09.41.18.png

Remember, this person has an entitlement to 25% of that £100,000 can be taken as tax free cash so what Mark is suggesting is that by buying value protection , the consumer is insuring that the full value of the annuity is paid out if the annuitant lives and the balance between what has been paid so far and the annuity is returned to the family as an inheritable lump sum.

This is an entirely new way (to me) of thinking about the annuity as both a protection against living too long and an insurance against dying too soon.

Solving the escalation problem

Mark tells us  there ‘s plenty of consumer interest in the more expensive annuity options, especially in escalating payments, an option that’s  frequently quoted and usually dismissed when its impact is understood. Anyone who’s been involved in programmes offering pension increase exchange (PIE) will know how ready people are to swap indexation for jam today.

Can we afford not to escalate?

I speak as someone who did not take the tax-free cash on offer when I drew my pension. The main reason I didn’t was that I was being asked to swap 3% escalating income for cash at an extortionate exchange rate.

Mark points out that the typical conversation he has with people assumes that tax-free cash is sacred

Q.    ‘Would you like to take out 25% of your pension savings free?’

A.      ‘Oh – Yes please’

As a result, the tax-free cash is taken out of the equation and we all buy  level annuities.

But reinvesting tax-free cash in the annuity purchase could have partially restored the escalation to the annuity  and Mark’s point is that this conversation is not being had. For many people who are looking for a real wage in retirement, tax-free cash is simply not what is needed.

I know that advisers will pick up on the fact that pensions annuities are taxed and that there are ways of getting the tax-free element of the pot paid out through drawdown.  I know  that there are plenty of ways to generate tax-free income from ISAs , but the point Mark is making is that if a client is coming to him for income, he may not need a cash lump sum at all.

Many people are being talked into a course of action that is just not what the customer ordered. Customers who live long , may well regret their escalation, when the cash is gone.

Protecting your partner

The third of the three issues the FCA have highlighted is that most annuities are purchased on a single life basis. The numbers of married couples in retirement suggests that many spouses are not protected from living longer than the person buying the annuity.

In almost every case there is likely to be enough money in the tax-free cash to make sure that the annuity is paid out for as long as is needed by the surviving spouse (eg till the second death.

In all three cases, tax-free cash can be used to overcome the problems normally associated with annuities.

Let’s learn how to buy pensions!

I’m grateful to Retirement Line and particularly Mark Ormston. Every time I speak with Mark I get a fresh insight into the retirement decisions he sees people taking and he teaches me new ways at looking at old problems.

Of course there are some fundamental issues with annuities which will put many people off them, chiefly their cost at a time of depressed interest and gilt rates. While this can be partially mitigated through the purchase of fixed-term annuities, an annuity is not right for people comfortable with market risk. But there are many people who want the certainty that annuities bring and I don’t think the simple messages in Mark’s blog are being properly disseminated.

Retirement Line aren’t financial advisers (though the firm is authorised by the FCA). They offer complimentary conversations to those people have with financial advisers. Many people who speak to financial advisers go on to speak with Retirement Line and get both perspectives.

I am learning and I think many advisers could learn a lot from Mark and his team. I think that many occupational pension scheme trustees should be speaking with them too!

Retirement Line.jpg







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

Those chants don’t seem so funny now – a depressing day for Yeovil fans.

Yesterday’s was the first Saturday afternoon I’ve spent at home since March. I had thought to go to Haringey to watch Yeovil against Haringey in the preliminary round of the FA Cup but thought against it as my son is away at College and my partner has toothache and could do with my company.

We are an apolitical household, my partner and I have radically different views on Brexit and so while we were aware of developments, I did not go marching.

Instead, we watched the racing and I watched the twitter feed. After a poor first half we got a penalty and I awaited with impatience the result. After a lengthy delay, we scored. It was to be the last good news I was to hear about that game.

Shortly afterwards, the club feed gave the first bad news

The detail came from following the #YTFC. Two bottles had been thrown onto the pitch, the goal keeper had been spat at, obscenities had been thrown and there was talk of rascist chants directed at the Borough goalkeeper.

After a delay, the match was announced to be abandoned and the players came back on the pitch

Later that evening the Borough manager made a statement explaining why he took his players off the pitch.

Talking to Radio 5 he said not just the goalkeeper but his number 6 were subject to racial abuse and that the team were in no state to play the rest of the game.

Yeovil Town issued a club statement.  The Avon and Somerset police have called for video evidence.

The impact on Yeovil supporters has been shock and deep shame that the traditions of a family club with fans who pride themselves on their behaviour will be tarnished by this.

Last week, immediately after a home match, we’d had another horrible shock when we learned that one of our great fans, Martin Baker, had been found dead in his flat, we now know he died of a massive heart attack. Martin had run the unofficial club news site “Ciderspace”.  Martin grew up in Shaftesbury and knew my family well, but he knew everyone well – this match had been dedicated to him and the non league football paper had written this tribute to Martin. 

Like all Yeovil fans I am upset for the club , players and true fans – of whom Martin was as true as any. Yeovil is a small community. It is not a greatly loved place, it has many problems – high teenage pregnancies , low levels of ethnic diversity and average incomes well below the national average. The football club had been a great source of pride for generations. In 2013 it had been promoted to the Championship and the following season Leicester, Burnley and other top flight clubs visited Huish Park to play league fixtures.

Yeovil have since fallen into National League Division one. Yeovil Fans have stuck by the club and this season have seen an upturn in fortunes under a new manager and with new owners. We have a brilliant woman’s team and a growing youth set-up.

Recent problems

Despite this resurgence, Yeovil has been in the news for the wrong reasons lately. A few weeks ago in what was jokingly called “Ball-boy gate”, one of the ball-boys got sent off by the ref in a home game for wasting time. The club marched all the ball boys off in solidarity and the ref was left to get the ball out of the stands himself – later in the game.

This seemed like innocent fun at the time but there were already more sinister tones. Though I didn’t hear it – being on the other side of the ground, Bromley fans suggested that some of our fans were less than sympathetic when the Bromley goalkeeper got injured. There were further rumours of bad behaviour at an away game at Hartlepool and now this.

I feel responsible for our club , though I don’t go to many matches. I suspect that all the more loyal fans feel responsible for the behaviour of their fellow fans. We all feel guilty that this bad thing has been visited on Haringey Borough by us. Indeed our most famous fan, Pat Custard, singled out Haringey Borough for its hospitality, this was their day – more than ours, they are in a lower league and this was their big game.

I was pleased to see our manager’s arms around Borough’s goalkeeper and the two teams mixing without rancour after the incidents.

Screenshot 2019-10-20 at 18.49.01.png

Yeovil Town apologises and I put my apology to what has happened. And of course what has been alleged to have happened has national resonance as it occurred in the same week as our national team got abuse in Bulgaria.

Our fans will now be put in special measures. When we go to any game, we will  be barracked by opposition fans for what happened yesterday. We will not be able to wear our scarves and shirts with the pride we once did. Obviously we all want the hooligans to be banged to rights but we shouldn’t isolate them as the sole problem. In as much as we  let this happen  no-one can claim to be blameless.

And our own fans have made it very clear they have every sympathy for the Haringey players

But we need to see balance in reporting and await the results of the various inquiries, before judgement on the club is delivered. I found this article provided that balance at this early stage.

I understand that several of our fans met with their Borough counterparts after the game and that all was well between them


Our team itself is very diverse, and players want to come to Yeovil because we have a reputation for treating people as people. Here’s the forward line of our squad.

Screenshot 2019-10-20 at 08.15.59.png

The behaviour of the few has dishonoured  the memory of Martin and the heritage of the club which will now be remembered for the wrong things. Many will argue that this is a massive over-reaction resulting from social media, whatever the findings of the police inquiry the damage has been done.

Just like pension scamming, a few rotten apples pollute  the whole barrel. There is no way that Yeovil can undo what is done – if found guilty of hate crimes and of bottle throwing, the  culprits  must be banned and we all must bear their shame.

If we are found complicit in racism , Yeovil should voluntarily resign from the FA Cup  and we should adopt Haringey Borough as our team for the rest of their time in the tournament. But I say “if” as it’s still far from clear what actually did occur.

We can’t keep hate-chanting; even calling the keeper a fat bastard (which it seems we were doing) isn’t funny – it’s rubbish behaviour.  Any kind of bottle throwing and spitting is football violence. Things will not get better until we stop thinking this stuff – even done by others – is funny.

I have stood in Thatchers when  gypsy chants have been sung, I’ve hear the Adams Family song, the abuse of northern fans, even the chants against Weymouth. I’ve heard homophobia on our terraces in Brighton away matches . All this seemed innocent fun at the time – it doesn’t now.

Appendix; post of Dave Coates on the @RedmenTV twitter feed

Excuse the long post, but did anyone see the tweet from TheRedMenTV about our current situation? If not, take a look at my retweet from tonight (Tuesday).

Basically, the snippet of a wider debate they posted calls for us to be chucked out of the FA Cup.

Below a message I sent them in response….

Good evening,

I just viewed your recent @TheRedmenTV Twitter post where your host calls for Yeovil Town to be kicked out of the FA Cup following the allegations of racism made against a supporter at Saturday’s FA Cup tie at Haringey Borough.

I will begin by saying I recognise these snippets posted on social media are there to get a reaction from people and make people watching the full video; I did and I recognise there was a bit of debate about the rights and wrongs of this what was being proposed.

However, as a Yeovil Town supporter who attended the match on Saturday I want to tell you about my experience before, during and after the incident and what comments like your ‘snippet’ have contributed to.

Having left my home in Lancashire at 7.15am on Saturday to get to Haringey, I was one of the first to arrive at the ground and visited the club bar where I was actually greeted by the Haringey chairman.

He expressed his hope that Yeovil would bring more supporters to give his club a well-deserved pay day, we spoke, wished each other well and my conversations and those of other Yeovil fans with staff and supporters of Haringey was nothing but friendly and good spirited.

The match itself was fairly uneventful until the 63rd minute when a penalty was awarded in Yeovil Town’s favour and there was, what appeared from where I was standing, to be an exchange of words with Haringey keeper, Valery Douglas Pajetat.

The keeper squirted water towards fans behind the goal and the situation quickly got out of hand, a plastic bottle was thrown on to the pitch and it quickly became apparent things had escalated.

At this point, both myself and more than 20 Yeovil fans around me immediately confronted our own ‘fans’ calling for whoever had thrown the bottle (this was as much as we knew at this point) to be ejected from the ground and urging stewards to act to do this.

The situation appeared to settle and the keeper faced the penalty which was scored, at which point another bottle was thrown on the pitch, and further words were exchanged which led to the Haringey team walking off, followed soon after by the players of Yeovil Town.

By the time the penalty was scored, there were stewards wearing body cameras dealing with the perpetrators involved in the verbal exchanges, and would have picked up anything said at this time – useful evidence in an investigation, I would imagine.

You have obviously read the headlines since then, the vast majority of which has acted as judge, jury and executioner before either a police or FA investigation had begun (let alone been concluded) and judged Yeovil Town supporters as ‘racist’.

My evidence of this? Supporters being abused as they left the ground, including insults being hurled at buses filled with people who applauded the announcement that the game would not continue, and subsequently hearing from countless fellow supporters that they have received messages and had comments about their club’s ‘racist supporters’ over the weekend and during the week that followed.

I experienced this myself from people and it all came before any type of investigation had been completed.

I now know people who have supported Yeovil Town for generations who are afraid to attend future matches for fear of being the subject of further abuse for being ‘racist fans’ and this has been driven by a rush to judgement of so many parts of the media which led to commentary like that you chose to post.

I now have genuine concerns my friends could be targeted for retribution when attending the re-arranged fixture next Tuesday night. How can it be right that people are made to feel like that? If Yeovil supporters are abused, what role will posts like yours have played in this?

You will have read that two people have been arrested on the allegations of racially aggravated common assault and (as I send this message) no charges have been made public against them; and yet you published a statement which has reached a judgement already.

If these people are found guilty of the allegations against them on the basis of evidence, you will not find a single Yeovil Town supporter who will disagree that they should receive bans and criminal charges brought against them.

But what about the stain on the name of thousands of other innocent people who did nothing more than support the same team as them? What about the reputation of a club with no history of any type of crowd trouble, least of all racist behaviour? I am afraid that statements like that you have made have left both of these things tarnished beyond repair.

If ever there was a supporter of a football club who understood the concept of trial by media and the need to look beyond the headlines, I would have thought it would be Liverpool.

Because one idiot threw someone in a fountain in Barcelona, are all Liverpool fans in agreement this type of behaviour is acceptable? Of course not, it is one idiot. The response of Yeovil supporters at the game and subsequently makes me quite sure there are none amongst us who believe racism has any place in our society, let alone football.

If there was a supporter of a football club who understood the idea of legal process and the concept of innocent until proven guilty, I would have thought it would have been Liverpool.

For this reason, I felt compelled to contact you to convey my deep disappointment at how you, like so many other parts of the media, have tarnished the good name of a club with no history of this type of behaviour, contributed to a situation where people feel afraid to attend a football match, and all before an investigation has run its course.

I hope you take this message in the spirit it is intended, from one football lover to another.


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That was the week (that was)


This week has seen a Pensions Bill make it into the Queen’s Speech, the Pensions Regulator’s Stakeholder Conference (Monday) , the Owen James Meeting of Minds (Tuesday) and the PLSA conference (Wednesday to Friday).

And then there’s the minor political and sporting events rolling out this weekend.

It was an enervating week for me that included a trip to Media City in Salford to talk on radio 4’s you and yours program (you can listen here). It was a real privildge to see the PLSA event with a press pass and I had insights into the worlds of TPR and of senior IFAs which I have hardly earned.

But being close to the action is not the same as being part of the action I realised when talking with Chris Curry just what being part of the action means. Look at this picture and you get an idea of the part Chris has had to play this week.


Chris is the bloke with blond mop next to Pensions Minister Guy Opperman, Terry Pullinger sits on the other side (a key player in  CDC’s inclusion in the Bill).

Neither Terry or Guy made it to Manchester but Chris did and he carried the torch for the Pensions Dashboard. To me – he was the star of the PLSA, not just carrying the Pension Minister’s message but acting a stabilising influence in a number of sessions where frustrations with the (lack of) progress made on the dashboard so far, could have made news for the wrong reasons.

It wasn’t just Guy Opperman who had to miss the PLSA, so did Laura Kuenssberg (replaced by Nick Robinson) and we saw nothing of the main CDC protagonists – including Shadow Minister Jack Dromey. The reason for absentees was of course Brexit, though the impending industrial action at Royal Mail may have made it and CWU’s absence equally political.

So what were the key debates?

The PLSA were never going to cover all aspects of what’s going on in pensions today. The Conference pretty well ignored CDC and its implications for both DB and DC pensions – maybe that is a debate for next year but I felt it was an opportunity lost.

The FCA’s key pension issues surrounding the provision of advice and guidance, how we measure and communicate value for money and the implementation of investment pathways never got into a session. There was an informal discussion of VFM with PLSA luminaries which included a statement from a senior pensions director that the Trustee Chair’s VFM statement was an exercise in Governance and of no importance to members.

As regards pension taxation, I heard a lot of whingeing about rich people’s problems (AA, MPAA and LTA limits) but the issue of 1.7m savers paying 25% too much in pension contributions barely got a look-in. I found myself violently agreeing with Australian Martin Farhy who described the sidecar as a distraction. If we really care about the cost of pension savings for the low-paid, we need to get them the incentives they’ve been promised. The lack of interest in this topic at this conference was shameful.

Similarly, the issues of cost- transparency was given little prominence. The one session on the PLSA’s CTI initiative competed with three others. The handing over of the baton to the PLSA’s CTI team seems to be yesterday’s news. The concept of transparency was  much lower down the debating priorities than I would have expected. There was nothing in this conference from the CMA and it was as if the asset management market study had never happened.

Relative to a decade ago, when I last attended , the number of debates on the funding, governance and investment of DB plans , was well down. They were replaced by an exploration of the social purpose of pensions. For me – the key speech of the week was from Nigel Wilson on the Power of Pensions to fulfil social purpose.  The debates on engagement tended to focus on responsible investment and this is where views were most polarised. An early trustee event on “the parameter of trustee investment duties” saw trustees refusing to co-operate with the ESG agenda, one pension manager in a debate on DC default design told the audience that young people were only interested in financial advantage and had no truck for ESG.  This debate continued throughout the conference and climaxed in a head on twitter feud between Iona Bain and Rebecca Jones on precisely the same point.

Paul Lewis joined in

Clearly the issues of individuals choosing to engage with pensions were of interest but there was little consensus as to how we were to achieve it.


What solutions were on offer?

If the key debates were around engagement, so were the proposed solutions.

PLSA is at its best when conducting research and delivering standards, the standards aren’t always worthwhile (see the degeneration of PQM) but many have stood the test of time and become embedded into pensions culture. I hope that the CTI standards will be part of the way we do things.

So the New Retirement Living Standards that I reported on yesterday should be this conference’s lasting legacy.

The standards should succeed but they will need delivery. Over the three days of the conference, I attended a number of sessions on technology. They were all pretty ropey. With the exception of Smart’s Martin Freeman, I did not hear anyone talk of Fintech in a meaningful way. Frankly the PLSA and the occupational world lag – and this is a big worry for the pensions dashboard. The Exhibition was – in terms of technology on show – a big disappointment.

Ideas using the new technologies brought to us by the distributive ledger were thin on the ground and data was consistently referred to as a threat to progress not part of it. Margaret Snowden claimed it would take £25m to clean data ready for the dashboard, I suspect that this is a spectacular low-ball.

Until pension schemes can be proud of their data and its management, the fully inclusive dashboard looks a long way away.

In Summary

The PLSA conference showed me an occupational industry divided as I have not seen it before. I saw little common purpose and a lot of self-examination. The PLSA has woken up to the change in its role but it has yet to find its new identity.

It is groping its way towards its new purpose and that is surely as the standard setter for issues such as target incomes, cost measurement and the governance of ESG. The PLSA should be where we go to understand value for money and the FCA and other Government agencies such as MAPS and GAD should be part of next year’s program.

The PLSA are not going to drive forward Fintech as Pentech.  That is for entrepreneurs, some of whom are happily on the pensions dashboard. But Sam Seaton, Will Lovegrove and Romi Savova were not at this Conference. They should have been.

This has been a week when I have seen pensions through many people’s eyes and I hope that as time goes by, the two major initiatives that took a step forward this week – CDC and the Pensions Dashboard, will help bring those worlds together.

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Thumbs up for PLSA’s Retirement Living Standards

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It’s a shame that the timing of the PLSA’s big reveal coincided with the announcement of the  Brexit agreement. It hasn’t got much airplay and frankly- even the PLSA annual conference seemed a little underwhelmed.

The PLSA have launched a lot of initiatives over the years, few have worked.

I’m going to stick my neck out and say that the retirement living wages produced by the PLSA research team in conjunction with Loughborough University are useful and should be adopted by everyone in pensions.

This one works for me – but see for yourself.

So what’s it all about?

The PLSA has identified a problem, the average person has nothing to target as a retirement income ( Agewage).

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Plucking numbers out of thin air, which is what has happened up to now, is no way to get consensus on what is needed. What’s needed is a solid -evidenced based – set of numbers that we can all get behind.

What the PLSA have done is solve this problem by teaming up with the people who set the National Living Wage and repeat the research that got us where we are with that. The numbers are based on research on what ordinary people think they need as a minimum to get by, to be moderately well off and to be comfortable – in later life.

You can see the gentlemen behind this if you click on the picture above ,  he’s lurking below the screen.  He and his colleagues did a good job explaining to us how the detail worked. I probed about why the shopping basket for basic and moderate lifestyles came from Tesco and why – for the comfortable, the cost of goods was measured by a shop at Sainsburys.

The research shows that the super discounters – Aldi and Lidl – are not suffeciently available to form part of our national shopping cost benchmark. Similar questions solicited similar answers when assessing the types of booze and food we bought.

The thinking behind these three categories of lifestyle is carefully articulated using words that occurred in conversations with the ordinary people who participated in the research.

I was very taken with the kinds of leisure activities people said they wanted to engage in , in later life

You can read for yourselves the detailed analysis by going to the website created for geeks like me , for whom this research matters, it’s a surprisingly interesting place to nose about in! Here’s the link.

And it wasn’t just me who was impressed by this concrete research

Immediately the simplicity of the approach sparked questions..

One of my (ha ha) fellow journalists, Rebecca Jones, asked sensible questions about the exclusion of housing costs from the retirement living standards. The assumption that these would be reduced by the end of mortgage or the availability of housing benefits , doesn’t quite work for me. Most elderly people I know complain about the cost of maintenance of the properties they own or the need to meet the rent because they don’t want to or can’t claim benefits.

So I can see the numbers sparking debate and engagement just as any simplified and universal benchmarks will do. These living standards need to be personalised but they act as a starting point and we heard later in the day that Aviva and others are already integrating these numbers into their planning.

I will certainly be looking to do the same for customers interested in creating a retirement plan , trying to work out what they want as a wage in later age.

You can judge for yourself whether the marketing collateral created to get the message out works. I hate it and am absolutely sick of these animations, but judge for yourselves! You might want to feedback on this blog as the comments box is turned off on YouTube

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Democratising pensions in Manchester

Diverse accross the ages

The pictures above are from the library supplied journalists by the PLSA, they are what the PLSA would like you to think they are about, and yesterday’s sessions really were about youth.

But young is as young did and as we drifted away from the hall I noted that the numbers of young people heading for the PLSA’s CEO dinner or the various watering holes in MI , I realised that these were the people I was drinking with the last time I came to this event ten years ago.

The NAPF/PLSA has always been  and still is crusty and male and rather pale and it was only in the press room that I found most people were young enough to think of pensions as something in the future.

In the best session of the day, hosted by Emma Douglas and John Roe of LGIM, tables were asked what millennials and below were interested in. One table told us that millennials were only interested in profiting themselves and had no interest in environmental and social issues. This may seem extreme but it represented a stream of reactionary thought within the conference which I heard again and again in the wine bars and pubs I drifted through in the evening.

Young is as young does and there is still a divide between the progressive programming of PLSA’s conference and the regressive attitudes of many of the delegates and that divide will not be bridged any time soon.

steph 7

Diverse in location

I listened with care to the speech given by Nigel Wilson (pictured above). He, like his fellow Geordie, Helen Dean,  is in exile in London and he spoke feelingly of how Newcastle , Leeds , Manchester and in Steph McGovern’s case Middlesborough, were powering ahead through Brexit while the capital seemed bogged down remaining.

For as long as I’ve been coming to them, NAPF/PLSA conference have been held out of London. But I have never enjoyed the Edinburgh events which seem to attract the investment fraternity, I love to sit with people from the RPMI from Darlington and get a fresh perspective from parts of Britain London could learn from.

Pensions are about the whole of the UK and not just London and Edinburgh and the PLSA has got this.

Diverse in gender

I was very critical earlier in the week of the way the IFA event I attended was run for men with all the speaking being done by men.

At some point yesterday I asked whether people agreed with the majority of questions being asked anonymously through the conference app. It was gently explained to me that this was to give a voice to the people who had not asked questions in the past.

That is an indicator of how far the PLSA has moved since I have been away. There may still be a preponderance of crusty old men in the hall, but there are enough people like Jane there to make a difference.

Diverse in sexuality

and in case I was in any doubt that we weren’t in the heartland of LGBT, I got these wonderful tweets in the middle of the Steph McGovern session – which made my day!

and again

A live conference or a “live feed”?

Back in the day, the PLSA conference was covered by the nation’s media. Today, the Pensions Minister will be streamed into the conference from Westminster.

To be fair to the pensions minister, he’ll be presenting our Pensions Bill to the House. Good for Guy Opperman for making the Bill happen. Ironically many of us will be checking  Cumbotweets” as part of our day.


Hopefully we’ll be checking from the auditoriums and not in the press room while glancing at the live feed (as I noticed some of the press now prefer to do)

There is nothing like “being there” as Bella Jo points out and it’s sad that people travel to Manchester to watch an event as they could on their desktop, the only way to understand what is going on , is to be there live and I bet Guy Opperman is livid he is stuck in Westminster.

Talking of being live, I will be live on You and Yours this lunchtime talking about the damage lead generators can do to people’s pensions (and to the reputation of pensions).

winifred.jpegI’m keen to point out that the reason I’m in the BBC’s Salford studios is because I want to be live in Manchester discussing the good that pensions can do. I will be talking with a female presenter , Winifred Robinson (pictured) and the research has been through another young female – Beatrice Pickup.

We need to be pushing out this live message that pension saving is good news for everyone in Britain, wherever they come from, whatever their gender, sexual orientation, location or age. The PLSA can still do this and I’m really pleased it is recognising that to do this it needs to reach beyond its conferences to the BellaJo’s and the wider public.

Democratising pensions means making pensions something that everyone is interested in discussing and that’s what I hope we will do today and tomorrow.




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The north east rises #PLSAannual19

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I’d come expecting what I’d left behind in 2005, a diet of DB . By the end of
day one I’ve only been to one session aimed at institutional investors and that was on lifetime mortgages, something I’ll be taking a keen interest in a few years when I fail to pay off my interest only loan from HSBC.

Instead I’ve heard from John Roe and Emma Douglas on what’s happening in DC and how LGIM are diversifying defaults with illiquid assets. I’ve heard from Helen Dean and others on how workplace pensions are developing and how they’ll interact with the dashboard. I’ve heard from Steph McGovern on how pensions might become interesting to ordinary people and Nigel Wilson (CEO of L&G) on how pensions could power Britain’s economy in a post Brexit world.

In short I’ve had a good and interesting time and it’s hardly felt like the PLSA at all. Infact I’ll go further than that and suggest that if I have another day as good as this, I might like starting to like the PLSA again.

I sat with the Darlington girls from RPMI through the afternoon. Dean, Wilson and McGovern talked in a strange tongue of places like Redcar , Sunderland , Middlesborough and of course Newcastle. Helen Dean is Vera glammed up and she sat beside me for Steph’s session. I have never felt so utterly overwhelmed by female emotional intelligence and what with the Darlington girls , I felt proper put in my place!

Having done time in a field hotel in Hampshire earlier in the week, I felt divested of the entitlement that befell me and invested with a freedom that comes from people saying what they think and putting people not profit first. Thank goodness for that.

I will be reporting more on the various sessions tomorrow morning but this interim report is by way of renewing my press pass for tomorrow. Sadly Guy Opperman is being kept in Westminster for voting purposes and won’t be delivering the keynote. Perhaps I can run a book on who should do the session instead. On the basis of today we should get Gazza along.

I am writing from the press room at the conference surrounded by real journalists like Maggie and john and I feel really priviledged. If you don’t get my credentials – here they are again!

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IFAs are living the life of Woodford

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Having spent nearly 24 hours somewhere in a field hotel in Hampshire, I am seriously worried about the complacency of IFAs. Indulged beyond measure, flattered by the fund managers that pay their bills seem oblivious to the conflicts of interests they court .

An accountant I spoke to over lunch discussed what could dent the complacency that was obvious everywhere I looked. Around one in ten of the guests were women, I don’t think I  spoke to anyone under the age of 50, there was little diversity of nationality or race, this is a club and- from what I could see – an exclusive one.

The trick in selling to this club is to remind them- slide after powerpoint slide – of  how wonderful the club is and how much value it brings to the 6% of the population it serves.

The most extraordinary example of this grievous sycophancy came in the form of research presented by Dimensional, I don’t have the digital slides so you’ll have to make do with photos.

It’s not just the advisers that need stroking, it’s the clients. These results are from the entire survey conducted by Dimensional but it’s possible to break down the clients of advisers between those who are fans (promotors) and those who are more sceptical (detractors).

One of the IFAs in the room thought being totally unaccountable for outcomes a good thing on the basis that “outcomes always disappointed”. In doing so , he neatly turned logic on its head so that the failure of the IFA to meet the client’s expectations became a failure of the client to expect the worst.

But who cares? IFAs have an endless stream of customers lining up to get some peace of mind from knowing what they’ve got, The cost of these financial placebos is a wealth tax equivalent to around 25% of the expected growth on a portfolio, which – since it’s taken out of the investment, means that the outcomes are under-performing of necessity.

Small wonder , those who don’t rate their IFAs are pointing to the state of their finances rather than their “financial wellness”.

And what needed to be said – and was said – was that the highest net promoter scores in financial scores have related to SJP.

A state of torpid complacency

I had thought that the PLSA (which I am visiting next) marked the extremity of self-indulgence but I’m now not so sure.

The ongoing love-fest between asset managers and their distributors – the IFAs – which went on pretty well 24/7 was quite perplexing. I really thought RDR , the retirement outcomes review, the asset management study, CP19/25 and all the other FCA remonstrances would have knocked some sense of pride and integrity into these jamborees, but this is not the case.

It is small wonder that IFAs are so smug and so arrogant on social media. They are fed lies by the packetful – lies are like their pork scratchings, they guzzle them without even noticing they’re being fattened up.

I do actually think that IFAs have overtaken the PLSA crowd for lassitude , indolence and myopia and that is saying something.

But tomorrow is another day and I have still to see the baying institutional hounds in Manchester.

More of this in a few hours time. Now for a read of Robin Powell’s dissection of Woodford, on the day when Link turned against him.



And here’s a golden Oldie that reminds us how it all began!


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Big week for politics – big week for pensions


Things will come to a head this week. For Guy Opperman today will either be the day his Pensions Bill will make it into the Queens Speech or his first term in office will be remembered as “close but no cigar”.

For Boris Johnson this is either the week he gets Brexit over the line or the week he metaphorically dies in a ditch.

Deadlines are like that, they focus the mind and build to an almost unbearable crisis.

Three little ducks…

Three little ducks went swimming one day, over the fields and far away, mother duck went “quack, quack, quack” but only two little ducks came back.

Originally we thought that the pensions bill would enable CDC for the Royal Mail, consolidation for small DB plans and the pensions dashboard for the people.

Rumours have it that “DB consolidation”, the output of the DB white paper, might be dropped, we will have to wait and see.

If we have a pensions bill without a dashboard and a way forward for Royal Mail, I’ll be surprised – and I’ll be disappointed. But as the Pensions Minister pointed out to me recently, decisions of exclusion and inclusion are made beyond his pay grade.

One lame duck

I don’t express my views on Brexit on this blog, but for the process that we’ll follow to implementation or delay, I’m lost – emotionally and for words.

It seems that political expediency is taking over, the process of attrition now means that we are moving towards something that will cause argument whatever it is. If we have a no-deal Brexit, it will be challenged in the court, if we leave with a deal that “betrays” the Northern Irish, we will have Irish trouble and if we delay – as still seems most likely, we will see a large part of the country in uproar.

Here are today’s odds for when Betfair thinks we are most likely to leave, next year remains favorite but not by as much as last week and the odds for a deferral beyond 2022 have lengthened.

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Britain is one lame duck, hardly able to swim and certainly unable to fly.

Meanwhile we get on with it

While all this politics goes on, I have a busy week getting to know what is going on in the pensions industry – not that I’m going to see much industry either at A Meeting of Minds Winning Advisers where  I’m moderating the pension sessions tomorrow or at the PLSA annual conference from Wednesday to Friday where I am independently blogging thanks to the PLSA’s enlightened views on journalism.

This meeting of minds event is “aimed at the Owner/MD of top 70-400 financial advisory firms in the country, who typically have £150M – £200M funds under management and between 4 and 20 RIs.  They represent independently spirited firms prospering post RDR”. I am really interested in IFA views not just on how they can continue to prosper, but as to the challenges they see themselves facing.

As for the PLSA, it’s been over 10 years since I last attended and I’m excited to spend two and a half days with a quite different set of people, see how they are prospering and how they face the challenges to come.

Politics and pensions

If we have a pensions bill, and I suspect we will, it will change the landscape. CDC will re-open the possibility of collective pensions organised under trust, the dashboard will present IFAs with ways of talking to people at retirement without the cost of assembling a dashboard of their own. Both CDC and dashboards involve innovations that may help those facing the difficult choices at retirement while in the pensions equivalent of the straits of Hormuz.


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The best audience I will have all year – thanks CIPP!

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Take a look at the audience above and you will see what I saw when I arrived to speak- not a single empty chair , everyone paying attention and a great gender mix. The Chartered Institute of Payroll Professionals has a right to be proud of itself and of its membership.

Shaun Tetley, a payroll professional from Portsmouth CC organised and compered, EY hosted and the only issue was the number of questions which caused the event to over-run.

I decided – being the awkward pension person squeezed between TPR and HMRC to give the audience a choice – 15 minutes of action or 30 minutes of boredom. Since the latter option meant a truncated lunch-break, the 15 minutes of action was selected.

When you get a really great audience, it is so easy to present, people are listening and you can interact with questions to the audience that get responses, jokes that get laughs and an energy that drives you on. Thank goodness for the people pictured above!

Here are my slides

I was – given the audience imposed time constraints, happy to focus on the topical issues that mattered to the audience.

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I wasn’t surprised that key to payroll were the issues over tax (the AA taper and doctors) and the net pay anomaly.

The next big issue (this being payroll in the public sector) was my thoughts on the various legal cases outstanding for women’s, judges and firemen’s pensions

Finally we talked about the pending legislation that could make a difference to payroll in the years to come.

As I travelled through these topics, I realised that I could have presented this deck last year with the same “wait and see” messaging. In truth – “not having a Pensions Bill 2018” could become “not having a Pensions Bill 2019” and I might be presenting these same slides in 2020!

Although I didn’t get to hear other presentations, I suspect from the audience’s nodding heads that they had got the message that Big Bad Brexit has eaten progress towards social improvements in many areas of payroll beyond pensions.

Payroll – we owe you!

I can’t say that public sector payroll professionals are AgeWage’s target market, but that really isn’t the point. Payroll provides the platform for pensions to work and if we don’t give back for all that payroll does for us, it’s because we like to bite the hand that feeds. Just because it suits us- doesn’t make it right.

Payroll we owe you and I owe you thanks for letting me talk about the things that matter to me. There are over 1m payroll driven workplace pension participating employers in Britain and they and the workplace pension providers need to say thanks too. Payroll is to pensions what water is to agriculture – rarely appreciated but desperately missed when it’s not there.

Payroll gives value for our money – do pensions?

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Boring Money – Extinction Rebellion and Responsible Asset Owners – we cannot go on the way we are.

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Yesterday I was lucky to see the best of institutional and retail financial services.

In Church House, the seat of the Church of England, I saw institutional investors and asset owners renounce green-washing and embrace responsible – impactful -investment with religious zeal.

In County Hall , once the seat of London’s Government, I heard Boring Money’s stellar array of speakers talk of new ways to turn us back on to saving for our futures.

And between them – and best of all – I saw London at one with Extinction Rebellion who danced sang and chanted as I made my way back and forth accross the Thames.

What of course united all three experiences was the universal realisation that something has to change, and that the way we manage our money is part of that change.

I’d like to thank Adrienne Lawlor and Holly McKay for making their conferences highlights of the Autumn, and I’d like to thank all those who are protesting for making it absolutely clear that we cannot go on the way we are.

boring esg

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Extinction , Boredom or Symposium?

Frivolity of fidelity, mindless or mindful – which will it be?

I am faced this morning with stark choice. Do I cycle on the north side of the river to join responsible asset owners and Adrienne Lawlor working out how to do their bit to save the planet.

Or do I stay on the south side and join Holly McKay and the Boring Money team, working out how to extract maximum rents from the wealth of Britain’s middle classes?

My heart is with Adrienne , my head with Holly. Commerce is about wealth transfer and I’m keen to see how the likes of this lot make so much money. There must be value there somewhere.

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I’m pleased that a refund policy is available – but I am reporting on the event so it will only be time spent that I can claim back and I’m sure I will have a good time.

The other side of the river

Those prepared to brave Extinction Rebellion in Westminster can make their way to Church House and listen to the great and the good opine on the great social , environmental and governance challenges we face. They will be sponsored by another bunch of financial worthies

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I haven’t deliberately faded the logos, that’s just the way they appear on Adrienne’s website.

This conference seems to be about a bunch who’ve made it – proving they’ve still got some sense of decency.

Fortunately I have my super-decent COO – Rahul – ready to do some research with the worthies and swap conference with me as we try to make sense of the competing claims for moral and commercial hegemony from these different crowds and sponsors.

Bridging two worlds

I am minded to spend my day whizzing over Lambeth Bridge, waving from my Santander bike at Extinction Rebellion as I try to make up my mind whether money does any good or is just as boring as Holly claims it is.

And somewhere in between these two extremes – I have to speak to my co-workers in WeWork Fore St about the importance to their budding businesses of complying with auto-enrolment and getting value for money from the pension contributions they are making to their staff.

Quite what the average WeWork co-worker would make of either conference, I don’t know. I suspect they would have more in common with the protestors on Lambeth Bridge than either the retail or institutional money men and women.

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Pensions lunch and learn?

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Why innovation in financial services is so tough

tough 2


Today I will be discussing with my team at AgeWage innovation. We are submitting an application for an innovation grant to Innovate UK and we have to determine whether we deserve tax-payers money to take our business forward.

To make that determination we have to work out what is innovative about what we do. I’ve spent the weekend puzzling over why we find it tough to provide people with the information they need to work out if they are getting value for money from their savings and do something about getting themselves a financial plan- an AgeWage for their later life.

The answer lies not in what we are doing, but in what we are not doing. We are not taking a charge on other people’s money and that is what is both innovative and tough to achieve.

Charging other people’s money powers financial services.

At whatever level of the financial services value chain, we see “ad valorem” fees. Ad Valorem is Latin for “to the value” and this phrase has been cruelly distorted so that “value” refers not to the value of service offered but to the value of money on offer. So a 1% fee on £1m is valued at 100 times a 1% fee on £10,000 though the value of the service to the owner of the money may be the same.

So businesses in financial services are valued on the assets under management or advice, rather than on the ongoing value being delivered to customers. This cruel inversion of “value and money” means that it is universally accepted that the wealthier the client , the more valuable he or she is. Meanwhile the vulnerable client – vulnerable because every penny counts, is considered unvaluable (I have just looked up “unvaluable”- it is not invaluable – it is a rarely used word most often associated with obsolescence.

Unvaluable is good

In my – and AgeWage’s world, unvaluable is good. You may not be able to make money out the non-existent wealth of the mass of people who do not hold value to the financial services industry, but we had better not ignore them. The 10.5m new savers brought to the party over the past seven years are unvaluable right now but they represent a powerful lobby in the future and will need help. It is hard to see them wanting to pay the fees levied on the wealthy, that would imply charges on their assets of 10% + pa.

To find a way to treat these customers fairly, to find them ways to find their pension pots, bring their pots together and help them spend their pots as a wage for life, we are going to have to get a whole lot smarter. We are going to have to innovate.

How do you innovate to include the unvaluable?

If you follow my logic , you can understand why financial services in this country is focussed on serving the wealthy 20% and ignoring the 80% unvaluable.

Indeed this is how you run a wealth management adviser,  a SIPP, a  funds platform, a discretionary fund – it’s also how you organise the distribution of institutional funds, you focus on wealth and supply to it and you leave the rest to NEST.

NEST ought to be innovative as it services the unvaluable but it does so with the help of Government money by way of a loan till it has sufficient money to be profitable on the assets it takes a charge over. So NEST – despite looking innovative, is actually reinforcing the classic model, taking money from one big pot and being supported in the mean time from the public purse.

There is an argument that says that NEST’s revenue model is presenting a cross subsidy from rich to poor, the big pots generate fees to subsidise the small pots. To some extent I buy this argument, a flat AMC – which is what NEST will move to once it has paid back its debt some time around 2040 will allow it to ditch the contribution charge. But NEST needs the public leg up it is getting till it gets to this happy position and that is why it has to have recourse to over £1bn of public money in the meantime.


Which brings me on to why AgeWage needs such recourse too!

I am not looking for a substantial grant but I do need money to build AgeWage. That money has so far come from my pocket and from the pockets of our 500 investors. We will need to raise more money from the market and if we do not raise money from Innovate UK, we will accelerate slower.

Time is of the essence, the decisions being taken by people retiring today do not fill me with happiness. We know that many people are needlessly cashing out their pensions and drawing down on their bank accounts, others are reinvesting in the wrong kind of funds – many of which will fail. We can see these investments by looking at the numbers published by the ONS and FCA. It is important that we get good quality information to people so they understand value for money, take better decisions and live richer more fulfilled retirements on the back of greater financial securities.

We are five years into pension freedom and we still have not found a way to properly help people – other than the wealthy – with their at retirement decision making.

Data management not money management


AgeWage is a genuinely different financial services company because it works to a different model. It sells information into the financial services eco-system and is rewarded for the use it makes of data – not of other people’s money.

Data processing is what AgeWage does, it is at the heart of its manufacturing capability and it gets paid for the results of that data processing. We are paid for the fruits of our algorithm , our ingenuity and our understanding of what the market wants and needs.

But we are very far from being successful, we are only just taking our first revenues and we will not be profitable for some time to come. We need the financial support of the taxpayer every bit as much as NEST and we need the support of organisations such as NEST as well.

If we are ever to move away from the traditional “ad valorem” model that takes a charge on wealth, we are going to have consider data as a commodity as valuable as money. This is accepted in other parts of the fintech world but not yet in the part I serve. I will need to go through the tough task of getting data processing valued, a process that I know my friend Will Lovegrove has trod.

Will’s PensionSync has done much to make auto-enrolment work and he should be applauded. He is currently enjoying some respite from his work as an entrepreneur , thought leader and data scientist.  I willingly sit at his feet and learn.

Tough on our customers too

Just how hard it is to run a data processing business in a world dominated by money managers is evidenced by the time it takes AgeWage to get the data from the insurers, SIPP managers and occupational pension schemes which hold both our data and our money.

This is the challenge for the pensions dashboard too.

But people demand to know who has their money, how it has done and they want to know how they can have their money back under their control so ultimately they can spend it on themselves and their families.

It it really tough on savers reaching retirement today that they find it so hard to get the data they want processed, into our hands so we can convert it into AgeWage scores.

Showing how hard it is , is part of the proof of our concept. Things will only change when we find ways to move information around the pensions eco system using the dashboard functionality to kick this off but developing a world of open pension data standards subsequently. These standards should start with a simple data request that is universally accepted under an e-signature.

We apologise to our customers for the time it is taking to assemble their AgeWage dashboards – but it should be the providers who should really be apologising!

With one or two notable exceptions the financial services industry, the pensions savings industry especially, is not ready to move to a data rather than an asset management model. Data is static, unavailable and still considered the property of pension administration teams.

Changing that will be the start of breaking down the hegemony of wealth and democratising financial services for the masses who have little or no control of their savings and little or no access to the guidance and advice they need to manage their finances in later life.

tough 3

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A pensions dashboard really would help



With a Queens Speech and a pensions bill only a week away, it’s timely of the Times to publish research from Ipsos Mori on the plight of UK retirement savers trying to keep track of their savings.

This piece is by Kate Palmer, one of a number of young female journalists explaining pension problems properly.  Her point is that it’s not just those in their 50s and 60s who lose track of their savings, it’s all of us.

A quarter of workers say they have lost the paperwork for private pensions they have saved into at previous jobs, and 13% say they have forgotten how to log in to old workplace schemes online, according to a survey of British adults by Ipsos Mori.

The number of lost private pensions surged to 13.6m last year, according to the Office for National Statistics — a 17% annual increase. These so-called “preserved pensions” are usually held with former employers.

A quarter of the 1,102 workers surveyed by Ipsos Mori said they found it difficult to keep track of their various pensions because they had changed jobs so many times, while 21% said that they encountered problems in keeping up to date after moving house.

Some 8% of savers said they had no interest in their pensions.

A government project in development, the pensions dashboard, is intended to help savers keep track of all their pensions in one place online. However, it has been delayed by technical issues and the all-consuming preparations for Brexit.

Pension providers have complained about delays to the dashboard’s launch, which was originally planned for this year, saying that they do not know what information they might need to share and who will be responsible for keeping people’s data safe.

The Department for Work and Pensions (DWP), which is in charge of the project, has already warned firms that it will have to ask them to share data voluntarily, because it has not yet created rules that will mandate providers to share it in time for the launch. The DWP is still setting out a timetable for the project. It said it intends to introduce the dashboard at the “earliest possible opportunity”.

Younger savers are most likely to support the long-awaited scheme, according to Ipsos Mori’s research. Nearly nine in 10 workers aged 18-34 said a single online system where they could see all of their work pensions in one place would be useful, compared with two-thirds of savers overall.

In general, younger workers are more likely than older generations to shun the idea of a “job for life” and may have many different pension pots — and more accounts to lose track of — by the time they retire.

“The number of people with multiple pensions is only going to grow,” said Joanna Crossfield of Ipsos Mori. “A dashboard is clearly seen as a way to make keeping track of these easier.”

She added: “People already find pensions complicated and overwhelming. A dashboard must help to address this rather than add to it.”

Talking on Friday with the dashboard/s new principal, Chris Curry,  I sense a new pragmatism about dashboard delivery. There is no doubt the public don’t just want- they expect – a dashboard soon, but – as Kate and Ipsos point out, it is the capacity of the pensions dashboard to help us track down lost pensions that is what we most want and anticipate.

While I can understand why many pension providers are nervous about publicly displaying  personal  data – I can see no argument for any provider not to subscribe to a national pension finding service that links us to our pensions history.

I for one, are fervently hoping that we have a Queens Speech , with a pensions dashboard in it, that makes the nation’s hope a reality.

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Do employers have a responsibility for pension outcomes?

Have to – Need to – Good to

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The employer’s view of workplace pension governance


At AgeWage we define “responsibility” in three ways, – “have to” – “need to” and “good to”.  Employers do not have to assist members in getting the most out of their workplace pension, they may feel they need to – if only to get shot of them – and a few employers feel a moral impulsion that it would be good to help staff as best they can.

So employers have no responsibility for staff’s welfare post retirement and most employers shy away from taking it. More than 1m employers offer workplace pensions in the UK and those that take the workplace pension seriously is – according to research by Pension PlayPen, around 15% of that number. But this hardcore of employers see pensions as part of a reward strategy, rather than just compliance with pension law.

AgeWage was formed to meet the needs of employers who want to know the value they are getting for the money they are putting into pensions. We do not – as our sister company Pension PlayPen does, look at subjective elements of workplace pensions – the payroll interface, at retirement service or scheme governance ((important as these are). We focus instead on the value of each member of staff’s pot relative to the contributions paid and the timing of those contributions. Once we have measured the member’s internal rate of return we compare it with a benchmark , created in association with the ratings agency – Morningstar to give each staff member’s pot a score.

Employers can see the scores of staff (usually anonymised) and see average scores for their scheme. This management information enables them to assess whether the scheme is working better or worse than average with quantitative measures that cannot be challenged by providers. We have found many reward departments need to do this measure how their reward strategy is doing and this scoring system is preferred to the opinion of a consultant. The scores are factual

If employers think it “good to”, they can allow members access to their individual scores . There is of course a risk to this, some employees will find their plans have delivered low scores. Typically this will be because they have chosen their own investment strategy which has underperformed the average but sometimes this may be down to bad luck- the timing of a lump sum investment such as a transfer, or bonus sacrifice that was invested on the wrong day.

We appreciate that many employers will feel that the transparency that the AgeWage scoring system offers – is too much of a risk and may not offer staff access to their own scores but we believe that progressive employers will not just offer staff scores but offer the support needed to explain them. AgeWage is planning to deliver this support service as the next stage in its development.

Providing outcome based reporting to employers is still in its infancy, but as workplace pensions grown in value, so do their importance to staff’s financial planning. So AgeWage has a great future ahead of it!


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What are deferred annuities and why do they matter?


Cooper and Cumbo – Aussie dream team


It takes skill to write so much in so few words – congratulations Jo Cumbo -thanks to Jeremy Cooper for the numbers. There is nothing to beat some Aussie straight talking and with the ashes lost to us for another years it’s good to see you putting something back!

Three reasons why deferred annuities matter in the UK

The tweet tells us what a deferred annuity looks like but why might it matter? Here are some simple suggestions.

  1. Peace of mind

Most of us have DC pots but few of us know how long they’ll last us if we go down the drawdown or UFPLS routes. A deferred annuity is a “backstop” – a word we all understand through politics.

In the best scenario where we are living longer than we expected, the worst scenario, our money running out before we do , is avoided, the deferred annuity is a pure insurance against us living too long and knowing the cost of that insurance when we are in a position to pay the premium is very helpful. For many – purchasing deferred annuities could provide peace of mind,

      2. Understanding difficult choices

The second reason why deferred annuities are helpful is that they help us understand the choice architecture we’re presented with at retirement. The binary choice of annuity v drawdown will not be supplemented by a third choice – say CDC – within the “time to choose” of the current cohort approaching decision time. Even

For most of us, the opportunity of having this risk covered involves buying an immediate annuity today, sadly the deferred annuity market in the UK isn’t well formed, there are only one or two insurers offering rates , but demand may grow. Even if a deferred annuity isn’t purchased, a rate for it is helpful for those trying to make decisions about the future.

Whether those decisions are taken with an adviser or not, deferred annuities can help us make the right decisions.

  3. Building certainty into drawdown choices

I am not the first to point out that deferred annuities could be packaged into drawdown products to provide an alternative to pooling mortality risk.

Though I prefer the pooling of CDC, I understand the arguments put forward by organisations such as Alliance Bernstein and Salvus for a hybrid DC plan which depended on an insurance company guarantee paid for out of tax free cash or a reduced drawdown.

A pragmatic solution of a Faustian pact with insurers?

It is interesting that what Jeremy Cooper chose to talk with Jo Cumbo about was the difficult issue of longevity. The Australian Super system’s weakness is that it confuses wealth with retirement security. A wealthy Australian in his sixties can die in a ditch in their nineties and their Government knows it. Ultimately the only insurance older Australians can rely on is social security and this implies an intergenerational transfer from young to old that is precisely what critics of collective DC plans find so unacceptable.

The deferred annuity system is not so accurate as pooling within a CDC scheme , it has weaknesses – insurers need to reserve and provide a margin for their shareholder. The opportunity cost of investment lost would be considerable and – as mentioned- there would need to be a lot more insurers prepared to offer rates before a deferred annuity system got traction.

But if we are ever to progress financial security for those worried by annuities and drawdown, if we are to take informed choices on how to use conventional products and if we are find new hybrid products which can be brought to market without new legislation, then deferred annuities may be the best answer.

New choices for the Pension Plowman

This is one of the first blogs I have written since leaving First Actuarial on October 1st. I have not written about alternatives to CDC before now, out of a sense of solidarity with my previous employer and CDC remains my preferred solution for those who cannot choose or do not want to choose how they provide themselves with a wage for life.

However, I do now feel I have greater scope to look at other alternatives and intend to do so. If any of my Australian readers can provide me with more information on how the Australian market for deferred annuities is developing – I would be very interested to read it!

jeremy cooper 2

Oo Jeremy Cooper

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

Prudential’s seal-clubbers still at large

seal clubbing

Back in 2011 I wrote about seal culling.

Seal culling;- the practice among financial institutions of providing sub-standard products to existing customers rather than treating them fairly and ensuring they are made properly aware of alternatives.

Have you been culled? To answer that question you need to have a degree of awareness of what you’ve bought and in retrospect, the reason you bought a sub-standard product.

If you are a pensioner, you may well have bought an annuity from an insurance company. You may have bought wisely, used the Open Market Option or better still considered all the retirement income options available to you.

More likely, you didn’t and if you took the annuity offered as the default option from the insurer who ran your pension plan, you may have been that seal.

I’m not ambulance chasing here, though I hear the sirens getting closer. The more that insurers and their trade body the ABI get angry when I mention these things, the more I fear a seal cull  has occurred.

Yesterday, the FCA caught up with the Prudential (Standard Life were collared earlier in the year).

People who were mugged, clubbed and culled in the first decade of the millenium are perhaps going to get compensated for being financially mistreated by institutions that knew better and chose not to treat their customers fairly.

man from pru

The man from the Pru- now happily retired?

FCA fines Prudential £23,875,000 for failures relating to non-advised annuities sales

But as Alan Hughes of Foot Ansty, points out,

Most of the ‘relevant period’ during which the breaches took place was before the Senior Insurance Managers Regime came into effect, which may be why there is no indication of action against individuals. If the same conduct were to take place now, the senior managers would perhaps be having very uncomfortable conversations with the enforcement team…

The people who we knew then were at it, are gone and it is the Pru’s shareholders who pick up the tab today. The fine is less than 10% of the estimated redress.


The Prudential was found by the FCA to have created the wrong culture within its organisation

Prior to 2013, the risks created by a lack of appropriate systems and controls were increased by sales-linked incentives for call handlers and their managers which meant that call handlers might put their own financial interests ahead of ensuring fair customer outcomes. Call handlers were incentivised by the possibility of earning an additional 37% on top of their base salary and winning prizes such as spa breaks or weekend holidays.

The Prudential still boast of their motivational skills today

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A long time coming

The fine and redress should be no surprise, the Prudential knew this was coming and there was provision in this year’s accounts. The cost of restitution will not be cheap, nothing guaranteed is – except perhaps the behaviour of the seal-clubbers whose actions have sold a generation of retirees short and left annuities with a bad name.

Shame on the Prudential and shame on Standard Life who picked up a similar fine for similar practices earlier in the year. You knew what you were doing and you made anyone who pointed out your practices at the time, feel very unwelcome.


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TPR moves on climate change

Keeping the world fit for its inhabitants is not something for other people to do, it is our job – all of our jobs. So it is entirely proper for the Pensions Regulator to make the sustainability of our planet’s eco-system part of their regulatory function.

I was sceptical about tPR’s commitment to this until I heard this excellent presentation at Minerva Manifest’s excellent workshop on ESG. The workshop came days before an important report on the changing attitudes of investment managers to Environmental Social and Governance issues.

There is currently a disconnect between what asset owners (you and me) want – (a cleaner planet) and what we do with our money. We simply don’t realise the power of our money to do good and allow it to sit in investment funds with no clear guidance to our managers about how we want it invested and how those investments be governed.

But when it is put to us that we have the power to vote the shares we own, at least by choosing the people who manage our money, many of us get very excited. Just watch this video to see.


Hopefully, it will not be long before we see investing as part of our business as usual social responsibility, like putting the glass in the glass box and the plastic in the plastic tub.

But to get us there we need politicians and regulators to make it happen. So please read through the presentation and have a think about it!

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Should DC investment strategy be driven by pot size?

The FCA’s latest market data was published last week and it’s highlighted trends that I’ve been identifying on this blog for a few months.

  • Just over 645,000 pension plans were accessed to buy an annuity, move into drawdown or take a first cash withdrawal in 2018/19.
  • 4 in 10 of all the pension pots accessed had a value of less than £10,000.
  • Over 350,000 pension pots were fully withdrawn at the first time of access; 90% of which were less than £30,000 in value.
  • 48% of plans were accessed without regulated advice or guidance being taken by the plan holder. 37% of plans were accessed by plan holders who took regulated advice and 15% by plan holders who did not take advice but received Pension Wise guidance.
  • 40% of regular withdrawals were withdrawn at an annual rate of 8% or more of the pot value.
  • Pension providers covered by our data return received 57,000 defined benefit (DB) to defined contribution (DC) pension transfers.

These are the highlights but there will be great interest is in the detail.

Look at those big blue lines – they represent people cashing out  8% or more of their plans. In practice this is not pension planning but short-term cashflow management since this level of income is unlikely to be sustainable for life.

It confirms that for most small savings pots, the conventional investment strategy known as life styling is unsuitable, perhaps we should accept the conclusion of the graph, that it is only when pots are larger than £100,000 that the majority of people try converting “pots to pension”.

How long before lifestyle designs are driven by pot size?

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Even more importantly – with investment pathways less than six months from introduction, shouldn’t we be recognising that advice is also driven by pot size.

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I am not convinced by the bar chart above, especially with regards the impact of Pensions Wise – which appears inflated. I’m also unsure how the annuity market is analysed. In my experience, most annuities aren’t bought with advice but the expertise available from annuity brokers make these purchases “informed”.  Compared to the “fully withdrawn” box, I suspect that those purchasing annuities are making informed choices which while not “advised” are likely to be less problematic.

A much better correlation between pot and the take up of advice can be garnered from this chart

Screenshot 2019-09-28 at 06.57.46

If we take drawdown as a proxy for “advised”, we can see that advice becomes popular only when there is sufficient money in the pot to warrant of pay for it. As we know, most advisers are suffeciently busy to focus on “wealth”, normally associated with assets of more than £250,000, while pension wealth can be spread over several pots, it’s clear that pension (as opposed to cashflow) management , is the privildge of the better off.

The FCA are surely right to look at investment decision making through two key lens’.

The first is the lens of decisions taken

Screenshot 2019-09-28 at 07.07.28

The vast majority of pots are being cashed out because they are not being considered pensionable. This is the social issues


The second relates to the value of assets which go from pots into their various buckets.

Screenshot 2019-09-28 at 07.05.40

By contrast – economic consideration would suggest that drawdown is the most relevant of the investment strategies.

The socio-economic argument may be to focus investment pathways on cashflow strategies (eg meeting immediate financial needs) for  those on low incomes (encouraging sound financial management). For those with larger pots, the pension strategies of drawdown , annuities and UFPLS are most relevant.

I suspect such a blatant segmentation around savings levels will be considered discriminatory but I would regards it as realistic. The FCA have landed on the key metric.


Pot size may well be the best determinant of investment strategy

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

Pension news, for NOW, Widows and the Dashboard!


Restoring confidence

I’ve been pleased by a lot of pensions news this week, including the master trust authorisation of the Scottish Widows (formerly Zurich) master trust and – more importantly NOW’s master trust. The latter is especially gratifying as the millions of members , thousands of employers and hundreds of NOW staff depended on this news for future certainty. Well done to NOW and to new owners Cardano for turning this situation around.

Good news for choice

The retention of all the major master trusts through the authorisation process is important for the reputation of workplace pensions and for choice and competition. Had we no choice we would of course not need a pensions dashboard, we must remember the original conception for auto-enrolment was for a singe provider – NEST. While NEST is a great success, it is challenged not just by other master trusts but by contract based plans from a variety of insurers and the odd SIPP provider.

Choice means variety and that presents us with the challenge of seeing our various pension pots  (both workplace and non-workplace) in one place. That is what the pensions dashboard is designed to do and that is what it will do – in time.

Dash back in the dashboard

It is taking too long to bring the dashboard to the people but when we see positive steps, we should applaud them. The appointment of Chris Curry as the Principle of this group was a positive step and the announcement yesterday of the dashboard ten – the steering group that will oversee the development of the dashboard is another positive step. I am really pleased to see that the Government has gone beyond the obvious representatives (ABI, PLSA, PASA and included people whose businesses are or have been based on the new technologies that underpin open banking . Step forward Romi Savova of Pension Bee, Samantha Seaton (MoneyHub)  and Will Lovegrove (formerly Pensionsync).

The full list of those on the group – plus biographies is available here.

Screenshot 2019-09-26 at 06.31.52

A proper steering group

There is nobody on this list that will not add value and it’s great to see people like Andrew Lowe and Dominic Lindley included as practitioners working for firms active in third party communications and employee communications. Yvonne Braun represents the insurers, Kim and Nigel occupational pension schemes standards while Dominic Lindley and Paddy Greene are championing the consumer.

This is a thoughtful, inclusive and bold list that I hope will speed up the delivery of the dashboard. If this is the first product of Chris Curry’s tenure, then it bodes well for the future.

In a separate blog, I have published the thoughts of Romi Savova on what should happen next. On these matters I take my lead from Romi and her team. Her contribution so far has been outstanding, her clear thinking and progressive approach to the delivery of technology will be particularly welcome going forward. She understands the problems of finding pensions better than anyone.

Will Lovegrove and Sam Seaton’s skill sets will be especially felt in part two of dashboard development when we move beyond finding pensions to integrating the pensions eco system so that we can see not just what we’ve got but how it’s doing.

A note on my recent blog on scamming the regulator

I know that some readers have tried to find this recent blog and found it is now password protected. I have been approached by the CEO of one of the companies mentioned who has asked me to take it down. I am currently not in a position to fight legal battles but I stand fore square behind the blog . If you would like to read it, then please explain why by dropping me a line on henry@agewage.com and I will provide the password


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We can have venturous investment within the pension charge cap


Schiehallion from Kinloch Rannoch

I’m a big fan of the British Business Bank (BBB) which helps start-ups like AgeWage organise the money to get them up and running and helps them grow.

I’m also a fan of their idea of making workplace pension work as hard as we do, by allowing them to invest in businesses like AgeWage.

The FT reports this morning that a cap on workplace pension charges should be adjusted to unlock the potential of “significantly” higher returns for younger savers from investing in riskier start ups.

Quietroom, Ignition House and Agewage research suggests that young people would be only too pleased to see their workplace savings invested for social purpose and they’re keen to know just how their money is working for them. Recent research in the UK by Investec and in Holland by ING  suggests that people would be prepared to accept lower returns to invest for good.

So I’m comfortable  with the report’s proposal to test the current 0.75% charge cap on workplace pension defaults  to account for carried interest, if this could accomodate investment in venture capital.

But I’m not so sure that this means scrapping the 0.75% cap and giving VC managers freedom to charge what they like. Savers can have their VC within a 0.75% framework and do not need to accept the pricing structures traditionally offered by venture capitalists.

The way venture capital (VC) managers want to take their fees is on a performance basis where they take a 2% charge on money invested and then 20% of any returns above an 8% hurdle rate.

The analysis in the BBB’s report which suggests a breach of the cap is possible assumes no fee reform whatsoever on the part of the VC manager.

It suggests they will continue charging a 2% base fee and 20% of all returns above a hurdle rate of 8%. It also assumes that a controversial structure known as “catch-up” will persist. This gives the VC manager 100% of all returns above the hurdle rate until the manager has gained 20% of all the returns.

This may sound a little confusing. So by way of example:

  • Gross returns 6% – manager gets 2% scheme gets 4% [below the hurdle]
  • Gross returns 8% – manager gets 2%, scheme gets 6% [right on the hurdle]
  • Gross returns 10% – manager gets 4% scheme gets 6% [manager has taken additional 2% to ensure they get 20% of all gross returns]
  • Gross returns 12% – managers gets 4.4%, scheme get 7.6%
  • And so on.

So returns need to be 13-15% before scheme even gets something comparable to target returns for listed equities, and significantly higher to get something comparable to small cap equities (which deliver higher returns, but at higher risk).

If the venture capitalists think they can simply shoe-horn their products into workplace pensions at current margins, they should know they’ll face considerable opposition from consumerists.

A better way?

As an alternative,  the report quotes the Baillie Gifford Schiehallion fund, which charges 0.75-0.85% with no catch up and no performance fee.

If the cost of running a workplace pension platform is taken to be 0.15%, then accommodating this expensive product into workplace pension defaults at the BBB recommended allocation  of 5% over a savings lifetime could be easily accomodate within the 0.75% cap with no risk of breaching the cap through performance fees.

The problem for workplace pension managers is that their current budget for investment fees is so low that even a modest 5% allocation will eat into margins to a level that might upset shareholders and the financial projections given to the FCA/tPR within the fund’s business plan. I think it unlikely that most workplace pensions could absorb this extra investment cost without pushing up headline prices

Is there scope for a “pass on” in terms of increased fees? Almost certainly yes. The fund costs of both NEST and NOW are currently 0.3%, People’s Pension offers an all-in cost of 0.5% and many of the insurers offer group personal pensions competitive with these prices , there is certainly headroom to offer defaults within the cap by putting up prices.

Is it fair that people pay more for more- on any money-worth scale the answer is yes! The BBB (which is Government backed) say in their report that

“Given the historical outperformance of VC/GE [growth equity] investments, there is significant potential for defined contribution (pension) schemes to improve outcomes for their members by investing in the asset class”

and quantify the potential upside of the proposed 5% allocation as an improvement in member outcomes of 7-12%.

But of course those 7-12% savings could easily be eroded by fees which transfer the investment risk from the VC manager to the member.

If we are to have VC in our workplace pension funds, and – like Mick McAteer, I think we should, then it is going to have to be on terms that are fair to both investment manager and member. The traditional 2 and 20 structure modelled in the report is not a structure that should have any place in a workplace pension. The simple charging structure offered by Schiehallion is much more suitable to the simplified world of workplace pensions.

So reform not only can happen – reform is happening and it is now up to workplace pension providers to manage the fees they have to absorb down and to communicate with trustees , IGCs and ultimately employers and members, why headline prices have to go up to accomodate a true increase in value for money.

There is absolutely no need to change the charge cap to accomodate a 5% allocation to VC, there is an absolute need to change the way that VC managers think about risk and margin.

Thanks for help from my friends on the pricing research in the middle of this blog. Thanks to the Scottish Highlands and Schiehallion for a lifetime of holidays!

Posted in advice gap, age wage, pensions, workplace pensions | Tagged , , , | 1 Comment

The politics of CDC

This morning I should be attending the CDC fringe meeting at Brighton’s Grand Hotel which forms part of the Labour Party Conference. If I can’t – I send my apologies to Royal Mail, CWU and the Shadow Pensions Minister – Jack Dromey who is chairing the event.

CDC is hardly top of the political agenda but it remains one of two matters in the Pension Bill that should be laid before parliament on October fourteenth – the other being the Pension Dashboard.

That it has made it this far is principally down to a deal struck between Royal Mail and CWU which averted a damaging pension strike and has led to some commentators heralding a third way for Britain’s workplace pensions. I think that third way is a cul-de -sac but that CDC is critical if we are to resolve the puzzle of our wanting to freedom to spend our retirement money as we want and our deep-rooted insecurity when faced with losing income in later life.

Why CDC isn’t proving popular with unions

The original concept of a CDC pension assumed that savers would build up rights to a collective DC fund which would be returned to them as a wage for life once they reached the tipping point known as retirement.

Such an idea works well where there are stable workforces that work together, save together and retire in an organised well. Royal Mail is one such workforce but it is unusual in Britain today. Increasingly workforces are fragmented , job turnover high and the concept of retirement is less rigid. Many of us will never see a retirement date.

Where the labour conditions persist to encourage collective provision, defined benefits also persist. Local Government provides our largest ongoing funded DB plans but the scale of provision is dwarfed by the promises to teachers, doctors, nurses, firemen and other public servants that have no fund but rely on the ongoing support of the public. The only large private sector DB schemes still accruing are quasi public – USS and Saul.

Understandably, members and their representatives of these large schemes see CDC not as a help but as a threat to the guarantees that sit within their pensions. Until they are prepared to give up their guarantee of a pension for a guarantee of a contribution, there will be no appetite for CDC from the members of occupational DB plans. Without the support of both unions and employers – it is hard to see CDC being established as a DB substitute.

The lukewarm reception amongst unions to CDC is based on a perception of CDC as being a trojan horse by which employers walk away from all responsibility for member outcomes. I think the unions are right to think this way.

Why CDC isn’t popular with employers

There is little appetite amongst employers to establish CDC as a means of upgrading DC plans along the lines of Royal Mail. Employers will not take on any risk of being perceived as insuring their staff’s longevity by way of a wage for life and – try as we might – those who advocate CDC cannot wipe out the concern employers have that it is they and not their pension scheme who will be the insurer of last resort – if CDC goes wrong.

It is fruitless arguing to employers that CDC is a DC upgrade when there is no pressure from employees to have anything better than what they currently get – DC workplace savings schemes.

No matter how progressive you are as an employer, you would only follow Royal Mail if there was considerable support for CDC from unions and staff. More precisely, CDC is only likely to be delivered though workplace under the threat of industrial action. There are not enough employers and workforces like Royal Mail to make the large scale introduction of CDC as a workplace pension , a reality anytime soon.

Why CDC will only happen when people have had enough.

I predict that the current choices available to ordinary people at retirement are insufficient and will grow increasingly unpopular. Annuities, Drawdown and Cash-Out are all problematic in the way that drawing a scheme pension wasn’t.

CDC’s main virtue is that it is a painless, hassle free way of getting paid a wage in retirement and depends not on IFAs or financial acumen but on rules that – properly followed- should lead to better incomes than can be drawn from any of the options currently available.

CDC’s future  is as the back end of DC plans – especially master trusts which bring together large numbers of savers through many participating employers. These master trusts need not act as individual DC savings plans while people are working, they can be converted into DC pot spending plans, when those people stop working.

Put simply, CDC has the potential to be the default at retirement choice for people with money in a DC savings pot.

When people collectively throw up their arms in frustration and point to the paucity of choice in the “freedom of choice” world – created by George Osborne, then it is time that their collective voice is heard . listened to and answered.

CDC and the political agenda

Any politician with a progressive political agenda should be looking at CDC. Royal Mail has opened the door but not to employers. It has opened the door to the large commercial providers that run workplace pension schemes – including its own provider- NEST.

These providers have currently come up with no coherent way of helping people at retirement and still rely on referrals to Pension Wise to dump the problem of what to do with the savings on someone else.

These providers are beginning to see CDC as a commercial opportunity to manage people’s in retirement savings for longer – indeed for ever.

The political agenda for CDC lies in linking supply (these master trusts) with demand- the increasing frustration people are having with converting their pension pots into lifetime income.

Unions would be much better off thinking of CDC as solving individual problems than worrying it might corrode DB.

The Labour Party should this morning be discussing how it can mobilise the silent majority of those retiring today behind the ideas of collectivism inherent in CDC.

There is no reason why political support for CDC as a way of spending DC should not achieve cross party support. The Liberals supported CDC in their previous manifesto and Guy Opperman has given it the green light through getting CDC into the Pension Bill.

But for CDC to become popular, it must be explained to the public as solving a problem. The problem CDC solves is not ” DC workplace pensions” where the saving is going fine, nor DB pensions where the issues of affordability will only be muddied by CDC.

The problem CDC solves is how ordinary people can convert their DC savings pot into a pension. CDC may not be the perfect pension , but it is better as a mass market default than cash, annuity or drawdown.

Once that message has been heard, listened and acted upon, CDC can stand at the heart of the pensions agenda. Till it does, I fear CDC will continue to be discussed at fringe events.

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Is your pension due an upgrade?


In the relentless pursuit of new business, insurance companies and other financial institutions involved in the commercial marketing of pensions , have focussed on the new customer or the existing customer increasing his or her savings. It’s not hard to understand why, everyone from the CEO down is rewarded either directly by the shareholders or by performance-bonus structures on growth.

Past wonder-products meanwhile languish, often sold to consolidators such as Phoenix and ReAsssure or managed in separate units, quarantined from the latest developments and labelled “legacy”.

The reality of product management today is very different from the promise of product management made to savers in the fifty years since pension savings products became mass market in the early seventies.

We have become used to upgrading legacy products. For instance if you have a hotmail account – you can upgrade to Outlook easily and for free.


This article looks at what has happened and what could happen, and asks just how easy it is to upgrade your pension to one fit for today’s purposes

Shouldn’t all customers be treated the same?

The idea of upgrades is to make available to loyal customers the best service provided by the organisation they purchased from. All customers should get the same value for money or “moneys-worth”.

Not all legacy products offer customers poor moneys-worth. If you got lucky, your policy might offer you valuable features guaranteed by the original policy conditions. These might include a guaranteed annuity rate and loyalty bonuses. At the other extreme, the product may deteriorate rapidly if you cease making payments or draw your money before the end of the contractual term.

These legal conditions do not however govern the provision of advice on the product. Despite insurers agreeing to pay commissions – which could be as much as everything paid into the policy in its first year- to financial advisers who recommended and help set up the product- the insurer had no responsibility for the service offered by that “adviser” who typically was never seen after the original sale.

The cost of using these advisers did not fall to the marketing departments of insurers but was passed on to the customer. So products that were bought with advice had the cost of the advice paid for from the policy, the impact of which is experienced today. Many insurance companies offered the product on commission free terms – provided the adviser was prepared to forsake his commission and we can see the impact of the enhancement in today’s pot value by comparing the returns achieved on the commission free and the commission loaded policies over time.

Research we are doing at AgeWage shows