Is Direct Investment the way forward for pension savers?


It’s a third of a century since Sid spread the word about the bargain of buying British Gas shares.  The dream of a shareholding democracy flickered, spluttered and was finally snuffed out by funds.

Nowadays – direct investment in the shares of British and overseas companies is restricted to a few sophisticated investors who know what they’re doing, not the mass-market pre-occupation of the silent majority. There was a time – but the time when most of us owned shares directly is long gone.

Sid did well

Sid was born out of the privatisation of British Gas, Telecom and a number of other large state owned enterprises – which were thought would be more enterprising under private owners. So it turned out to be and by 2011 the Guardian was telling Sid and others

“Investors have actually done very well out of this, making 12 times their original stake if they have held onto their shares over the years,” he said. “A lot of people know they have the shares, but may not realise their worth. When people are trying to make ends meet, they might want to look out their certificates.”

Following later demergers and mergers, someone who bought shares in the initial privatisation could now hold shares in three companies, Centrica, BG and National Grid.

Not only could Sid see the Centrica vans and watch as the National Grid pipes were dug in, but he could sell his shares with clear instructions and pricing. The Guardian told its readers

SimplyStockbroking would charge investors £8 to sell shares through a nominee account, or 1.25% of the value of the stock (minimum £12, maximum £40) for those in certificate form.

The process should take about 10 days from the point of applying to sell the shares to getting money in your bank account.

But Sid never got involved in pensions.

If Sid had been investing a decade later, he could got his personal pension to buy his shares or he could have invested them into  his PEP (the forerunner of our ISA).  That might have saved him a little tax and helped him resist the temptation to sell his shares for a quick buck.

But the kind of personal pensions being sold (by people like me) in the early 1980s were not for Sid. If Sid wanted a pension , he joined a big company and made sure he hung around long enough (five years back then) to make sure he got a promise that would be paying him a monthly income today.

Sid went viral because of that postman, he’d probably be getting a Royal Mail pension today. The postman did not have to think about investing for his retirement then (and thanks to CDC should not have to think about it today). But Sid probably does.

Sid’s pension today

Sid – the ordinary bloke – is now in a workplace pension. Unless he works for the Government, that pension’s building him up a pension pot and is invested in funds.

Sid doesn’t know what the pot is invested in, it could be Centrica or National Grid. Infact Sid has probably never given his investment a moment’s thought. Like some of  these people.

These people generally haven’t been told where their money is going. If they could do some research they might find out their money was invested in funds but just what their funds invested in would be a mystery. Instead of getting a clear instruction – as the Guardian was giving – of how to turn funds into money, people are generally unaware of how they get their money out of a pension.

Poor old Sid. 33 years ago he was buying and selling shares and today he is being auto-enrolled into funds he doesn’t know anything about.

“Funds” have got some explaining to do.

I read during the week an article in one of the trade papers which had a video of fund managers telling each other that the Woodford thing was a lot of fuss and bother over nothing. It made me smile to see their complacency.

I don’t think the public are complacent about funds, I think they are beginning to ask some questions about these funds – which don’t tell them where their money is invested and make it hard for them to get their money back/

The people who manage these funds need to be very careful. Not only are people a lot more interested in where their money is invested (see video) , but they are not at all pleased to hear they may not be able to get their money out of these funds as easily as they supposed.

Were they to be given all the facts about the money taken out of their funds to pay management fees , they’d be even more fed up. The biggest howl of anguish over Woodford is at the news of how much Woodford is taking out of the fund to pay for his services. When they see the amounts going out of the fund, they object.

Woodford may be an exception, but to the general public, he is the one fund manager that everyone’s heard of and he represents fund managers much more than Mr Cummings at the Investment Association.

We live in a sophisticated technological world

Whether fund managers like it or not, people are going to carry on asking awkward questions about where money is invested and how much it’s costing. They are going to want to get rather better answers than they are getting at the moment. They are going to want to see their investments as Sid did and to be able to get their money back as Sid did.

They are going to want to be able to use their phones to find this information out and they will want to use their phones to change things if change be needed.

We live in a sophisticated technological world where  – should fund managers not step up to the mark – those people who understand what users want – will give them it.

Direct investment – avoiding funds – may be just what people want.


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

Preparing for getting old


I am glad that I took some time out to listen to  and discuss with some great women what it means to get old. The occasion was the Pension Policy Institute’s launch of Living Through Later Life which you can read from this link. It was also good to talk with David Yeandle about growing old with MS. The first lesson I learned from the afternoon was that it is best to talk about these things. As the ads affirm, it’s good to talk about money and how it supports us as we become increasingly frail. And it’s good to find the right words to talk about the process that has us move from independent living, through cogitative and physical decline into dependence. We agreed that “Frailty” is a better word than decline.


Screenshot 2019-07-18 at 06.06.24

Women to the fore

It was over an hour into the seminar/workshop that we heard our first male voice and that only a question to the all female panel.

The event was chaired by Michelle Cracknell and the opening talk was given by Lynn Wilkinson of the PPI and featured the experience of Anna Brain . 

Anna cared for her father who was unexpectedly siezed by a stroke and became immediately dependent and her mother who became frail through Alzheimers. Anna cared for them through to death.

Once we’d digested the account of Anna’s parents final years it became clear that being prepared for what the future brings makes it much easier for those needing care and for the carer(s).

This may sound trite, but it is not discussed and it took the panel session that followed to get us fully involved. By the end almost everyone in the room seemed to have their hands up.

This was largely due to the panellists , Liz Robinson of DWP, Teresa Frietz of MAS and Tish Hanifan of Solas.

As well as the panel, the session featured Jane Voss of Age UK who shared their work

Panel at PPI.jpg

We were left with some things to think about

key takeaways.jpg

You’ll need to read the report to get the granularity behind these headlines/

For me, the issue is to get people thinking about their finances in a way that helps them prolong independence but insures against frailty.

Thinking of later life in terms of health makes planning retirement financing a lot easier. As usual, PPI have done us a service by making something obscure and difficult – relatively easy.

If you feel you are getting old, or have clients who feel that way, then you could do a lot worse than read the report and think about what it says.

Thinking about getting old is hard and preparing for it harder still. But it is what retirement planning is about and the more we practice , the better we will get

Thanks PPI

Posted in advice gap, pensions | 2 Comments

“Your pay-rise is a pension rise”


I often “wake up to money” but not to this! In a discussion about when we last got a pay-rise, one listener mailed in that her boss told her

“your pay-rise is a pension rise”

It’s the first time I’ve heard of an employee being told that their pay-rise is in pension contributions and it woke me up good and proper.

third world matters 2

There are two worlds of pensions, those who are just getting by and those who worry about things like CPI and RPI – GMP equalisation and the like.


Those two worlds crossed for me yesterday afternoon when I answered a question on twitter which I shouldn’t have

To me – powers to enforce contributions are all about individuals missing out when due money from employers (or Government) on auto-enrolment. They aren’t getting their promised pay. So I answered the question.

How I wished I hadn’t! I had imposed on an argument about DB funding between Mike (the Bazooka) Otsuka and John (Ralfebot) Ralfe on DB funding!




Because of course the one thing you don’t do is dumb down a good argument between two pensions experts by introducing things so mundane as auto-enrolment.

John was keen to deliver the coup de grace

Screenshot 2019-07-17 at 06.02.58

There are two worlds out there! There is the world of 30% + contributions going into USS and other well funded DB schemes and there is the world where a pay rise is a pension rise from 2 to 3% of AE band earnings.

Nothing could so define the difference between those two worlds as the contempt shown me for inferring that these two worlds were infact one world, that the university teacher and the contractor who cleaned the lecture theatre were equal in the eyes of God!

Third world pension problems

I sometimes wonder about the humanity of pension experts and whether they leave it behind when they go to work.

I quite often here actuaries talking between themselves using phrases like “it’s only DC” when talking of third world problems like auto-enrolment.

They consider people who survive in retirement on the meagre scraps thrown to them from the rich man’s table, as beneath their consideration.

That 40% of those eligible for pension credits don’t pick up the pay rise on offer to them, doesn’t get a mention in their Olympian discourses.

That 2m people aren’t getting the pay rise they were promised by the Government because they were put in the wrong kind of pension scheme, doesn’t worry the pension experts one jot.

But the third world matters.

We are all equal in the eyes of God and the Pensions Regulator is right to put compliance with auto-enrolment at the top of its priorities.

The days of considering workplace pensions as “only DC” should be over and it is time for the pension experts to wake up and smell the coffee.

There are millions of people in this country who are not getting the right amount paid into their pensions and they are not all in the USS DB pension plan.

If the only pay rise you get is a pension rise of 1% of your AE band earnings, you need all the care you can get.

The pensions third world matters!

third world

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

Pensions for all -not just the public sector


Hilary Salt

Although I’m pleased that pension promises to the Firemen and Judges are to be extended to all public sector employees, I’m sorry for the millions of private sector employees now in DC savings plans whose reasonable expectations were for a wage for life from a DB scheme.

It remains odd that the public sector – which is supported by the wealth generated by the private sector, should have its pension system reinforced, while pension promises are withdrawn at will elsewhere.

It leads me to think that such inequality is in the long-term – unsustainable.

A best-estimates pension or a guaranteed pension

I have worked with Hilary Salt now for the best part of 10 years. I remember when joining First Actuarial, her spelling out a vision of a levelling up of pension promises so everyone could have a reasonable expectation of security in retirement from a replacement wage from their lifetime saving.

Many people talk of such things, few have made it happen. I firmly believe that had Hilary not stuck to her guns, the CDC scheme that looks likely to arrive at Royal Mail in the next couple of years, would never have been broked between staff and employer.

CDC is of course a DC plan , but its outcomes are pensions and not a pot from which a pension can be bought. For 140,000 Royal Mail workers, the outcome of their pension saving will be a wage in retirement which should meet their expectations from previous arrangements.

While the CDC scheme for the Royal Mail is a risk-sharing arrangement with the employer’s liability being capped at a percentage of salary, there is no cap on the Government’s liability to public sector pensions. The McCloud judgement will add £4bn to public sector pensions debt.

Though this extra debt is serviceable, it’s announcement comes at a time when we are holding our breath over the impact of Brexit and is bound to cause resentment amongst those who feel that they have suffered enough at the hands of politicians. I mean of course those who manage and work for private sector enterprise.

The lack of flexibility within public pensions means that pensions are now seen as part of the problem not the solution.

I hope that in the long-term, an exchange of promises – from guaranteed funding to best estimate funding in the public sector, from pension pot to best estimate pension in the private sector- will prevail.


A lifetime’s achievement from public sector pensions

The grant of a pension, whether it be guaranteed or conditional on the affordability of the promise, should be universal for UK employees. I think it should be a condition of employment and should be something which the self-employed should be able to opt in to as well.

A pension is the reward for a lifetime of work and its achievement a principal outcome of our labour.

It will be a lifetime’s achievement to  make this happen and I hope that there are young visionaries – of the intellectual stature and with the moral compass of Hilary Salt who will see this through.

Public Sector pensions can be linked to the capacity of the state to pay them and be part of a deal with the private sector that does not cast the burden of affordability on the tax-payer. Public sector pensions should be linked to the capacity of the state to pay and the decision on what should be paid , should be created from a consensus between private and public sector.

At present , the private sector have little or no say in public sector grants – other than through their limited capacity to elect politicians.

It would be a lifetime achievement to create the conditions where a more equitable second-pillar pension settlement could be implemented.  I do not see it happening at any time soon, but it is a work in progress for the young visionary I hope is out there!

A lifetime achievement from private sector pensions

I am optimistic that private sector pensions can be reinstated, as part of a DC system which benefits from lower investment costs (disinter mediated) , cheaper and more accurate administration (using distributive ledgers) and better engagement (digital communications).

When I say “reinstated”, I mean that for all people who are currently saving into DC, there can be a promise of a best estimates pension at the end of their saving – calculated using actuarial assumptions on collective mortality and implemented through the pooling of risks in the collective vehicles we are beginning to understand – CDC.

Critics will dismiss this as “waffle”, I admit I am not a mathematician and there are no numbers in this article to back up what I say. But my argument that the private sector can pay pensions rather than pension pots is based on my understanding of people’s risk appetite. I know people and I think that people will accept the risk of a market based pension solution in preference to a market based pension pot.

I do not mean that we should do away with tax-free cash which seems to me the acceptable compromise  for most people to the binary decision of pot or pension. People can have both, but the majority of a pension pot should be applied to the provision of a wage for life.

An end to the pensions of envy

My hope is that – within my lifetime (if not my working lifetime), we will see a new pensions settlement which will allow public sector pensions to become more flexible and enable public sector reward to meet the needs of a changing public sector workforce, I don’t mean by this a dumbing down of pensions, I mean a more constructive approach to risk-sharing than is seen in the McCloud judgement.

Inevitably, McCloud will reinforce the arguments agains “pensions apartheid” where the private sector envy the public sector and ultimately refuse to pay the price of public sector guarantees.

There will be more McCloud judgements, more pension strain on the UK balance sheet and more of our taxes going to pay public sector pensions. Our P&L cannot withstand ongoing stress without the elasticity of tax-payer support snapping.

Fungible and sustainable pensions – that’s what we want!

Hilary Salt  talks of the fungibility of pensions, I wrote about the fungibility of CDC five years ago. Re-reading that article I understand how a CDC scheme can survive in a way that a guaranteed DB pension cannot. Fungibility is the key to the sustainability of a private sector pension system – and it can best be achieved through best-estimate funding with a DC contribution basis.

CDC lifecycle


Posted in CDC, First Actuarial, pensions | Tagged , , , , | Leave a comment

Are DC trustees worth the money?



Is this how the public sees the DC Trustee’s role?

It seems churlish to take up your Monday morning with matters of pensions governance, what with the cheers at Lords, Silverstone and Wimbledon sill ringing round the country but I will!

My blog yesterday set out the case for cutting out DC trustees from the pensions body politic. I compared them to the appendix in the human body that does little good and occasionally does a lot of harm. We all know about the  acute harm “trustees gone wrong” can do , but they are few and far between, but I’d like to focus on the chronic weakness of DC Trusts and why we have to ask the same question of trustees as we do of other parts of the pension schemes

Are DC Trustees worth the money?

What do DC Trustees cost?

I don’t know, and I wonder if anyone has actually done a proper estimate of the cost of running a DC board. It will of course vary according to scheme size, but the simple logistical costs surrounding convening four meetings a year are substantial. Consultants, investment managers, lawyers even actuaries, attend DC meetings. Most are on hourly rates , most claim travel expenses and that’s just the start of it.

Increasingly trustees are expected to be reimbursed as professionals – independent of the scheme. This is right and proper, there can often be savings by having professionals on the board, where those professionals reduce the need for external consultants. But all too often the paid trustees result in ever more consultancy and I say this as a consultant.

How is the cost met?

The answer is that it’s met by the scheme sponsor, by the employer, unless the trust board is acting for multiple employers, in which case the cost of the governance is spread and so diluted that it becomes a part of scheme expenses and loaded into the annual management charge – in which case trustee expenses are met by the member.

It would be wrong to leave it there. The cost of running an own occupation DC scheme where the employer sets up , manages and pays for the trust board, is ultimately met from a pensions budget. Were this money not spent on governance, it would be available to boost employer pension contributions. It would be naive to think that ultimately there is a difference, the cost is always met by the member and the member should be asking, is the cost worth it?

Why don’t members query trustee VFM?

The short answer is that that question has never been asked (to my memory). There is no accountability amongst DC trustees to the people they serve. When a Chair writes a statement on value for money, he or she does not have to assess the trustee and the trustee retinue. The emphasis is on what members are getting for their investments.

But maybe this is wrong. If members knew that contributions from the employer are reduced to meet the costs of the trustees, they would legitimately ask whether the trustees were worth it. They might also ask why the scheme they were in needed its own trustees and why it might not be part of a multi-employer scheme where the work was done once for hundreds of sponsors.

We neither know the costs of trustees or the impact of those costs on scheme funding rates. Since the common mantra amongst trustees, sponsors and consultants is that we need to get more money going into pensions, wouldn’t an examination of the money lost to fiduciary management, be factored into the equation?

Members should be questioning what the cost of having their own trustees is and what that means in terms or reduced outcomes when they come to take their pot.

What is the value of DC trustees?

I expected push back on my assertion that DC trustees add about as much value as the human appendix.

I would expect trustees to be supported by Ian and his fellow consultants, they are part of the fiduciary ecosystem – paid for by sponsors out of trustee budgets or directly by sponsors as trustee support.

What the Pensions Regulator is consulting about, albeit in a rather pussy-footing way, is whether we are maximising the value of trustees.

My blog of yesterday was not an attack on individual trustees, who are individually very good, but on the collective value they give to DC savers. I use the word “savers”deliberately, trustees have all but given up on helping people to spend their savings.

As regards investments, the cartoon at the top of this blog suggests the public’s awareness of what DC trustees do with regards investment decisions. In my experience they put themselves in the hands of their platform managers and consultants, the amount of conviction-based trustee decision making on investments is woeful- as witnessed by their collective failure to adapt defaults to a modern world where responsible investment is the member’s primary requirement.

Nor are Trustees the champions of the user experience as their trade bodies might have us believe.

Trustees, who should be at the forefront , lag at the back when it comes to helping people move their money around. Four of the five named DC providers operate exclusively through occupational pension schemes, the fifth – NOW Pensions, employs JLT- now a part of Mercer. 

Screenshot 2019-07-15 at 07.35.36.png

By refusing to join Origo, the consultancy TPAs are putting their customers at the back of the queue, they are also at the back of the queue for pension dashboard adoption. Far from being a the cutting edge, trustees are presiding over administration which is decidedly 20th century.

My conclusion yesterday is my conclusion today. That trustees are by and large busy doing nothing.  By “nothing”, I mean nothing that couldn’t be better done by switching to a master trust or abandoning members to insurance company group personal pensions and the protection of IGCs.

DC trustees may not be adding enough value to justify the expense of maintaining them, at least not in the numbers of DC trust boards that survive.

Even modern master trusts are not exempt from scrutiny – I take NOW as an example of a Trustee Board that has had to take account of itself and move with the times. 

Compare and contrast the shape of their trustee boards 18 months ago and today.

This change did not happen organically, it happened at the Pensions Regulator’s demand. 

NOW Trustees

The NOW trustee board in October 2017

I think there are very real accountability questions for NOW pensions and I hope that  Joanne Segars  will work with her new board to get NOW back on track.

The new Trustee Board (below) is there because of Government intervention. I suspect that such interventions will become increasingly common.

Trustees cannot be allowed to fail their members – and that is what is happening in many schemes today.

Screenshot 2019-07-15 at 06.56.09.png

NOW Trustee Board July 2019

What is the benchmark for value and money?

As the FCA  keep telling us, there has to be something to compare trustee costs and value to. In the case of single employer occupational trusts there are two benchmarks, one is the work of master trust boards and the other the work of insurance company IGCs. While neither are doing exactly the job of a single employer trust, there are enough similarities for tPR ,DWP and FCA to make some meaningful comparisons.

I mention these Government organisations because they seem to me the only independent arbiters of the questions raised in this blog. Expecting trustees to determine for themselves the value they offer for the money they cost is unfeasible. It is unfeasible for consultants or the PMI or the PLSA or AMNT to opine independently.

This is where Government needs to exercise its role as an independent champion for the consumer and if they can’t work out what the VFM of trust boards is , then they should get the OFT and even the CMA in.

We need greater accountability and proper VFM benchmarking of our DC trustees.

A very specific inquiry

I do not want to conflate here the roles of DB and DC trustees. DB trustees have a quite different role to DC trustees. They are responsible for the funding of scheme promises.

DC trustees have no responsibility for the outcomes of DC pensions which is the existential threat they face. They simply have no proper role.

I believe that in challenging DC Trustees as I want them challenged, we will see them having to find a new role. It could be that they want to take on the challenge of helping members provide themselves with a Wage for Life, in which case they should be pushing to upgrade the scheme to CDC. It could be that they hand over their responsibility to a multi-employer mastertrust of GPP (and its IGC).

Either way, doing nothing is not an option. In an ideal world DC administration should be part of the blockchain, DC investments should be managed as NEST manages them. In an ideal world, DC members should have control over their money with the ease and precision they get from internet banking. There are examples of good practice in all areas, but by and large DC schemes are lagging and lagging badly.

In my view, DC Trustees are holding the member’s user experience back. That is the argument that I will be presenting to the Pensions Regulator in my response to its consultation and I look forward to pursuing this conversation with anyone who choose to challenge that view!

This is a very specific inquiry. I would like to feel comfortable by the end of this year, that it gets a very specific answer.

Are DC trustees worth the money?

Now certainly thought so back in 2013


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

The DC Trust – a pension appendix

appendix 3

The appendix

Nobody knows exactly why we have an appendix, but removing it isn’t harmful. Appendicitis typically starts with a pain in the middle of your tummy (abdomen) that may come and go. (NHS inform).

I feel much the same about most DC trust boards. We have DC trusts because occupational pension schemes are governed by trust law, but just what DC trustees do remains a mystery to most of their members and – I suspect – to the Pensions Regulator.

Once a year , they are required the chair is required to write a statement telling us what is being done to get us value for money, ensure our money is managed with due regard to Environmental, Social and Governance considerations.  But with the exception of exceptional trustees (Rene Poisson at JP Morgan springs to mind), hardly anyone could name the people who act as fiduciaries for their money.

Like the appendix to the large intestine, DC trusts are legacy items that in time will wither away, their passing unlamented as their removal  painless.

The action is elsewhere

My investigation into the location of the appendix also brings up interesting parallels.

It’s connected to the large intestine, where stools (faeces) are formed

No one is saying that the appendix produces faeces, but it’s proximity to the large intestine suggests that it might once have power over the output of our tummy.

If DC trustees could give their members advice, they might still stop people taking crappy decisions.

If DC trustees were allowed by their sponsors to offer help in spending money, they might be more than pension’s equivalent of  “a small, thin pouch about 5-10cm (2-4 inches) long”.

But the action is elsewhere.

People who want a pension from their DC pension scheme can no longer get one from the scheme, they have to buy an annuity.

Instead of bringing retiring members together and offering them the opportunity to pool mortality, DC trustees have given up on what they call “decumulation” altogether.

As for helping members understand their value for money, DC trustees are paralysed by the “risk” that if they told members how they’d actually done, some members might not be happy and blame the sponsor or even the trustees for not doing their job properly.

And while trustees “embrace” in principle, the idea of ESG, only a handful have actively changed their default fund to ensure members get its benefit. Indeed many trustees still talk of ESG as a risk rather than a means of risk reduction.

The action is elsewhereTaps FCA


Inept and out of touch

Inept and out of touch, most DC trustees have little to do but turn up at trade shows and sit through worthy presentations by consultants and fund managers selling them services that they purchase to get further invites and (if they are lucky) a golf day or two.

The actual decision making within our large DC schemes is being taken by the manufacturers – the fund managers and the providers of investment admin and communication platforms that the trustees meekly purchase and oversee.

So as I contemplate responding to the Pensions Regulator’s latest consultation on DC trustees, I wonder whether to tell them what I think , or what the pensions industry wants them to think?

To tell tPR what I think would risk the wrath not just of the trustees, but of all the mouths that suck at the trustees underbelly.


To tell tPR what the industry want tPR to hear , would provide me with a cosy job and perhaps a few DC trust position of mine own. I could feather my retirement nest by being paid for being at best ineffective and at worst inept.

What would you choose if you were 57 ?

Reform or removal?

IMHO, 95% of DC trusts are useless and the 5% that are useful are multi-employer. Occasionally DC trustees go bad, like appendices, and have to be cut out and replaced by firms like Dalriada and Pi who specialise in recovery work – sadly usually at the member’s expense.

The concept of an occupational DC scheme for the staff of a single employer is an anachronism. It’s a hangover from a time when DB schemes really were part of the company’s ecosystem and not a risk to be managed out. DC trusts have long since lost any meaning and – save for rare schemes like HSBC’s staff scheme- have demonstrated zero appetite to evolve to the changing needs of today’s member.

So I thoroughly support the process of consolidation that is seeing employers participating in multi-employer occupational DC trustees or just hand things over to insurers with fiduciary management coming from IGCs.

I don’t see much point in the Pensions Regulator’s consultation other than it informs on action that is happening elsewhere (the much more cogent work going on in DWP and at the FCA). The Pensions Regulator should stick to the task of facilitating consolidation , removing (not reforming) DC trusts.

Appendix 2



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

Time to tackle pensions tax

Screenshot 2019-07-11 at 11.32.15.png

Pension taxation isn’t working. It is benefiting those who find it easy to save and not incentivising those who don’t. It is causing doctors to work below their peak capacity and demanding up to 25% more in contributions from our 2m lowest earning savers.

It is creating confusion amongst those moving from saving to the spending phases of their retirement savings. Pension taxation is – as Liz Truss says- “too complex and could do with simplifying”.

Some might say she is kicking the can down the road when she says it is a job for the next Prime Minister. I take that comment to mean that finally reforming pension taxation should be a priority for an incoming leader and something to be dealt with before the next general election. That puts reform at the top of the political agenda (as Jo comments).

A group of us, Chaired by Baroness Ros Altmann, is determined to help the cause of pension tax reform. Reform cannot come too soon, not just for the higher earning doctors but to millions who pay pension contributions but are denied their promised incentives.

More than just doctors

Yesterday I went back to the last pension tax consultation which began in July 2015 and petered out in the run up to the Brexit referendum early the next year.

You can read the consultation here

It’s entitled “Strengthening the incentive to save” and is quite clear about what the incentive to save for those auto-enrolling will be.

1.24 Average contribution rates will rise as the minimum contribution levels under automatic enrolment increase to 8% in 2018 (of which the individual will pay 4%, the employer will pay 3%, and the government will add tax relief of 1%).
However, it is still important that the right incentives are in place to support individuals to take responsibility for making sufficient contributions to their pension to meet their expectations. That is why the government is considering how it can go further to ensure that individuals are supported to save.

The Treasury’s policy intent is clear. The Government will put in 1% if the employee puts in 4% and the employer 3%. There is an intent to go further but no commitment.

Rather than see through the policy, two things have happened
  1. The date of the move to 8% of band earnings was delayed to early 2019
  2. Up to 2m low earners are not getting the promised 1% and are thus paying 25% too much by way of contributions (5% and not 4%).

Instead of doing more, they have done considerably less than they promised. I suspect there are reasons for the Treasury’s failure to deliver , but that those reasons aren’t “good”.

The Treasury’s estimates of the number of new savers by now proves to have undershot actuality by 15-20% (10.5m rather than 9m). AE has been more of a success in terms of inclusion than anyone dared think. But greater pension savings lead to lower Treasury revenues which is why the Annual Allowance and Lifetime allowance have been brought in. There is an explicit link in the 2015 paper.

The lifetime and annual allowances were introduced at ‘A-day’ in 2006. They were originally set at £1.5 million (the lifetime allowance) and £215,000 (the annual allowance), and were designed to ration the  amount of tax-privileged saving an individual could make into a pension. By 2010-11 they had risen to £1.8 million and £255,000 respectively.

Over the course of the last Parliament, both limits were gradually reduced in order to manage the growing cost of pensions tax relief. The annual allowance is now £40,000 and the lifetime allowance is £1.25 million. However, it was announced at Budget 2015 that the lifetime allowance would be reduced to £1 million in April 2016, and then uprated by the Consumer Prices Index from April 2018.

Complexities such as the Money Purchase allowance (stopping recycling) and the Annual Allowance Taper (a kind of pension super-tax) are additional to the core AA and LTA legislation outlined above.

Not to put too fine a point on it, the Treasury underestimated demand for tax-relief and appear to be balancing the books by not paying it (to those who need help most).

Pension taxation policy intent is to take from the haves and give to the have nots. We know from the state of today’s NHS waiting list that the taxation of the well off has succeeded not just in reducing Doctor’s pensions, but in their willingness to practice.

We also know that the money that they are paying to the Treasury through Scheme Pays or directly (via self assessment) is not going as it should to incentivise the lowest earning into saving. Instead the low earners are paying more than they anyone else to save (as a proportion of their net disposable income).

Impact on saving

In February, This is Money ran an article on the high-opt out rates among young low-earning NHS staff .

Why are NHS staff quitting generous pensions at an alarming rate 

The research it drew on concluded that young staff were being asked to pay too much for a benefit they didn’t understand.

There are .. fears many NHS staff feel unable to afford the pension contributions.

Nearly a quarter of a million active members have opted out in the past three years, a Freedom of Information request by the Health Service Journal found.

NHS workers aged 26-35 are most likely to leave the scheme, with some 30,000 doing so in 2017.

The research focusses on the affordability of saving

A typical nurse on £25,000 a year currently has to pay a contribution of 7.1 per cent before tax relief so saves £1,420 by opting out of NHS Pensions, according to Royal London figures.

This suggests to me that there is a point at which pension contributions become too expensive and that the assumption that 2m low earners will continue to pay 5% rather than 4% for their pension contributions is a dodgy one.

For low paid NHS workers , auto-enrolled into the NHS pension schemes without tax-relief , the cost of not getting the basic rate tax incentive is 1.42%, which is a lot of pay if you weren’t getting pay increases.

The Government should not be complacent, there is a point at which savers can save no more and it’s not just consultants who have reached it.

So it’s time to tackle pensions tax

The 2015 consultation points out that “Over two thirds of pensions tax relief currently goes to higher and additional rate taxpayers”.

It also hints at an emerging problem which has grown since 2015 with the phasing of auto-enrolment contributions.

Increases in the Personal Allowance in recent years have also led to a decrease in the share of pensions tax relief which goes to those with an income below £19,999.

I suspect that the Treasury knew even then that the squeeze would come both at the top (AA and LTA) and at the bottom (through the failure of net pay to pay the promised tax incentive to lower earners.

Let nobody think this will be painless.

The group of people who stand to lose most from change are those who benefit most from the current system. They are the mass affluent who don’t get hit by the AA and LTA and get the bulk of the “two thirds of pension tax relief”.

Restricting their lucky status by moving towards a flat rate of relief or even TEE would be extremely painful. It was too painful for Osborne and Cameron in 2016 and it may be too much for a minority Government in 2020-21.

But this bullet must be bitten if the pension system is to retain fiscal credibility. We cannot go on as we are and it’s clear that the Government know it. Liz Truss is not the only person who wishes to take up the Doctor’s grievances, future prime ministers are saying the same/

It’s a shame they aren’t saying the same for the have nots, who are being so badly failed today.

net pay

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

Drivel is Drivel – whoever says it

I read articles by Jack Bogle and Warren Buffet and John Kay and Terry Smith because I like to understand how money can be managed on my behalf better. I like to improve my understanding.

And occasionally I read drivel.

I have just read the most stupid article on asset management. You can read it here.

Its author describes himself as

A leading professional trustee who knows stuff and gets stuff done in pensions, investment and governance.

That is indeed the case.

The author, Richard Butcher has been chair of the PLSA, a member of the IDWG, he’s a Governor of the PPI and Managing Director of Pitmans Trustees Ltd.

He is undoubtedly a very influential man and gets a lot done;- and yet he trots out total drivel.


Here is the central thesis of the article. The author suggests we are walking the plank

I’ve drawn this picture to help to describe the plank.

The blue line shows the shape of the normal economic cycle. The economy and market – albeit on a slightly different time frame and in a more volatile manner – falls, bottoms out, grows, peaks, falls and so on, ad infinitum.

The red line shows what has happened to the economy and market recently. It has continued to grow. We are on a plank.

Now, as sure as eggs are eggs, we will fall off the end of the plank at some point. There’s just no telling when.

Why is this relevant to the active v passive debate? Because of the rule of thumb in the Pensions Insight blog . Passive funds tend to do better in rising markets, active funds better in falling markets. The conditions for passive funds have been benign for an unusual length of time.

There is no evidence for this sweeping statement. It is purely based on the personal prejudice of the author.

And there is no evidence to confirm that passive funds produce better outcomes than passive funds in rising markets or that active funds produce better outcomes in falling markets.

But this cod logic comes up with a conclusion

So yes – over recent past passive funds in general have probably done better than active. The argument, however, will swing at the point we fall of the plank. (sic)

Probably? Has the author looked at the evidence?

About the only consistent data there is , is that the more you allow a fund manager to take money out of your fund to manage it, the less there is likely to be when you want your money back.

The evidence based investor Robin Powell, has assembled a massive archive of evidence that demonstrates conclusively that active management does not deliver good outcomes.

Here is his most recent article on the subject and here is a comment from a former active manager who is convinced by the evidence

Screenshot 2019-07-11 at 06.51.48.png

Which is why most fiduciaries do not take risks with other people’s money and stick with passive strategies.

Where we can employ asset management is to improve governance , asset managers can improve governance without trading stocks – and they do. If asset managers stuck with ensuring the assets they managed – were managed better – then they would be worth their salt.

Many passive managers – like LGIM and Hermes do just this.

The plank

But this is not what Richard Butcher is talking about when he offers us his very general rule of thumb;- that in a rising market passive funds will do better whereas in a falling market active funds will prevail.

He calls on fellow trustees to

“be agnostic in the debate. Their strategy should be based on investment objectives rather then (sic) personal prejudice. One challenge for trustees, however, is to find dispassionate advisors”.

Even when we are walking the plank?

In a short article the author displays his personal prejudices, calls for dispassionate behaviour and tells us we could be walking the plank (without an active management safety net). Trustees should be both agnostic and evangelical, starting with passive and ending goodness knows where.

All other things being equal, which they rarely are, trustees should be agnostic on the philosophy but evangelical on costs. In other words, passive is the proper starting point.

Whatever principle survives this bizarre conflation of  arguments is finally exposed as secondary to the whims of sponsors.

” in a defined benefit world, it is the employer who bears the costs of our (trustee) decisions. This means that they should have a say, assuming their covenant is up to it, on investment approach. We may decide on balance to go passive, but if they want us to go active, for whatever reason, and they are willing to pay for it, we should go active.

I do not normally  read drivel , I read this only because a friend sent me the article with the following comment

How does he get away with writing such shit?!?! The guy understands nothing. In any given day, wherever the cycle, soaring returns, bumping along or plunges, there is a benchmark return. There are passive traders in the market and active traders. The passive traders return the benchmark minus low fees. The active traders in aggregate return the benchmark minus higher fees. The end.

Whether the markets are rising or falling, in aggregate active returns less than passive. Why is this so hard for people to understand?

I think we just need to take a deep breath and recall that this jerk is being paid £1000/day by pension scheme members to be lazy, stupid and wrong. And he is the chair of the trustees’ trade body.

The answer is that Richard Butcher gets away with it because no-one calls this drivel- drivel.

Richard is a first class operator but he is not a strategist. He should stick to the knitting and not design the patterns.



Posted in pensions | Tagged , , , , , | 9 Comments

The value you get for your pension money

Independent help for all pension savers

I started yesterday in the swanky new film studio under the FT’s Bracken House. It had to be built on stilts and sound and vibration sealed as the district line runs right below it. As you sit on your sofa, cameras wheel past you driven by an unseen hand.

All this to explain to subscribers to FT Ignite , why IGCs and DC Trustees do matter and that they can make a difference. I look forward to sharing whatever comes out of the session- though I may be constrained. My key point was that IGCs and Trustees are responsible for protecting members from harm (however inflicted).

We talked of Fidelity’s default workplace pension fund that has  transaction charges that more than double the AMC. We talked about Woodford and the role of the Hargreaves Lansdown IGC in protecting workplace pension savers.

And we talked about value for money scoring for pension savers.

From zero to hero – the Hargreaves Lansdown IGC report

Trouble at stables

Hercules 2

I wasn’t anticipating continuing this discussion later in the day but with typical candour, Richard Butcher shared with us his frustration with having to make value for money disclosures.

We know that Richard doesn’t think cost disclosure worthwhile, from the laissez-faire attitude he adopted in his IGC Chair’s statement for Old Mutual. The pendulum has swung and 70 pages of disclosure later, Richard may feel he’s proved his own point.

Legal & General threw the kitchen sink at the problem in their 2019 IGC Chair statement. Where Trustees or workplace pension provider offer 200+ choices for members, they necessarily burden those tasked with fund governance with 200 times the data and 200 times the trouble.

As most workplace pensions are unadvised, the IGC or Trustee is the only independent source of expertise the policyholder/member has.

The message to those managing the fund platforms must be simple. If you want to offer every fund under the sun, there is a price to pay for it in extra governance and that means paying Richard Butcher and others to clean the Augean Stables


Should we ban fund platforms from the workplace?

It’s easy to argue that we should simply ban fund platforms from workplace pensions and go back to a small but well governed range of core funds with an intensively governed default. This would be regressive,

Hargreaves Lansdown’s workplace pension platform (Corporate Vantage) is well regarded by employers that use it. It would be interesting to know how many policyholders accessed the Woodford World Equity Fund through the corporate plan but (judging by policyholder behaviour elsewhere) I doubt many. In any case, pension savers have less need of liquidity than most.

The IGC may want to have a conversation with Hargreaves Lansdown about red flags, and if they can’t get assurances that HL is managing the risks on the platform, then the IGC should be thinking very carefully about what funds to expose vulnerable policyholders to.

This is a question that the FCA may well be addressing as part of its IGC review which is kicking off this summer. I do not think that we should be throwing the baby out with the bathwater but I do think that employers who select a spectacular fund platform for a workplace pension, need to justify that decision. IGCs have an important role to play in discussions with employers who have not taken advice on their choice of workplace pension and are offering wider fund choice.

Why RAG is just bull!

I cannot agree with Richard Butcher’s assertion that members can be given a series of traffic lights based on the Trustee or IGC’s opinion.


I am with Ian McQuade – people need to know the value for their money, not a pronouncement from Olympus!

While Richard Butcher’s approach ticks all the boxes for the provider, it offers the saver nothing but “save more”.

People need to know what they are paying for and what they are getting for it. In the crudest sense, they need the equivalent of a till receipt.

A better way

Ruston Smith and I see eye to eye on most things, but especially on the need for simple statements that policyholders and members can read, digest and act on.

The Ruston Smith simplified pension statement, co-designed by Quietroom, shows what can be done on a single sheet of paper.

Ironically it is currently banned from showing the cost of pension management in pounds shillings and pence terms by (amongst others) the FCA. Apparently telling people the price of what they’ve bought might stop them buying again.

Ruston can’t provide a till receipt and instead has to pack the statement with words. The two pager has still a long way to go to the simplicity of a Tesco till receipt!

Simplifying pensions

We all think that value for money is very hard to explain. By “we”, I mean pensions experts. But for the ordinary person it is a very simple concept, he or she gives you the money and the amount you give them back shows your value.

agewage evolve 1

An aligned approach is the one I am pioneering at AgeWage which shows people how their money has done in a single score.

It works by analysing all the money that has gone into a pension savings account and compares that with the money is available to come out (contributions and net asset value).

Such a comparison can tell people the return or interest they’ve got on their savings. But that number is meaningless unless it can be compared with how the average person has done.

The AgeWage score is simply an expression of this comparison. By reinvesting contributions in the average fund we can compare one return against another and score people’s outcomes with a single number.

Why scoring outcomes is the way forward

This simple way of scoring outcomes is the only way I have found to give people what they crave, an accurate, un opinionated measure of how their pension saving has actually done. It is a way of giving people the value they’ve had for their money.

It is not the end of the story, infact it could be the beginning.  For many savers, it may be the only number – other than the amount in their pension pot, that seems clear vivid and real to them.

But there is in AGE an acronym that we’re adopting which allows us to take people further down the road to pension enlightenment!

A – assist- we need help with VFM

G- guide – we need a path and guide

E- equip – we need to tool-up for later age

If we can give people a proper view of their past saving and how it’s done, we can at least get some  to the next stage – a path and a guide. We might even equip them to take hard decisions on how to turn their savings into an AgeWage – an income for life.

Scoring outcomes is what Richard Butcher should be doing, not delivering a 70 page appendix to his Trustee Chair Statement.

Adopting AgeWage scoring is what Ruston Smith and Quiet room could do, to show members how the value they’ve got for their money , compares with the average.

Employing AgeWage to provide the guidance and equipment going forward, may be a next step for Trustees and IGCs, though I suspect we will have to do an awful lot of scoring before we get that far!

Finally an offer

If you’d like to have your pension pot (s) analysed by AgeWage and be given your own AgeWage score (or scores), you just need to mail me

If you have already done this – I will be writing to you today (Weds 10th July).

We can’t promise we can get you a score as not all providers will co-operate, but we think it highly likely, given some patience from you, that we’ll get your score to you by the end of August!

Getting scores online is what we aspire to – but you have to start somewhere and this is where we start!

AgeWage evolve 2



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

Giving doctors a break

NHS choice

“82% of consultants say they are are or are planning  cutting down on work” – Dr Tony Goldstone

You can listen here to Dr Goldstone explain the issues facing doctors who find themselves on the cliff edge of taxation and all too often trigger unnecessary bills – ensnared by the complications of the annual allowance taper.

His comments on some doctors facing tax bills of up to £80,000 and having to re-mortgage to pay them have fallen on the incredulous ears of pension experts.

Liz Truss speaking in parliament (see video below) was “in no doubt that the pension taxation system is too complicated”. But Doctors , patients and the NHS have not got time to go through the series of consultations that would lead to a permanent solution.

It really doesn’t matter how the big bill is explained, the matter has now reached that point where the BBC, Sky News, the Guardian and the FT all ran the same story on the same day. In a world where the story is in the sentiment, the sentiment is clearly on the side of the doctors.

One of the many compensations for spending three days on an NHS ward was that I met quite a few consultants who wanted to have a chat about their affairs.

The consensus view was that no matter how much doctors cared for their patients, they cared for their families and their private time as well. The economic interest of the medical profession is not served by working for nothing, The tax-rules are wrong and the taper is causing the problem- not the doctors.

A failure of taxation policy which must now be admitted.

Whatever our feelings about high earning doctors (and I am not one to begrudge doctors high earnings), we cannot call what they are doing “industrial action”. It is “inaction” – it is not industrial – it is “social” behaviour. Doctor’s are choosing to spend their time differently to the way they were because they are so discouraged to work weekends/

As Prospect point out – this is not an affordability issue for Government

The matter was debated in parliament (to know great effect by the look of this video) The question is tabled at 16.22

Which leads to three questions

  1. When will the Government sort this out?
  2. If they sort out the doctors, why not those on low earnings who don’t get promised pension savings incentives?
  3. And when will they do something about the 40% of potential claimants not getting their pension credits?

We will soon have a new DWP, Treasury and DHSC team

Let’s hope that a new Government will do more than wring its hands over Brexit and start governing in Britain again.

The lack of action on these pensions issues over the past few years has been scandalous.

A new Chancellor and Secretaries of State at DWP and the Department of Health have an immediate agenda , to cut hospital waiting lists, make pension saving worthwhile for low-earners and to alleviate poverty for those in later years.

The answers to these issues may require a redistribution of pension tax-relief (as proposed in 2015). The ideas under consideration then should be picked up, dusted down and implemented without more ado.

This is clearly now a political issue.

But can our politicians get their heads around the problems they created?



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

Cyber-power; is Facebook our new Government?

cloud server platforms

When your bobbing up and down on the Thames in a wooden boat for a few days, it’s difficult to imagine how tech platforms are changing the world, but returning to terra- firma and reading “the Fracturing of the Global Economic Consensus” by Rana Farooha, I got a significant wake up call.

The article ends where I begin.

As one participant replied when I asked if he thought Facebook chief operating officer Sheryl Sandberg could still run for US president one day: “Why should she? She’s already leading Facebook.”

The capacity of technology platforms to take on aspects of Government is spelt out.

A few digitally savvy participants saw Libra (Facebook’s cryptocurrency) as only a first step into areas where governments (at least in the west) haven’t been able to effect change. Facebook could, conceivably, provide online education, or become an employment platform for legions of workers in a new global gig economy.

and the article talks of territories,  quite the opposite of cyber terrorism.

One participant, pointing out that liberal democratic governments simply can’t move fast enough to keep pace with technology, wondered whether “technology platforms might be the new Westphalian states”.

The rise of cyber-power

The ability to talk to and influence the population is something that liberal democracies have aspired to and achieved over the last 200 years. But they are now having to compete with Facebook, Linked in and Twitter as authoritative.

Indeed these platforms have forced Government to use them. Trump is a slave to twitter not the other way round.

And these platforms are American looking at  a regional breakdown of the equity market share of tech platforms — 70 per cent in the US, 27 per cent in Asia, and 3 per cent in Europe.

In terms of geo-politics, China has still a lot of catching up to do, but America’s geo-political advantage only translates into economic power if the US treasury can properly tax what its stock exchanges support.

The real power of the tech-platforms is with the likes of Sheryl Sandberg.

What does this mean to you and me?

As I look at politicians trying to be popular, I see populism destroying the aura of Government. If I walk into a Government department or even parliament and see an eminent politician, that eminence is usually tarnished by their participation on social media platforms.

Western Politicians are in hoc to social media and exposed to ridicule when they try to be popular on it. By comparison the Chinese political system (control and command) gives no such freedoms and may never embrace the social media platforms, watching how it is devaluing politics and politicians in the West.

I wonder whether in ten years time, I will be looking back at the article in the FT (and my reaction to it) and thinking “prescient”. Or will we see the rise of social media in the West as a bubble that burst – returning politics and economics to what many of my generation consider “business as usual”.

Oddly, this means a lot to me and you. Instead of being observers we are in the thick of it. What we say, observe and regurgitate shapes the prevailing consensus. If we chose to stop using social media, all cyber-power could be turned off.

Is that going to happen? I struggle to think of how it could.


Meanwhile – back on the water


Not all unicorns are “cyber”


Posted in Facebook, pensions | Tagged , , , | Leave a comment

HR and the decline of empathy


I wrote to my HR department to tell them I had had some emergency treatment. What I got back surprised me, an admission that they knew nothing about it – contractual sickness terms  –  and a sign off that reads

Please let me know if I can do anything else to help at this stage and I hope you are soon back at work.

From “Welfare” to “well being”.

It was not that long ago that “staff welfare” was the #1 priority of HR departments, now they seem to be a risk mitigation function ensuring companies cannot be sued by employees with an eye to the main chance.

Compliance with IS 9000 is a KPI for our company so when staff “fare badly” , they become part of the risk-register. In this blog I argue that process cannot has to put staff welfare – nor corporate risk mitigation as its focus.

Staff welfare or “well-being” as it’s now been rebranded, is a very simple concept that does not require a 900 page staff handbook and a battalion of lawyers. It starts  in sympathy. As sympathy is no longer in the HR lexicon let me remind myself what it means

“feelings of pity and sorrow for someone else’s misfortune”.

You can express sympathy but not be believed, to be believed you have to show “empathy”. Empathy can be defined as

the capacity to understand or feel what another person is experiencing from within their frame of reference, that is, the capacity to place oneself in another’s position”

It is not enough to have sympathetic thoughts, there needs to be more, you need to see and feel things from someone else’s point of view.

When we commoditise welfare – we get to well-being, a “measurable” that turns HR into a branch of risk management. Welfare is more than can be achieved through process; HR due process is an abstract notion linked to productivity and compliance.


The real problem with HR as risk mitigation

Sympathy is easy, you can cut and paste it from any HR manual, but empathy is hard, it’s dead hard – because it means trying to understand where someone is coming from.

The compliance approach to HR assumes that staff are always coming at an issue with a wish to escalate for personal self-gain. If the assumption is that behind each mail or letter there is an ambulance chaser then the chance to see things from your staff’s point of view goes out the window. The mail I got from HR read like a legal disclaimer and I guess that it did a good job of protecting the company’s position.

But it made me feel mad! I’m already back at work- I never left work. I love First Actuarial , I don’t want to bend the rules! I’m a Director, I have duties to my company!

I didn’t need a lecture but I got one

“You’ll appreciate that under such circumstance we will offer as much support as is possible but our contractual sickness terms apply to all employees”

The real problem with “HR as risk mitigation” is it makes  worried and scared people even more worried and scared. It puts up the barriers turning sympathy into hollow words. Empathy has no chance – this is all about them and nothing about you.

Personnel means people

I didn’t want a lecture, I wanted a cuddle. I wanted someone in my company to give me sympathy (with empathy).

And I am sure up and down the country, people are reading this and asking the same question. Whatever happened to staff welfare, to the personnel officer to the  “get well soon card” or similar.

Nowadays, that empathic sympathy comes through social media where people feel free to issue an emotional response to situations without fear of litigation.  Thanks to all – most especially to Gareth and Andrew for the kind gift!

It is a shame that companies feel unable to do staff welfare but I fear that is what has happened,

Personnel used to mean people- now people are a commodity – a human resource employed to maximise profit. Yet the companies in Britain that have survived longest, have done so because they look after their people.

I think of Bournville, Port Sunlight and I think of WeWork – these are places where the basic principles of looking after each other emanate from work.

Personnel means people and can still mean people. I know our HR people they are great. But they shouldn’t forget that for all their accreditations, they are about staff welfare and there are times that even ISO 9000 falls short.



Posted in NHS, pensions | Tagged , , , , | 7 Comments

They shall not grow old!

nigel and sheila.jpg

Yesterday I wrote about how 40% of those who could claim pensions credit don’t. Today I’m writing about Nigel and Sheila, my boating friends who have a related problem. Nigel is 75 in a fortnight, has been deferring his defined benefit pension but has been told that whether he likes it or not, he gets his pension from his 75th birthday.

A little bit about Nigel (and his remarkable wife Sheila). Nigel is curator of wood for the Victoria and Albert Museum, he is still working and Sheila tells me that when he gets home after a full day, his first thought is to walk the dog and second to mow the lawn. Nigel is a remarkably fit man despite having been ravaged by cancer earlier in what most of us would call his later years.

Nigel and Sheila have a large family with whom they share their boat, they are never without a smile on their face (even when Sheila had a boating accident and broke bones she never moaned).


It’s an overworked phrase. Nigel and Sheila have it and they people who spend time with them – see it rub off on them.

I don’t know how to advise Nigel regarding his pension. I am quite sure that he sees this influx of unnecessary money as a nuisance but I’ve tried to convince him that there will come a time when even he will look for a wage in retirement.

He doesn’t seem to comprehend the idea of stopping work, explaining to me that that would be like a death sentence.

Let’s celebrate getting older

In a week when the prospect of getting older looked a little dim, Nigel and Sheila are my role models and mentors!

I think we can look up to older people in this way (there is less than 20 years between us but it seems like a generation).

Nigel was born at the end of the war, he is a child of that post-war austerity (like another friend Bernie Rhodes). The resilience of that generation is something I’d like to inherit.

Let’s celebrate getting older and learn to love the older life – however young we are!

Nigel and sheila 2.jpg

Posted in age wage, pensions | 3 Comments

#NESTinsight19 – worth it!

The world’s most pampered think tank?

Released from the bondage of the catheter, yesterday I made the short way from Tapper towers to the offices of JP Morgan for a day with NEST Insight.

NESTinsight is a think tank, this might conjure up a vision of a lonely platonist in hist tower but it’s not quite that spartan. NEST Insight’s conference was supported not just by JP Morgan but by Vanguard, Invesco and its research by LGIM. I was getting gratitude fatigue well before the end of Will Sandbrook’s opening address.

There is a serious point here, good as it is that NEST Insight is not making further inroads into NEST’s £1,200,000,000 taxpayer loan, we’ve got to remember that it is blowing the research budgets, not just of the financial services companies sponsoring, but of a lot of other research projects that do not have NEST’s glamour. Be careful what you spend guys.

This is highly hypocritical of me as I spent whatever time off I had wolfing down the posh nosh, making up for three days of hospital food (thanks JP).

Universal pension credits?

The “context” of the event was given us by Will Sandbrook but while he spoke news broke of a rather alarming statistic which rather put the valiant efforts of NEST to get us to save more in the shade.

The reality of life in Britain today is that only 6 out of 10 people so poor as to need a top up to their state pension – are claiming. There were noises off about the pride of the working class not wishing to pick up means tested benefits, that’s Orwellian bollocks. Four out of ten people don’t claim pension benefits because they don’t know they can or they don’t know how to.

If the Government really want to help alleviate poverty in older age, they need to concentrate on the here and now, not just the future. We may become sufficient in time – thanks to Sidecars and behavioural economics but there are desperately poor people in Britain right now who should be auto-enrolled into pension credits.

Perhaps a bit of NEST Insight’s budget could be spent working out why – in the 21st century- with RTI and universal credit – we cannot get the right money into the right hands at the right time

Universal pension credits – my arse!

Enough moaning!

The rest of the gig was good. I particularly enjoyed the lunchtime session with Madeline Quinlan (despite me calling her out for telling us we should be “making the self-employed save”.

The work NEST is doing with IPSE and the DWP to work out what is the solution to Matthew Taylor’s problem is going down the right paths. I wish it was going quicker but this is a big big project and the thorough research looks proper to me.

I’m hoping that this research will be in the public domain before too long. It is vital that we get the self-employed back interested in pensions (though not at the expense of them losing their entrepreneurial instincts!

Good to see women to the fore.

There were some good panel sessions and for the first time in my memory – a four member panel without a man in sight.


You’ll have to follow my tweets for details of this and other sessions.

A good day and – despite my moans – a worthy day

We need the kind of thinking that the programme gave us, we need to think about behaviour and triggers and how to change things in a big way with small nudges.

We need to challenge NEST Insight, which is prone to being too much in the industry’s pocket. We need to challenge the DWP for getting flabby – thinking NEST Insight is doing its job.

Most of all, we don’t need to be complacent. Those 10.5m savers, 7m of whom have got NEST accounts are looking for decent outcomes. It’s one thing to save, it’s another to be financially capable of managing a wage in retirement.

If people can’t even get as far as picking up their pension credits, we know we have a lot more to do- by way of defaults – than we are doing today.

Posted in pensions | 2 Comments

We don’t know how lucky we are!

Wonky tapper.jpg

I have just come out of hospital. I was admitted on Monday afternoon, had a three hour operation under general anaesthetic on Tuesday morning and left at Wednesday lunchtime.

Had I not had the services of the NHS, I could very well be dead –  many have died from haematomas that made it impossible for them to pass water. Many still will.

I live close to Guys and St Thomas’ , have the mobility and confidence to get myself to the right outpatients and the determination to be seen. I am very lucky indeed.

Our health service is no small thing

The last time I was in hospital was in 1982, I had a bruised kidney and urinary problems then (not connected).

In the intervening years I have always known that a free public utility was awaiting me , were anything to go wrong.

Of course things have gone wrong for many of my friends, many have been through the NHS emergency procedures and have been nursed back to health through NHS care. A few have died with dignity.

Our health service is no small thing, it is a treasure we have created for ourselves, something we share with those who are visitors to this country and a source of comfort to immigrants.

In my ward  in beds beside me was a young Pakistani and an elderly Indian gentleman. We were looked after by students and nurses who’s origins were from Nigeria, Ghana, Sierra Leone, Ireland and even the UK!

My consultant is of Sri Lankan extraction. Our great London teaching hospitals are an expression of our commonwealth, we share with the world.

The comfort of friendship

Much is made of social media as a destructive force, but little of its power to bring people together. On Wednesday morning, as I was preparing to leave, I was visited by a consultant knew of me only through the conversations I have had on twitter with doctors (AA and the Taper).

Thanks to all the people who picked up on my tweet about being ill. It made it a lot easier – took away worry and made me think about you and not me.

Thanks to my brothers Albert and Gregory, to my son Olly – who visited me. Thanks most to Stella my partner who is my rock.

We don’t know how lucky we are

The reason that life expectancy has increased in this country has been clear enough to me over the past three days. There is a system of care which starts with the NHS and extends through our family and friends to our wider social circles. We support each other.

We have all this because we are lucky enough to live in the first decades of the 21st century where technology brings us together.

My mother, who could not get up from Dorset, spoke to me as I came out of the operating theatre, she called on a hospital landline from her landline in Shaftesbury. I was able to tell her the good news that there was no tumour under the haematoma and that I most probably did not have cancer.

It may not have been the most conventional of modern day communications, but – thanks to some nurses who really did care – it happened when she was worrying most.

And that is the real point of this blog. There are people in our National Health Service who are dedicated to alleviating pain, giving comfort to the worried and getting patients back from the perils of physical and mental failure.

Alastair Santhouse, a psychiatrist physician, chose to visit a patient rather than have a coffee break, he is just one of the many people who I am thanking.

It is because of these great people, that we can do the things we do, in commerce, in the arts and in public life. Our whole society sits on a platform of confidence in our health built by the NHS and the people who work in it.

We don’t know how lucky we are.


Posted in age wage, NHS, Personality | Tagged , , | 12 Comments

Family offices and Social Impact.

Screenshot 2019-07-01 at 06.06.58.png

Sometimes you get the key insights from the most obscure sources. Here is the statement that concludes an article posted on Linked in by Tony “Property investment” Miller who runs a Mayfair property boutique called Huriya (and is a member of the Pension Play Pen).

This is how the article starts

Some of the world’s richest people may take their money away from private bankers and wealth managers unless they offer more impact investments and philanthropy deals, according to family offices and foundations.

This is how the article ends

Yet the issue is a complex one for relationship managers, whose salaries and bonuses are often linked to the size of a client’s portfolio and its return on investment. While impact investments in theory eventually pay a profit, they’re often risky and can have lower returns.

The idea that impact investments are risky and can have lower returns is a common theme throughout financial services. The idea of philanthropy being profitable has become unfashionable. I was thinking about this question with regards the endowment of Trinity College Cambridge.

What I suspect Family Offices and Wealth Managers fear most about impact investment is that it is philanthropic and that they cannot pivot to philanthropy after decades espousing “greed is good”.

Philanthropy gifts, investing loans. However philanthropy can be a gift with reservation, that the gift is for a social purpose. Whereas social impact investing comes with a single reservation – liquidity – the investor can always ask for the money back.

Liquidity is the third (unspoken) issue that the wealthy may have with impact investing, it involves losing total control of wealth, which I suspect is what is meant by “risky”.

If (as predicted by Mark Carney and others  in this article in the FT) liquidity comes under pressure in funds, I would be surprised if Family Offices became sources of “patient capital”

Screenshot 2019-07-01 at 07.05.23

Philanthropy – Wealth diminishment?

I suspect that social impact investment is attractive to high-end wealth managers as it keeps family money in-house rather than see it flies off to philanthropic institutions, which explains this “peer group” advice

“To the extent that your clients want to do philanthropy, you should be helping them.”

Impact investing (the article stops short of talking of ESG- see below), is also a means of hooking the next generation of investors

“If we don’t get it right, we won’t be able to engage our clients in future,”

There could of course be a third reason for wealth managers to do the right thing, namely “to do the right thing”, though this might be a little too radical to a group of people who think that doing the right thing includes owning private planes, private yachts and expensive automobiles (just for starters).

Nothing philanthropic about wealth management

Wealth managers have seen the threat of philanthropy emerge with a new generation. They have recognised that social impact investment keeps wealth under their management and they are looking to minimise disruption by perpetuating the myth that investing for good is “often risky and can have lower returns”.

I find the high-end of wealth management enlightening as it is transparent.  Huriya is the arabic word for freedom, specifically

Screenshot 2019-07-01 at 06.08.19

this kind of freedom is flatly opposed to external governance and gives licence to any kind or environmental or social misbehaviour.

One can only wonder how Sustainable and Responsible Investment fits into a “Huriya” framework.


For completeness , here is the whole of the article

Some of the world’s richest people may take their money away from private bankers and wealth managers unless they offer more impact investments and philanthropy deals, according to family offices and foundations.

RS Group Chair Annie Chen, whose Hong Kong-based family office is dedicated to impact investments, said at the Asian Venture Philanthropy Network conference in Singapore Wednesday that despite many banks promising to offer more deals that do good, front-line bankers and relationship managers often failed to do so.

Her comments come as private bankers prepare for the transition of wealth away from older family members and toward next-generation investors who have expressed a desire to change the world for the better as well as make money. More than one-third of wealth clients surveyed by Ernst & Young LLP in a report last month said they’re planning to switch financial service providers within the next three years because they’re dissatisfied.

“I’d urge you to really step up your game besides the pronouncements that you make at the likes of the World Economic Forum, and give a budget to your different branches, different regions so that your front-line people — the wealth relationship managers — actually get educated about sustainable investing,” Chen said.

William + Flora Hewlett Foundation President Larry Kramer echoed her sentiments. The $9.9 billion foundations was established by the co-founder of Hewlett Packard Corp. and it awarded about $408 million of grants in 2017.

“A big part of our climate work is beginning to focus on getting banks — retail and investment banks — to change exactly that,” he said on the sidelines of the conference. “To the extent that your clients want to do philanthropy, you should be helping them.”

Read more: Harvard Course Helps Rich Millennials Do Good (and Make Money)

Standard Chartered Plc’s global head of private banking and wealth management Didier von Daeniken said the inability of front-line staff to offer better information was “the biggest headache for us.” High-net-worth individuals will have almost $70 trillion in net investable assets by 2021, according to E&Y.

“If we don’t get it right, we won’t be able to engage our clients in future,” he said.

Von Daeniken said Standard Chartered is training about 50 bankers, or around 15% of the private banking and wealth management team’s front-line sales force, to be experts in the field of impact investing. The bank’s assets under management in impact investing are still small, but growing at more than 10% a year, he said.

Yet the issue is a complex one for relationship managers, whose salaries and bonuses are often linked to the size of a client’s portfolio and its return on investment. While impact investments in theory eventually pay a profit, they’re often risky and can have lower returns.

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

Why do we need funds?

James Coney, formerly of the Daily Mail and now of the Times is a campaigning journalist who says it as he sees it- and that’s refreshingly transparent

He is asking in an article the question that’s in the title of this blog. His starting point is this statement.

Open-ended investments, more commonly known as funds, are in the middle of an existential crisis. Right now, low-cost trackers and investment trusts look like much better products because funds seem fundamentally flawed in their design

James ends his recent piece in the Times

The IA (Investment Association) is boldly plotting a way towards better transparency, but I don’t really think its members are on board.

It must start from the principle that investors are entitled to have full details of what assets are being held — not what extra information they should be allowed to have.

It is, after all, our money — not theirs.

James is kicking off from the problems investors are experiencing with the Woodford Equity Income fund.

But he seems to be questioning what it is that we’re getting from funds that justifies the assumption we should use them.

Funds – the great feeder

I had this conversation with a couple of gents from an insurance company who were asking me what bits of financial services we could do without.

I said “funds” and they blanched.

Funds are indispensable to the financial services industry but not – it would seem – to its customers. Funds are a source of income for fund managers, asset managers, custodians, lawyers, accountants, brokers, ACDs, traders and platforms. I think I could write a lengthy blog just on the retinue of flunkies who feed on funds

When you think what a fund is – (a collection of investments offering people easy ways to get your money in and out of investments) – it really shouldn’t be so hard.

Take funds out of the equation and a whole bunch of people would need to find new ways to get fed.

Is there an alternative?

It is extremely hard for investors to avoid funds but there are ways. People can invest directly into the stock market, or they can buy shares that passively replicate the stock market (ETFs) or offer investment through a shareholder trust (investment trusts). These alternatives are frowned upon by fund managers and it is easy to understand why,

I am not convinced by the transparency of investment trusts and ETFs any more than I am by most funds. But they do at least present a challenge to the fund management industry.

What I hope for is wholesale reform of the funds industry that will allow us to properly understand what we are investing in. This should not be as hard as all that, but as we have seen with Woodford, a list of holdings can be bait for hedge fund managers to prey upon funds that are in the process of changing these investments.

People like Dr Chris Sier, who has pressed for better standards of reporting, are now actually enforcing better reporting. But ordinary people are still a way away from properly understanding what happens with their money.

The alternative to not knowing – is knowing. People have a right to know where there money is invested and if we had the courage to tell them, those people who manage funds might get a pleasant surprise.

The alternative

We shouldn’t do away with funds, but we need to start thinking of funds as things that help investors rather than things that pay the people who run them.

As James Coney points out

Investment firms dish out information like gruel in a poorhouse and we’re made to feel grateful for what little we get. Don’t dare ask for more.

The point is this, telling people what is going on is not bad news for fund managers, unless they have something to hide. The good fund managers do not hide and already Chris Sier’s ClearGlass organisation is listing managers who do a good job.

Many Independent Governance Committees report that they are still having trouble getting the information they need to discover if funds are giving value for money.

Organisations like AgeWage are able to show people the value they get for their money, bypassing all the complex reporting and just comparing money in and money out.

Both ClearGlass and AgeWage have been criticised by making the complex simple. But the truth is always simple.

The alternative is simplicity and it comes through transparency.

Posted in pensions | Tagged , , , , | Leave a comment

Farewell to the Pension Play Pen lunch


After nearly 12 years of monthly lunches, I have decided to discontinue the Pension Play Pension Lunch. There will be no lunch on Monday July 1st so please do not go to the Counting House.

12 years is a long time. It was Robert Gardner who suggested we had a monthly dining club and the first lunches were held upstairs in the Dining Room of the City University Club.

We switched to the Counting House later that in 2007 and they have been terrific hosts ever since. I’d like to thank the various managers and army of waiting staff who’ve looked after us over the years.

Recently we’ve seen a fall in numbers and though the discussions have been no less vigorous, I must admit to my becoming a little jaded.

So I’ve decided to knock the lunches on the head for the summer and consider whether we may launch new AgeWage lunches in the autumn! I’d like a new venue, perhaps the WeWork I work in in Moorgate. Any ideas to

My biggest thanks are to you, the loyal Pension PlayPen lunchers who’ve been such a pleasure to each other and to me.

We will meet again!


Posted in pensions | 1 Comment

The trouble with conformity – USS latest



The dissenting voice has long been upheld in British Universities. Minority opinions are valued as an antidote to received wisdom which all too often degenerates into herd-like conformity. So I worry when I read the justification that the USS are giving for their current stance on risk.

“The trustee’s fundamental belief is that risk is multifaceted, and requires a wide perspective, and broad tools to manage it appropriately. This approach to the valuation has been carefully constructed, and robustly built based on independent advice from our scheme actuary and covenant adviser. It has been subject to independent review by a third party actuarial firm, and by TPR. None of these reviews has suggested there is scope to take the level of risk in the funding arrangements that is proposed by recent commentary”.

The “recent commentary” in question is from Dr Sam Marsh and it criticises the Trustees’ position for being overly focussed on today and insufficiently focussed on the longer term. Marsh’s position is characterised like this

In effect, Dr Marsh’s approach takes the JEP’s proposals to ‘smooth’ contributions over two valuation cycles, and extends that to 20 years. It is not surprising that when this is done, current contribution levels are (in aggregate) ultimately adequate.

Taking a long-term view on funding as a basis for today’s snapshot valuation may not be “multi-faceted”, but it has one serious ally to commend it, common sense.

The USS has to take a long-term view as it is designed to run for hundreds of years through all kinds of economic conditions. The current conditions give us the lowest gilt yields on record and in any common-sensical view of history, would be seen as anomalous.

Projecting current conditions inexorably into the future is taking “short-termism” to an extreme.

Sam Marsh and Jane Hutton

Sam Marsh is not a trustee of USS, Jane Hutton is – albeit a suspended trustee, (charged with a kind of treason). Her treason, to point out that the consequences of following the strategy proposed by the USS risk management team would be to push contributions up making the scheme unviable for some employers and leading to new calls to close the scheme to future accrual.

Since the information that Jane Hutton- one of Britain’s leading statisticians, has been denied her, she is unable to carry out her job as a trustees (as nominated by the members). Sam Marsh has picked up where Jane Hutton cannot follow

The two of them are not wreckers, they are simply trying to make it clear to the members of USS that there is an alternative to the USS view of the world (multi-facteted as it is) and that view is based on common sense.

Common sense says that people will continue to want to go to Universities and British Universities in particular.

Common sense says that University teachers want to be paid a wage in retirement from a defined benefit scheme rather than something else.

Common sense tells us that the current dispute is being won by the likes of Marsh and Hutton and from the member’s union who say there is scope for the USS to take a long term view, invest for growth and adopt a discount rate that reflects the strength of the British University system (as confirmed by various covenant assessments).

So I am very much on the side of Jane Hutton and Sam Marsh and not on the side of actuarial (and regulatory) conformity.

Trouble brewing

While the USS stonewalls, there is increasing questioning coming from other third parties – specifically from Frank Field who is questioning not just what is going on with Jane Hutton, but why the Pensions Regulator appears to have been dilatory in its dealings

Screenshot 2019-06-28 at 06.33.47.png

The letter is part of a wider inquiry from the Work and Pensions Select Committee into just what the Pensions Regulator is up to.

The trouble with conformity

The trouble with conformity is that – unless challenged – it produces received wisdom which may not be wisdom at all. Received wisdom is that privately funded pensions should not provide guarantees and so USS should close to new members and cease future accrual for existing members.

The Pensions Regulator, charged with keeping DB schemes out of the PPF seems to be complicit in the USS’ current strategy – which will likely lead to closure of the scheme.

The USS has recently been rebuked by TPR for overstating the explicit support of tPR for its strategy and of putting words in the regulator’s mouth. Nonetheless, the question Field asks, suggests that the relationship between tPR and USS is at best “cosy”.

The trouble with conformity is that it breeds arrogance, arrogance that with their actuaries and their regulator on their side, USS is invulnerable and can do as it likes.

But the behaviour of Jane Hutton and the work of Sam Marsh are showing how very vulnerable USS can look – and with them, those parties who presume that the USS are too big – too advised and too well paid – to be wrong.

Posted in pensions, USS | Tagged , , , , , | 1 Comment

Darren Cooke – outstanding contribution

For those not at the Money Market Awards, here is the speech I gave in praise of Darren Cooke who rightly won recognition for his work and his spirit. Thanks Darren


Outstanding contribution to the profession

This year’s award will not be controversial. Nobody would deny our winner this accolade – he is universally regarded with respect and affection by his peers and his clients

Our winner worked at HSBC for 18 years – leaving when his division announced a plan to go restricted. He started with network Positive Solutions but went directly authorised in 2016.

He says the suggestion by networks, that small firms cannot afford to remain independent amounts to scaremongering.

With typical directness he has been on the record saying

‘Most networks are run by life insurance businesses that are trying to create a route to market for their products. It is cheaper to remain independent”

He calls his firm Red Circle  ‘His  idea’s “your finances are important, so red circle them”… the circle also represents the concept of holistic planning and provides a memorable image for the branding

Our winner uses the Institute of Financial Planning’s six-step process as the framework for his advice.

his  chartered financial planning qualification proves his technical ability , but for him being  certified is about applying that ability with soft skills and the ability to understand the client.

Today he is most famous as the architect of the cold-calling ban which finally came into force on January 9th .

It means that for all but FCA regulated advisers, no one can cold-call on pensions in this country without risking a fine of up to £500,000.

The ban has been implemented on all live, unsolicited direct marketing calls relating to pensions.

The ban is already protecting those vulnerable people whose pensions are at risk from fraud.

It will protect many more whose savings are growing under auto-enrolment.

Our winner is making a material difference in the battle to restore confidence in pensions.

Britain owes our winner a debt of thanks.

But it’s also his personal qualities and business skills for which we acknowledge him tonight

Here’s Victor Sacks

He is a wonderful guy. An attentive listener who has all the qualifications, but ensures his clients are not blinded by them. A straight talking no nonsense man, I’m delighted to call a friend.

And here’s his client Angela Richardson

he made the whole exercise understandable, financially advantageous and organised.all I had to do was sign on the dotted line. I would highly recommend him to anyone seeking financial advice.

I am sure that there is no-one in this room who does not know who I am talking about.

Ladies and Gentleman, the winner of this year’s award for outstanding contribution to the profession is Darren Cooke.


And thanks to the Editor and Compere!

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

One life – one retirement – two regulators

Screenshot 2019-06-26 at 06.05.10.png

Quietroom and DG’s Pension Map

Yesterday’s Pension and Benefits UK conference kicked off with consecutive speech’s from TPR CEO Charles Counsell and the FCA’s Edwyn Schooling Latter.

Counsell delivered a staid and unambitious rehearsal of tPR’s agenda and frankly I was bored. Schooling Latter spoke to an agenda that most in the room seemed unfamiliar with. He left without taking questions and the FCA were nowhere to be seen at the Exhibition. We need more of Schooling Latter, he was good.

Making sense of the pensions regulator

I am trying to create a ratiocination between the regulator’s approaches. It is hard to do so, the FCA is approach pensions from the point of view of the consumer while tPR looks at life through the lens of sponsor and trustee.

Referring to Quietroom’s map of the pension world, the Pensions Regulator is increasingly about how we build up money while the FCA is responsible for outcomes.

Outcomes are managed on the right of the diagram while the savings phase is to the left. While the FCA has skin in the game in saving (GPPs and Stakeholder plans) it is primarily concerned with what happens after workplace pensions give out.  While the Pensions Regulator oversees scheme pensions (and we hope CDC) , it is primarily about workplace pensions and auto-enrolment.

Actually the role of trustee and employer is becoming less important over time as pensions either level up or dumb down to a consistent contribution schedule and DB schemes are put to bed through the uniform funding code proposed by tPR. The scope for innovation in the accumulation phase is limited and tPR and its world of occupational trustees is little more than a compliance function of the DWP.

This explains why I found Counsell’s speech boring.

Making sense of the FCA

While tPR baton down the hatches, the FCA innovate. The FCA has an innovation unit, a sandbox and a pensions policy team that is looking to do new things better.

Later in the day, I biked down to Stratford through Victoria and the Olympic parks, you know you are nearing the FCA as you pass West Ham United’s Olympic stadium and the white swan pedillos that meander beneath the FCA’s offices. You can approach the FCA through the Westfield shopping centre but try a Boris Bike instead – the FCA has its own Boris Bike stand.

The three big deals on pensions for the FCA are

  1. Stopping the flow of DB transfers
  2. Sorting out the choice architecture at retirement
  3. Ensuring we get value for money.

I met with Pritheeva Rasaratnam and Cosmo Gibson (of the value for money team). Pritheeva is head of pensions and funds policy and our discussion focussed on the needs of ordinary people to get to grips with their pension pots and do the best they could by them.

We used Quietroom’s map to understand where we were coming from and how the consumer related to the various stages of their retirement savings journey. It was – to coin a phrase – clear vivid and real.

One life – one retirement – one pensions map.

Not for the first time, I thought yesterday having two regulators very unhelpful.

For all the rhetoric about working “ever more closely”, the two regulators see things so differently , behave so differently and are so physically dislocated that they might as well be on either sides of the moon.

What is worse, the pensions world is similarly bifurcated. I tried to follow reaction to Schooling Latter’s excellent speech on twitter

Screenshot 2019-06-26 at 06.46.43

The occupational pensions crowd aren’t that interested in the FCA,  I suspect they aren’t that interested in pension outcomes either.

But the members of the occupational pensions schemes are very interested in their outcomes. They are much more interested about what they can get out of their pensions than all the issues surrounding scheme administration, member communication and financial education.

  1. They want to know where there money is invested
  2. They want to know they are getting value for their money
  3. They want their money paid back to them fast and easily.

The Pensions Regulator seems to have lost sight of these fundamentals in its earnest pursuit of compliance to its various employer and trustee codes.

It is only by putting the people who own the money – the people who get paid the money- as the focus of the map, that a one-world map of pensions makes sense.

Exactly the same can be said of pensions regulation and – judging by what I saw yesterday, it is TPR and not the FCA – who have most to do.





Posted in advice gap, annuity, pensions | Tagged , , , | 1 Comment

Lady Godiva , Neil Woodford and Peeping Tom


I have taken to reading some of the commentary about what’s going on with this chap Neil Woodford because it’s generally guff and makes me laugh.

This blog makes me laugh (and cry) out loud. It’s entitled “Benefits of Segregated Mandates”

I print it in its entirety

The past few weeks have brought into sharp focus some of the benefits of managing money using segregated mandates for those that have the necessary scale. Alongside this is a need for oversight of governance not just the investment approach. And, research agencies need to do more to assess governance and liquidity.

Over drinks with an industry mate the other night, he referred to the benefits of segs as the 3 Ps: prescription, price and portability. SJP and Openwork client money isn’t locked in Woodford’s fund. Both firms swapped the manager and both restricted holdings in unlisted securities.

While segs come out looking good over the past couple of weeks they only work with the right governance and oversight. This requires scale, the right culture and the right people.

I hear from a lot of largish financial advice firms that they plan to introduce segregated mandates. There can be enormous benefits but it’s not a decision to be taken lightly. There are a lot of mouths to feed – the ACD, custodian, fund admin, depository, etc.

Scale is needed not just to negotiate on price but also to put in place the necessary oversight. Scale alone isn’t enough. There needs to be a culture that allows people to question decisions and the right people in place to ask the tough questions. Firms managing money using segs need people around the table with legal, investment and regulatory experience to provide the necessary oversight.

What about the customer

The people around that table need to have a keen focus on the reason they are all there. They have a regulatory responsibility to the customer. They also have a moral obligation. We think that too often the customer is forgotten.

Failure of research and ratings agencies?

As for firms not using segs, we need to push research and ratings agencies to evaluate and highlight the governance of funds not just investment approach and performance.

A lot of advisers hold Woodford in models they manage for clients. They will be looking to rebalance those models at the end of the quarter. A few weeks ago it would have looked sensible to hold Woodford. Heck, it had a Morningstar bronze rating in May! Who knew how illiquid an equity fund could be?!

This is exactly why the research and ratings agencies need to shine a light on governance. Advisers rely on third party research to short-list funds. Stress testing portfolios for liquidity seems like a good idea. Ratings can’t be just about investment performance.

I don’t know which of the people at Next Wealth wrote this. I know Clive Waller and Heather Hopkins and deserve like Peeping Tom – to be struck blind.

It needs to be said, this piece is guff of the first order.


I am laughing at the thought that St James Place and Openwork can be seen to be coming out of the last few weeks “looking good”,

The only perspective which allows us to see SJP as looking good, is one that benchmarks SJP’s next few weeks with those of Hargreaves Lansdown and other platforms awaiting the write downs to come and the dismal drop in price of Woodford Equity Fund units when they return to the market.

It may be that SJP’s customers are not so badly off as those directly investing in Woodford but that does not make SJP look good. SJP fund with “Woodford Inside” actually underperformed just about every other comparable fund, and underperformed Woodford’s Equity Fund too.

SJP may argue that because they didn’t include the Guernsey illiquids in their segregated mandate, they haven’t benefited from fictitious valuations on non-tradeable stocks (as WEI has).

It may be that when the gate is opened , SJP customers will win a prize for tallest dwarf but that is not in itself a cause for celebration. The customers have still had a bad time because Woodford was inside their funds and they have paid Woodford handsomely  for delivering nothing at all.

In terms of “value for money”, SJP’s employment of Woodford looks a total wash-out. SJP are not of course on the hook for Woodford, they may have got Woodford on the cheap (you get your own price in a segregated mandate), but the customers paid the going rate for SJP funds and all the price negotiation mentioned above benefited the SJP shareholders rather more than its policyholders.

The firms who offer “seg” mandate “need” plenty of lawyers, ACDs, fund admins, custodians and depositaries, or so the article tells us. But do the customers benefit from this army of flunkies who push up the total cost of management? It is almost impossible to work out from looking at SJP funds why they perform so badly , but the suspicion is that the yield drag from the “mouths to feed” is a major part of it.

In short, SJP’s fund governance failings over Woodford are every bit as heinous as everybody else’s and for the fund industry to pretend that “seg” mandates have ended up protecting customers is preposterous.

Segregated mandates are a vanity play of the first order

There is nothing new in segregated mandates. Defined Benefit schemes have been dishing them out to fund managers (under the advice of consultants) for donkey years.

They give trustees the illusion of better governance but in reality they provide jobs for the boys and very little added value for the people picking up the tab – the customers.

Of course the funds industry loves “seg”, it gives everyone something to do and allows fund marketing people to peddle the twaddle above.

Would the world be a lesser place for the loss of segregated funds – no!

Does the world need a fund universe full of actively managed pooled funds – no!

The entire funds industry exists for the benefit of those who serve it and not for the customer at all.

Most of the properly managed DB schemes find better ways to get exposure to markets than by dishing out segregated mandates, the biggest manage assets directly, the smartest go for cheap well governed Beta through passive pooled funds.

Wiping all these silly – self obsessed – institutional segregated mandates would be a step in the right direction

Wiping all these silly – self obsessed – wealth management DFMs would be another step in the right direction.

Retail or institutional , they could all be absorbed into LGIM, BlackRock and Vanguard’s maw and exchange their pokey cottage industry governance with some proper stuff that really managed the money for good.

I have said enough

I am going to be a judge on one of these industry award things run by Clive Waller. I expect he’ll be asking why I was ever allowed to darken the judging panel’s door.

The answer is of course that in the court of Godiva, I am the peeping Tom.


May I be struck blind.

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

New research shows BSPS transfers driven by fear not greed.

tpr 4


I have on my google drive a piece of research conducted by one of my friends – a steelworker himself – who was one of the main pillars of support for steelworkers faced with the hard choice of whether to have benefits paid as a CETV, from the PPF or from a new version of the British Steel Pension Scheme.

You can now read more about this on Maria Espadinha’s excellent article – many steelworkers spent less than 2 hours with an adviser.

It’s not my research to share so I won’t be overly specific. The research has garnered a response from 176 steel men who transferred over the BSPS “Time to Choose” campaign.

What is different about this work is that it is not focussed on Port Talbot but represents the dispersal of deferred BSPS members accross the country. So there are large numbers of respondents from Teeside, many from the Welsh borders and quite a few from South Yorkshire. The rest are scattered around the country and indeed the globe. So the research is representative of decisions taken across the deferred membership of BSPS.

I very much hope that the researcher will share the research with the FCA and with the wider public.

The second point to make is that the vast majority of people responding did transfer and that most of them are happy to have done so. There are a fair few who are unhappy and fewer who “may be” happy.

The research asked about  the amount of time spent with an adviser over the decision. Again there is a wide dispersal of answers with a seemingly even split between spending less than two hours  and those spending two to four hours, a handful spent more than four hours. The results do not suggest that advisory were piling it high and selling it expensive.

Similarly the research does not show a wholesale use of “vertically integrated” solutions. We can see from the data gathered – where the money ended up – and the vast majority ended up with insurers and not in SIPPs.

Fear not greed

Finally we can see why people transferred and the vast majority of answers remain because people had “no confidence in the British pension scheme“.

This final point is the one that should be most worrying to the Pensions Regulator. Although most of the flack for what happened at Port Talbot has been directed at the FCA, the root cause of the problem was not advisers, or even the pension freedoms. For the majority of the people in this survey, the problem was the ability of the British Steel Pension Scheme to pay its pensions.

Why was confidence in the scheme so low?

It is hard to avoid the conclusion that something went badly wrong in the promotion of BSPS2 (New BSPS) to the deferred membership.

That 8,000 deferred members transferred away from a solvent scheme well over £3bn , suggests that the benefit of staying in the pension scheme were undersold. If the Pensions Regulator thinks that the decisions taken by members on transfer are outside its scope, they should think again.

One of the pillars that TPR is built on is “protecting member interests”. Quite clearly, a high proportion of the members of BSPS felt no confidence in the scheme they were in and continue to feel that way , two years later.

TPR can point to a lack of confidence in the sponsor – TATA- but that is to surrender the point of the Regulatory Apportionment Agreement, which was designed to protect members if New BSPS succeeded or if it failed. The PPF benefits bought by taking no choice or if New BSPS collapses, are still much better than the annuities that can be purchased from CETVs.

It is only if steel workers genuinely wanted to manage their pension rights from a drawdown policy, that CETV made any sense at all. And yet, many of the deferred members voted against the strong steer from the Trustees and the Regulator to stay put.

Why was confidence in the scheme so low? The answer is blindingly obvious, no-one was listening to the deferred members (except financial advisors).

Advisors to blame?

Clearly what went on in South Wales was a disaster and the research shows a higher number of people unhappy with the transfer decision they took – living in South Wales, than  satisfaction levels elsewhere.

But the research does not show as high a level of dissatisfaction with the advice offered as I would have expected.

People have a right to a CETV if in a funded pension scheme and people have a right to shape their retirement income as they choose. We should not forget that many of the people who transferred remain happy with the choice they took.

Nevertheless, the problems with advice may be for the future, the research shows that only a handful of steel workers transferred having paid a fixed fee, the vast majority did not have to find the cash for the advice, it was found for them from the transfer value. There is a chance that in five years time, were this survey to be repeated, the damage done by high adviser charges would materially change satisfaction levels in advice. However, the evidence that I have before me does not suggest the majority of those advised feel they got a bad deal

That said….

The question TPR should be asking, is whether it should allow itself to feel exonerated by the failings in advice in a minority of cases and I think the answer is “no“.

Managing public sentiment isn’t easy but…

For me the Pensions Regulator has still a lesson to be leaned from BSPS. It is evident in the research I am looking at.

People can be easily spooked to transfer away from occupational schemes and be frightened by the idea of the PPF. It is easy to do this because of high transfer values boosted by the de-risking that the Pensions Regulator’s current funding regime is encouraging.

The consequences of low levels of perceived support for occupational DB schemes is a continued flight to advisers who are happy to offer easy to pay for advice to take CETVs in a painless way.

Isn’t it time that tPR and the FCA did something not just to change the behaviours of advisers, but to encourage people to want to stay?

By which I mean some positive intervention by tPR to promote the benefits of a scheme pension.

Sadly, I see this as low down the list of tPR’s priorities, much much lower that its obsession with self -sufficiency and recent variants thereof.

So long as we have high transfer values, low barriers to transfer and low confidence in defined benefits, we will have high ongoing levels of transfers.

It is within the FCA’s gift to put an end to contingent charging, but it is in the Pension Regulator’s gift to allow schemes to remain invested in growth assets so maintaining reasonable discount rates and avoiding high transfer values.

tpr 4



Posted in BSPS, pensions | Tagged , , , | 5 Comments

The advisers who went away

port talbot steel workers

Laura makes a good point and it’s one that goes to the heart of the retail distribution review.

Money paid to financial advisers should be for advice. Where an adviser charges ongoing fees for advice, there must be ongoing advice.

Currently, the mechanism for paying for advice is for the client to request that the advisory fee is no longer paid, but this is a mechanism that relies on the client being aware of the process and self confident enough to turn the fees off.

Why we need lawyers to get involved is that, as with PPI, most people don’t understand the process and even when they can see what to do, are nervous about doing it.

To put it bluntly, ordinary people are out of their depth.

Hitting the nail on the head.

I don’t know Laura Robinson or her firm – Thrings , but she clearly understands things from her client’s point of view and is refreshingly blunt in her views.

The only reason most of the Port Talbot steel men met with an adviser was to get the IFA to take on the responsibilities of the Trustees.

I refer back to this poll done by steel workers by steel workers in September 2017. “Take their pot and let their IFA manage it”

poll bsps anon

Most steel men I spoke to at the time thought of IFAs as some kind of independent trustees – they knew only the trustee model as all the wealth they had ever had was managed in BSPS by trustees.

There is an important point to be made here. BSPS Trustees were a free service that steel-workers took for granted. They simply weren’t prepared for the fees of wealth-management because many of them had no experience of paying professional fees.

It is sad that their only experience of paying fees may be  to advisers who have gone away.

Advisers – good and bad.

The wealth management model is good for people who understand wealth. These are people who have solicitors, accountants or at least know how professional fees work.

The wealth management model is absolutely wrong for people who don’t understand professional fees , don’t know how professional practices work and who are daunted by challenging their advisers when they realise they aren’t getting value for money.

Despite this , many financial advisers continue to extract large fees from these vulnerable people and they can do so through a frictionless process known as “contingent charging”.

Contingent charging works just like PPI but on a massively larger scale. It is a buy now – pay later scheme where the cost of the service isn’t felt by the customer till the money in the pension pot starts running out.

Contingent charging preys on the lack of knowledge, experience and confidence among blue-collar workers and others who may have money but have no experience of “wealth”.

We cannot regulate to stop financial advisers taking advantage of contingent charging (or indeed ongoing adviser charging). We can legislate to stop contingent charging and we should do – the FCA could write this into their secondary legislation now – though I fear it is way too late.

As for advisor charging, I think the onus is on the advisor to justify the fee , not for the client to estimate if they are getting value for money. I do not think that the majority of adviser fees are easy to turn off.  Turning off fees depends on the capacity of clients to understand what they have bought and as Laura’s tweets demonstrate – most of her clients just don’t have the competence , expertise and confidence to contradict the advice of advisers – which is to pay for advice.

IFAs are asking to be treated as professionals

Most IFAs I know are every bit as professional as lawyers and accountants. Indeed many lawyers, as Laura points out, have swapped advice for ambulance chasing and turned themselves into the kind of transaction-based  pariahs that the worst IFAs are being accused of.

Some vulnerable clients may lose as much to dodgy legal practices as dodgy IFAs.

And this is where we have to take a step back and ask just what is going on. We have a system of occupational pension schemes where those who work for certain companies get rewarded with a wage for life.

This system is disrupted by IFAs who take money through contingent fees on the basis they will do what Trustees did – which – in the steelworkers mind – is manage the pension pot.

And then it all falls apart when the steelworkers find that their IFAs are nothing like the trustees, that their is no highly experienced CIO managing their money, no actuary ensuring there is enough in the pot, nobody – nobody at all – acting in their interest.

This is why the FCA are so concerned

The fundamental problem at the heart of the transfer problem is that almost half of the people who are transferring (FCA number) should not be exchanging the fiduciary promises of their occupational pension scheme for the open market.

I’ll leave the last word of this blog to Stefan, who is a former steelworker and someone who has done more than most to protect his colleagues from financial harm.

BSPS Missing

Posted in pensions | Leave a comment

FCA plan to get tough on poor transfer advice

cumbo cetv2

Two unexpected  things happened yesterday; SJP’s candidate for the “fireside chat” with the FCA – went sick (with no replacement offered) and the FCA published their market- wide data results for defined benefit transfers.

Together this meant my fireside chat with Debbie Gupta turned into a tete a tete and a very illuminating one at that. That was because Debbie Gupta is a straight talking person who answers the  questions put to her and says it like it is. She is constrained in what she can say (which is why we did not talk about Woodford, or ACDs or the failings of individual SIPPs , but she was prepared to talk about the data results and she did promise that they would prompt action by the FCA.

There are many, including me, who reckon that you don’t have to wait two years to decide whether there is evidence enough to consider DB transfers a problem.

The FT solicited a comment from Frank Field who’d read the data results

“Today the FCA tells itself, again, that only about half of DB pension transfer advice meets its own standards” “The alarm is ringing, people are still losing their life savings: It’s time to wake up. More of the same kind of regulation just won’t cut it.”

During our fireside chat I asked Debbie whether she thought that market forces would turn the transfer tap off. Interestingly the FCA do not accept that the rate of transfers has fallen recently (as evidenced by the results of leading life companies who have benefited from the flows). You don’t have to probe hard to find why, most IFAs are now a lot more cautious about taking on CETV inquiries and many are on quotas from their PI insurers which give them limited scope to do more than a basic triage service.

Since the FCA are not accepting that the transfer market is dynamic and changing, I went on to ask what kind of intervention would follow. I asked Debbie straight whether the FCA would ban contingent charging. She would not be drawn.

Back at the ranch, Megan Butler, executive director of supervision, wholesale and specialists at the FCA , was telling the FT the same thing

“We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable,”  “It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.”

£83bn and counting

The £82.8bn that has transferred via advisers from DB to DC is from data submitted by IFAs – 99% of IFAs submitted data and the number relates to transfers completed since April 2015. There may be some pipeline, some non-advised transfers (where the CETV was less than £30k) and there may be some under-reporting. This may explain the gap between what advisers report to the FCA and the higher figures of what is reported to the Office of National Statistics.

Frankly, what matters is that the FCA reckon half of these transfers shouldn’t have happened (against an expected “poor advice” rate of 10%.But because the data published yesterday does not include a longitudinal breakdown (which I suspect would show a slowdown in transfers), it is hard to understand Megan’s comment in bold (above).

And because we don’t know whether the 50% (bad) number applies equally to 2018/19 transfers to 2017/18 transfers, the FCA will have to do more counting.

Reviewing decisions


Meanwhile, the problems for those who transferred out back in 2015 are beginning to see a track record on their investments. The gains made when the markets were hot, are being eroded now the market is not (hot). If adviser fees , active management fees and platform fees are dragging back performance on pots already diminished by the contingent charge, the returns on the CETV itself may be looking pretty dismal.

By April of next year we will start to see five year track records on post freedom transfers and I’d like to see internal rates of return based on the CETV, not the amount post the contingent charge.

Since October of last year, IFA clients have been presented with a bar chart with two bars. The lower bar is the cash equivalent transfer value (CETV) on offer. The higher bar is  a capital sum – the amount which, invested in a risk free way up to retirement, would generate a pot large enough to buy an annuity which matches the DB pension foregone. The idea is that this  enables a client to see graphically how much of the ‘value’ of their pension they are giving up.

If this method were to be used by the FCA to sample the progress of invested pots since transfer against the defined benefit foregone, I think some of the numbers would be looking pretty scary (especially if compared with the pre- contingent charge CETV calculation.

While I appreciate that the performance tracks are short and that many people transferred for reasons other than investment, the bottom line is that the outcomes of these transfers are likely to be less security, lower pensions and increasing anxiety for a high proportion of the 162,000 people who have transferred since 2015 will be experiencing low returns, lower pension expectations and heightened anxiety.

Taking action

We are continuing to see the FCA sporadically getting tough on bad advisers

But as yet we have seen no coherent move to identify, name and shame advisers who have consistently over-advised for transfer.

I sense from talking with Debbie , that this is only a matter of time.

The current sporadic action on those who have over-advised is not much of a deterrent to those still over-advising.  If the FCA want to cut off the oxygen to the CETV transfer market they must ban contingent charging which is a clear conflict of interest and consider further interventions with regards the destination of CETV monies.

One further question I asked Debbie Gupta was whether she knew the percentage of the £83bn that went into the defaults of the workplace pensions that those transferring were saving into. These default funds are capped on charges, need no advisory charges and are designed for the needs of ordinary people.

Instead of using workplace pensions, the vast majority of CETV money has been invested into Self Invested (non-workplace) pensions where charges are higher and advice necessary.

I question whether the people in this poll taken from September 2017 and conducted on the BSPS members Facebook page, knew just what “letting their IFA manage” their pot actually meant.

poll bsps anon

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

How proactive do we want the FCA?

Screenshot 2019-06-19 at 06.15.53

We get the regulators we deserve. It’s no use us whingeing that we have a reactive regulator if we demand a free market without interventions. But when there is evidence of malfeasance, we demand our regulators are quick off the mark and decisive when they get involved.

This afternoon I will be chairing what Horizon’s Lifetime Savings and Investment are calling a “fireside chat” between two chums, Debbie and Ian, both of whom I know and (like)  well.

Since the third bullet point is deliberately open, I hope that both Debbie and Ian will extend the conversation beyond the issues of DB to DC transfers and touch upon some of the problems with Neil Woodford and his crumbling empire.

As far as I am aware, this session will not be under the Chatham House Rule , but even if it is, I expect both participants will be guarded, the FCA have announced they are launching an inquiry about what has happened with Woodford so Debbie may be able to say nothing at all. Ian may be similarly constrained but…

On the wider issue of proactivity, we are inevitably drawn, when talking of DB to DC transfers to the events at Port Talbot in 2017, the aftermath of which is rumbling on today. I have an ever-diluted story to tell of those days. Diluted because what is happening today is playing out between the regulators, the steel men, the lawyers and Al Rush.

What is important is a statement made on Moneybox last Saturday by a steel man who pointed out he will have to live with the consequence of his decision for ever. The consequences of getting it wrong do not dilute for the customer, they distill.

Knee-jerk or knee-deep?

The FCA found itself knee-deep in the brown-stuff over Port Talbot. I was in the Committee Room when Frank Field lambasted the under-prepared FCA and Megan Butler has since shown a resilience to see through justice for those who have been wronged which I find admirable.

But the question remains, could the FCA have acted faster and – if they had – would many steel men now be looking forward to a lifetime income rather than a lifetime worrying about their wealth management?

To a very great degree this comes down to whistleblowing from the general public and from advisers who are conscious of what is going on.

This is the poll that was published on the Time to Choose Facebook pages run by the steel men through 2017.  The poll was taken days before Al Rush and I went down to Port Talbot the first time. We shared this poll with the Trustees , with the Regulators and – via this blog – with the general public.  I have blocked out the name of the person who posted the poll though he is now a friend.

Just then, nobody took it very seriously.

poll bsps anon

Pension Freedoms have little to do with it.

In 2017, many were blaming the decisions that steel-workers were making on the siren call of pension freedom. I didn’t, that’s because none of the steel men I spoke to had the slightest clue what would happen to their money other than “an IFA would manage it”.

Steel men simply wanted the likes of Darren Reynolds to pay them their pension rather than Tata Steel (who they saw as having taken over the stewardship of their pensions from the Trustees).

There was no question in their minds that they weren’t going to get a better pension having it away from Tata.

This then is the question for Ian Price and SJP. Because SJP did take money out of Port Talbot and only stopped doing so when the full extent of the contagion had emerged.

I’ve no doubt that SJP behaved responsibly at the micro level, but at the macro level, do the big financial organisations like SJP, Aviva and L&G – all of whom had peripheral involvement at Port Talbot – need to step up and say stop? Or is there job to let the FCA do that for them?

The same question arises for the investment platforms that are involved, in whatever way, with Neil Woodford’s fund management.

I fear that many people – including providers and regulators, have hidden behind the excuse that pension freedoms changed everything. It was not the pension freedoms that caused the problems at Port Talbot, no-one talked about them; it was the breakdown in trust exploited by IFAs who have subsequently proved untrustworthy themselves.

A fireside “chat”.

Sometimes, writing a blog, helps me prepare for an event to come and this is one such occasion. I hope that some of the people attending the debate today (and even Debbie and Ian) may have the chance to read my thoughts.

I enter the chat with no clear answer to the question “How proactive do we want our regulator to be?”. I hope that after forty minutes which I hope to be a rigorous debate,  I will have a clearer position.

If I am able to report on what was said and by whom, I will. If not, I suggest that you get yourselves tickets for future Horizon events as they look very good to me!


Fireside chat

FDR – top fireside chatter

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

For the 2m pension excluded.

Reform the payment of pension tax relief to ensure that no low earners miss out

We call on Government to ensure no low earners miss out on the tax top up on their pension contributions. We estimate that this issue hurts the living standards of nearly 2 million pension savers. Government should act to ensure low earners in all types of pension schemes receive pension tax relief






At 10,000 signatures…

At 10,000 signatures, government will respond to this petition

At 100,000 signatures…

At 100,000 signatures, this petition will be considered for debate in Parliament


  • Created byAdrian Charles Boulding
  • Deadline14 December 2019All petitions run for 6 months



Adrian Boulding

Posted in pensions | 1 Comment

The Four Trillion pound lifeboat for (some) British Pensioners.

Screenshot 2019-06-18 at 06.16.24

I was in Westminster last night for drinks on the terrace watching politicians lining up to tell their in-jokes about the Conservative party leadership contest. The jokes weren’t very funny and even if they were, I couldn’t tell you them as the jokers wanted drinks to be under the Chatham House Rule.

The Four Trillion pound lifeboat for British Pensioners

By contrast, we were here to discuss a very serious issue, the changing role of property in later life financial plans. I’ve just read the Equity Release Council’s excellent study called “Beyond bricks and mortar” and I recommend that you do too.

Property accounts for 35p in every £1 of household wealth – rising to 61p for non pension assets. That makes bricks and mortar, the biggest source of finance for those aged 75 or over.

65% of property wealth is held by the over 55-s , a massive 11%  increase since 2008. A third of over 65 households have more than £250,000 of personal wealth in property.

Screenshot 2019-06-18 at 05.45.40

The chart shows that net UK property wealth passed £4 trillion for the first time in 2018 – that’s nearly £79,000 for every household. Mortgage debt is falling as loan to value on our property plummets . We are paying off our mortgages and directly investing in property like never before and this investment has exceeded new mortgage debt every year since the financial crisis in 2008.

Can property stave off a pension crisis for future generations?

It would seem that people’s attitudes to their property are also changing. On the one hand we are seeing our property as useful to us as we grow older

Screenshot 2019-06-18 at 05.45.02

But we’re also seeing something new

Screenshot 2019-06-18 at 05.45.20

Less than 10% of people feel borrowing against a property in later life would be a stigma to them. Only a third of us feel we won’t have need to access income from property and nearly half of us recognise releasing money from property to supplement pensions is becoming more common.

We can no longer ignore what middle England is telling us, our property is though of as part of our pension – and people expect to pay for their breakfast sausages with the bricks from their dwellings.

You can buy a sausage with a brick

For those included in the great home ownership bonanza,  supply of lifetime mortgages is starting to meet demand. This is paradoxically because of pensions. The surge in bulk-buy outs by insurers of UK Defined Benefit Schemes, coupled with the maturity of many deferred annuity savings plans, means that annuities are being purchased at a greater rate.

Insurance companies are having to take not just the longevity risk but also the investment risk and they are looking for return seeking assets – just like everybody else. They have no interest in tying themselves into long-term gilt yields that offer them a return less than inflation. They are very interested in lifetime mortgages against our residential housing stocks which last as long as the home owners.

These mortgages exactly match the shape of the liabilities – people’s income needs in later life. Not only do they mean people can get the top-up income they need to enjoy their retirement, they mean that insurers can prosper in a competitive buy-out market.

Sausages all round.

Am I painting too rosy a picture?

I don’t think I am. The people at the top of the Equity Release Tree aren’t the snake-oil salesmen of yesteryear. They’re the serious politicians who may not be in parliament , but are still pulling strings. People like Chris Pond who chairs the Council’s Standards Committee and David Burrows, Chairman of the Council itself. Add to these a hugely enthusiastic and energetic CEO  in Jim Boyd and you have a trade body I’d be proud to be a part of.

To ordinary people in this country , property is the first thing they think of when they consider financial security in later life

Screenshot 2019-06-18 at 06.19.03.png

So while the politicians laugh and joke about the mess they’re making of this country, these people are quietly getting on with the great work of solving the need for an AgeWage.

A message to the Minister for Financial Inclusion

But I am painting too rosy a picture for those who do not know housing security, for those whose weekly shop starts with a trip to the food bank, for those for whom 10 years of austerity has not led to rising housing wealth but ever greater poverty.

For these people there is no help from Equity Release and precious little help from Government as they struggle to save for a pension.

Yesterday also saw the launch of a very important petition.

We call on Government to ensure no low earners miss out on the tax top up on their pension contributions. We estimate that this issue hurts the living standards of nearly 2 million pension savers. Government should act to ensure low earners in all types of pension schemes receive pension tax relief

I would be interested to know how  many of the nearly  2m pension savers not getting the promised Government incentive to save, will have access to lifetime mortgages.

If we want to be financially inclusive, we’d better think about the 2m who don’t get the housing breaks, as well as those lucky ones who do.

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

The good in gating.

icarus 3


The wonder of the gating of the Woodford Equity Income Fund is that it happened in peacetime. There is no financial storm, the crisis is as random of the fall of Icarus in Breughel’s famous painting.

There’s no doubt that Woodford is right to gate, it’s the only way to protect the remaining investors from the markets, hopefully the fund can find sufficient liquidity to salvage itself (and Woodford).

The alignment of interests between fund manager and unit holders is important. No doubt there are lawyers sharpening their knives but unit holders have a lot more to lose by fighting their manager than by co-operating.

Now, another star manager – Nick  Train , is warning that the risks of underperformance could happen to his fund – Lindsell Train.  I suspect speaking out now is as much a  ploy to encourage his investors to stay than to encourage investors – overly dependent on his fund’s outperformance – to turn down the dial. Nonetheless, it’s good to hear a fund manager in something other than “asset-grabbing” mode.

The link between manager and investor is important and it’s that link which got broken with Woodford. Terry Smith still holds his investors in the palm of his hand and Nick Train is obviously looking to emulate.

That link is severed by intermediation and this may be the longer-term message of the Woodford crisis. The big losers of this – in terms of loss of shareholder value are Hargreaves Lansdown and other funds which took responsibility for the promotion of Woodford. I suspect that there are many heads rolling – and not just there.

The problem of platforms is not just that they disintermediate the relationship between investor and owner but that they become both dating agencies and divorce lawyers. Effectively they are a kind of marriage guidance service in the meantime.

It’s a strange kind of service that introduces, manages and fires and it’s small wonder that Terry Smith has been very shy of getting too close to the platforms.

The good in gating

What is good for investors is not necessarily good for platforms. Although SJP did not directly offer Woodford Funds , they did offer Woodford as a manager and when the gat came down, Woodford left the building. Hargreaves similarly stopped recommending WEI only when it was gated.

By implication , HL and SHP and Openwork and even Kent CC are kicking off against the protection of remaining members. They can only see the negative PR in gating, not the good it does.

Which really begs the question – are these platforms really acting for the member or their shareholders- which is precisely where I’d be starting my inquiry if I was the FCA.

Risk should be taken- where there’s a risk budget.

Robin Powell and other evidence-based investors have for some time been pointing to the risks of active managers losing liquidity. A friend of mine said just this to Neil Woodford a couple of years back.

Will investors in future accept that active equity funds can be as vulnerable to redemptions as any other? I expect they will not, that they will see Woodford as a “one-off” and demonise the manager for his conviction. Meanwhile will other active managers cease investing for any purpose than to make money? Will we  see a flight to closet tracking?

The appointment of Columbia Threadneedle, a house that has long spoken out against star managers, may be a sign of things to come.

But if it is , and we see active management becoming another branch of risk management, then where will we be able to take risks?

The wake up call for investors is precisely articulated by Nick Train when warning against dependency on his returns. Risk needs to be embraced but only when there is a risk budget.

The illiquidity premium

Longer term investors should be prepared for occassional gating, indeed they should welcome it. It is what gives them the illiquidity premium.

If Woodford was promoting his funds as being relatively illiquid, then occassional gating should be part of the risk warnings- I am aware that the T’s and C’s of the fund mentioned this option.

But investors don’t read the T’s and C’s of funds they invest in and that’s the problem. It takes a Terry Smith or a Neil Train to tell them how it is and I hope that is what happens over the next few months.

Far from running scared of gating, fund managers should promote their capacity to gate – to protect short-term investors.  If gating frightens off short-term investors and speculators – that is a good thing; so long as everyone knows the rules of the game


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

TPR’s impatience with USS’ fibs


A previous phoney deficit

Phoney deficits

The Pensions Regulator’s patience with USS and its Trustees is running short.

The FT has got hold of an email from TPR which rebukes USS for overstating its deficit and misrepresenting the views of TPR on discount rates. (you can read the FT article on this link – thanks FT)

The deficit has been presented at various levels- including the £10bn quoted above – part of the 2017 valuation pack. The scheme published a consultation document in January outlining how the plan had a (revised) deficit of £3.6bn , but even that is now showing much too high.

In its January consultation document, the USS set out its approach to valuing the scheme, including the liabilities, and said the regulator

“prefers measuring discount rates relative to gilts”.

But the regulator said in its email to Jeff Rowney, USS head of funding strategy, that this statement by the scheme was “incorrect” as the watchdog had no preferred approach to setting discount rates.

The impact of phoney deficits

The impact of USS’ actions – has been to set the Trustees on a path that requires it demand unsustainable contribution rates to the scheme to meet a notional deficit.

The implications of TPR’s intervention are that the deficit arising from USS’ valuation is too high, that the deficit contributions are unnecessary and that by overstating the deficit, USS and the Trustees are undermining confidence in USS.

We have seen just where this leads. Last year it led to a strike, this year it is leading to Trinity College walking away from the scheme apparently fearing it could be the last man standing.

Just why USS is intent on being the architect of its own demise is unclear. It’s firmest supporter is not the USS, but the University and College Union who have this to say

“This latest revelation will do nothing to calm the frustration felt by many members . . . It is essential that members’ trust in the scheme is restored and maintained.”

Hero Jane Hutton

Jane Hutton

The fearless Jane Hutton stood up to USS and whistle blew to the Joint Expert Panel (an independent group set up to moderate the dispute). To quote Jo Cumbo in the FT

She highlighted a discrepancy between the regulator’s published position on discount rates and how the watchdog’s views were presented in the USS consultation document.

The regulator’s January email to Mr Rowney (funding officer for USS)  was copied to David Eastwood, chair of the USS trustee board and Bill Galvin, group chief executive of the scheme and a former chief executive of the watchdog.

But the email was only shared with the entire USS trustee board in May after Prof Hutton sought confirmation from the regulator about its position on discount rates. In the email, the regulator did not insist that the USS correct the wording in the consultation document, but asked the scheme to “consider doing so”.

The document was not altered.

The regulator is separately probing claims by Prof Hutton that she was obstructed by the USS trustee board from establishing whether the scheme exaggerated the extent of the plan’s deficit in the 2017 valuation. The USS estimated the deficit at £7.5bn at that time.

Now threat of more strikes

The Trinity College bursa has written an open letter to the College’s dons, which includes this statement.

As a responsible employer and as a charity, the Trustees have a duty to protect the College from risks and mitigate those as far as possible. By removing the LES [last employer standing] risk, the Trustees have helped ensure the College’s continued long-term existence as an academic institution and charity….

You can read the  open letter to the fellows of Trinity College Cambridge on Mike Osuka’s blog  though Mike wants me to point out that the blog is not the open letter!

The perceived threat to Trinity College is based on insecurity created by overblown deficits. Even the Pensions Regulator, a most conservative body, has had enough.

There is talk of Cambridge fellows boycotting teaching Trinity students next term

The UCU is now threatening to take fellows back on strike unless there is a change in position at the USS to fall in line with the proposals made to it by the JEP – the independent moderator.

The students will once again suffer. There is no doubt in my mind – and I speak as a parent of a son who has suffered a year of disruption at Cambridge – that the USS are causing unnecessary problems which are leading to disastrous consequences.

It is quite possible that Trinity’s action could prove contagious and that the USS gets what it has warned against, a scheme unable to be supported by its sponsor. If this happens then the USS will be the architect of its own demise.

Who suffers?

It strikes me that while university teachers suffer, students suffer and the tax-payer suffers, USS is not suffering at all. Salaries at USS continue to be paid at very high levels. USS staff continue to parade around as industry authorities and certain elements of the pensions industry continue to hold them up as upholding the principles of prudence, caution and of financial economics.

There doesn’t seem much suffering going on at USS.

The asymmetry of suffering in all this is only too obvious, as is the asymmetry of information.

There is something deeply wrong with a system that allows USS and its Trustees to behave as they do without sanction, whilst all around them pay a high price for their less than transparant behaviour and their promotion of a deficit which is quite obviously a fib.

Team Fib


Posted in pensions | Tagged , | 2 Comments

What does SJP “sacking” Woodford mean?

The relationship between Neil Woodford and SJP is over, SJP sacked Woodford as a manager – that is clear. Since 40% of the funds Woodford managed were for SJP, that makes for a difficult business problem for Woodford, he will have to adjust his business. I am told, by IFA friends on twitter that SJP were not investing in a pooled fund – run by Woodford, but in what is called a segregated mandate, where SJP has the right to hire and fire the managers of the assets but does not have to liquidate the funds if they do so.

This is comforting , the replacement managers of the SJP funds do not have to sell anything till the time is right, and then they only “have” to sell , if there is an imperative to do so. It is becoming clear that the FCA, the Bank of England (through Mark Carney) and SJP (through their own fund governance) feel that something went wrong, but that is all we know.

There is speculation as to how much change the appointment of a new manager will bring.

As with football teams, a change of manager can bring wholesale change or a little bit of tinkering .

But what I had not appreciated, and here I am just showing ignorance, is that not just the customers but the SJP advisers have very little control over who is managing the money, that is a matter for SJP’s fund governance team and advisors.

Which explains Al Cunningham’s comment at the top of this blog. Where Hargreaves Lansdown clients are responsible for deciding on whether or not to own Woodford funds, SJP clients give discretionary control to St James Place as to who manages their money. Quite different models indeed.

So SJP sacking Woodford means more for Woodford than for SJP and its clients

I’m happy to stand corrected on this. I am learning as I go, but this I would say in my defence. It is very far from clear from the press reports about the implications of the change in SJP’s managers and while I am sure SJP are communicating to their clients, they are not communicating to direct investors in Woodford funds (through Hargreaves and elsewhere).

I remain critical of SJP on its fund governance and in particular on the timing of the sacking which happened only once Woodford had to gate his fund because other investors had voted with their feet.

If SJP owned 40% of assets under Woodford management, how had it not dealt with the problems of illiquidity earlier? It is in the nature of segregated mandates that the entity awarding the job mandates how the fund is managed and has the responsibility to ensure that job is being properly carried out.

That SJP only took action once the gate had slammed following the withdrawal of £260m by a Government body, suggests that  SJP were bounced into action.  This I find really surprising as it does not suggest an orderly investment governance process.

Woodford did not become a bad manager overnight, I am told by those who know him that he has been aware of the risks of holding high amounts of illiquid stocks in funds that may need illiquidity and he has lived with this risk for some years. I assume that when Woodford was appointed by SJP they knew of this risk too and that particular controls should have been in place to guard against the problems of the past few months.

I cannot avoid the conclusion that not only has SJP let itself and its clients down, but it has failed all Woodford clients, first by not managing its mandate better and secondly by not sticking with its manager when the going got tough.

Too much transparency?

In a very cute series of tweets , Matthew Bird points out that Woodford was a victim of being too public about what he was investing in.

Now this really is an issue for the Regulator. As I have been writing over the past two weeks, the best way of getting engagement is to tell people where the money is invested.

But if in demonstrating that (an admirable feature of Woodford’s and Terry Smith’s management style), the fund’s investments are shorted by the market, then a number of problems arise

  1. Companies become wary of being quoted of the publicity
  2. Managers become wary of transparency
  3. Investors are returned to darkness and to all the shady dealings that opacity can bring

If what the FCA concludes is that fund managers cannot be transparent about what they hold for fear of short-selling then we have a quite different regulatory issue.

Problems with the fund management model

I find myself reluctantly returning to the position of Robin Powell, the evidence based investor. Chasing returns by changing managers, changing asset allocation , changing investments is a mugs game. Here is Matthew Bird again

Which brings us back to John Kay who asks fundamental questions about the fund management model and finds no answers.

It seems to me that being a top fund manager is about as thankless a task as being a top football manager. You will have your moment in the sun but you are unlikely to avoid sunburn, for every Alex Ferguson of Bill Shankly there are 20 once-loved football managers with reputations in tatters. Today’s Klopp is tomorrow’s Morinho.

For an interesting (if speculative) view of the reasons for SJP and Woodford’s falling out, read Matthew Vincent’s article in the FT Lombard column

If anything, Mr Woodford’s relationship with St James’s Place had to end because the duo had become fundamentally incompatible: St James’s Place an ever more conservative City type, but Woodford still the maverick. Their mistake was to stay with each other for so long.

Learning from experience

Well I’m learning as I go on this – thanks to Al Cunningham , Matthew Bird and several others for setting me right and helping me out (even on the little things like names)

The article has been edited slightly! But the thrust remains the same.

  • Employing conviction-based fund managers who buy and hold is a good thing
  • Transparency of holdings is a good thing.

If Woodford broke the terms of his mandate with SJP, he deserved censure and ultimately sacking. Strong governance of segregated mandates is a good thing and pooled funds need even greater fiduciary oversite. But there is no evidence that he did.

If I am learning about how managers are employed, I can be expected to be pulled up and corrected by good people like Al and Matthew, I learn from being corrected and I hope that those who read my blogs learn from my mistakes too.

What is a bad thing is that many investors are being mucked about and losing considerable amounts of money to the short-sellers because of the collapse in confidence in Neil Woodford and for that – I have to hold those who employed him partially responsible.

If we award managers mandates as long-term investors and sack them when the going gets tough, there have to be good reasons and so far we have not seen those good reasons from SJP. It’s left to Matthew Vincent to speculate that perhaps SJP were asking Woodford to do the wrong job.

Fund analyst Brian Dennehy points out that, in the last month, WEIF was down 8.10 per cent but the supposedly more liquid blue-chip SJP UK High Income was down 8.83 per cent. As a result, the return for SJP clients has been -3.16 per cent since July 2014, while for WEIF investors it has been -1.42 per cent.

The FCA clearly want to look deeper into this and they are right to do so. We need to have confidence not just in the managers, but in those who employ them. What is clear from learning about SJP , is that it is they, not their advisers or their clients – who call the shots. If Woodford only managed to his mandate, the buck stops with the FCA,


Posted in FCA, governance, pensions | Tagged , , , , , , , | 10 Comments

Getting youngsters saving more


Telling youngsters to save more is a waste of time

It’s been a sad 48 hours on twitter watching the wolf pack turn on Paul Claireaux for his cappuccino blog – where Paul postulates that a youngster could have a markedly better retirement for giving up a cappuccino a day and saving the money into a pension pot.

There are many other versions of this argument – it used to be done with packets of fags and NEST are trying it with their sidecar. All are versions on  nudge with a sexy theme disguising a fairly tame idea – “save what you don’t miss”.

Unfortunately people do miss their coffee and fags and low-paid people don’t always stay in the sidecar saving employment. Anyway, the amounts saved rarely amount to enough in practice and the grand plan depends on things that don’t often happen – continuity, perseverance and the right set of financial assumptions.

Oh and if we can’t be bothered to give low-earning people the promised incentives to save, who are we to preach the value of saving anyway?

My problem with financial education is that it’s usually those that have the money teaching those that haven’t how to be like them – and young people don’t necessarily see people like me as role models. Even if they do, the last thing youngsters would admire in a baby boomer was his or her pension.  Financial education is at heart paternalism and youngsters don’t take kindly to that.

There are literally hundreds of tweets on my timeline arguing about cappuccino pensions. What a waste of time – when that time could be spent on getting a better futures

Spending on a better future

The paternalism of financial education usually manifests itself in a demand for self-denial called “saving”. Telling people to save doesn’t go down well but showing people how to spend does – it is the basis of advertising and behaviourally it is a much more effective way of going about things. Spending on a better future begs the question – spending on what?

By a strange coincidence, I am doing three presentations today , which will all incorporate this message. This morning I’m talking with a high street bank on how to get millennials saving more, at lunchtime I’m talking with the Equity Release Council about helping older people spend their savings and this afternoon I’m talking with payroll people about promoting workplace pensions.

In all three talks I plan to focus on spending not saving and on making use of assets like pension pots and houses and work income to spend on a better future.

We all renters

We live on borrowed time, our lease of life expires not when we choose but when we are chosen. Many young people are renting and have no plan to buy, they own less and less, subscribe to more and more. Ownership is not even an aspiration for many millennials.

For younger people, the future seems out of their hands and they are determined to take control. We see this in their determination to reduce emissions and decelerate global warming. And if we ask people about their savings , they want to know where their money is invested and to take control of investment decisions. Once more – watch this video.

In a world where we cannot or don’t want to own, we can at least steward.  The planet is ours to save, let’s spend on a better future.

Turning savers into spenders , spenders into stewards

Our time would be better spent showing people how their savings are invested and giving them the chance to make positive decisions on how their money is spent.

I mean by spent – invested, but people need to understand what is happening to their money after it leaves their bank account, their payslip – even their bricks and mortar.

Giving people a clear picture of what happens to their money is critical to keeping their interest.

Instead of issuing people with annual statements full of financial jargon and compliance warnings, we could be reporting on how money has been spent. The only fund manager I have known who does this is Terry Smith – and look how successful Fundsmith is.

And of course, when we have turned savers into spenders and spenders into stewards, we have changed the nature of saving for the better.

We do not need wealth , we need to pay the rent

This blog challenges the conventional view of pensions as wealth and replaces it with a view of pensions as a way of paying the rent. This is the new reality for many youngsters.

We should stop confusing the need to pay the rent with ownership, stop suggesting that we can dive into our pension savings to put down deposits on houses.  We need pensions to pay the rent – not to amass housing equity,

We need to stop thinking of pensions as a means of becoming wealthy and start thinking about our responsibility to each other not to become a burden in later age. Investing in our retirements should be a deeply satisfying – socially responsible behaviour.

Appealing to the responsible instincts of young people is much more likely to win their hearts than appealing to their greed.

If we are to get people to take pensions seriously, especially young people, we need to forget  about swapping pensions for home ownership.  We need instead to get people using the collective power of our pension pots to do good things. This starts one person at a time.

So when I talk today to that big high street bank, and the equity release council and to the payroll  community, I’ll be talking about this paradigm shift that is needed to get people saving more. I hope to meet some of you during the day!




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

Millennial fightback

The greatest current threat to motor manufacturers is that people no longer want to drive. The second biggest threat is that people no longer want to own a car. That’s the message that comes loud and clear from an article in the FT that features the Volvo car stand with no cars on it.

Screenshot 2019-06-04 at 05.43.43

I have to admit a reluctance to get in my car myself, my personal mileage was below 5000 miles last year and I keep my car out of nostalgia and for the personal number plate S4 HEN – which tells me who I’m owned by!

Car’s are not alone – what about houses?

The value of owning a record collection, of philately , of wine cellars – all seem to have dropped. People who I talk to who are under 35 no longer value themselves in terms of what they own. I suspect that we are returning to a different set of values that may be rather less materialistic and (dare I say it) more spiritual.

I suspect that houses are also way down on value. Owning property is certainly not a priority for my son (who was bullied into getting a driving licence but who has never used it – other than as identification).

Is this behaviour a result of pragmatism, or does it continue a trend we are seeing?

If young people fall out of love with home ownership, what will this mean to the value of older people’s housing stock? Will the equity on which so many of us rely for financial security prove illusory?

A house is only worth what someone is prepared to pay for it and as we age, there is a very real chance that ownership rates amongst older people will fall. The lack of income arising from pensions will inevitably place greater reliance on equity release and the lifetime mortgages which pass property from self ownership to the ownership of lenders.

Milennial fightback

There is only one way for millennials and that is to take control. Historically that has been through securing ownership of cars, houses and possessions.

I don’t see the urge to control today among younger people who are quite happy to stream services and use them on demand.

Instead of owning, millennials are investing heavily in themselves. They are taking jobs that are interesting and rewarding in themselves, not just a means to get a mortgage.

They are buying into training and taking an inordinate interest in their personal finances. Bloggers like Iona Bain – of young money – are the new Martin Lewis’ but they are talking to a new generation more interested in how their money is invested than what to buy with their savings.

I am dubbing this “millennial fightback” as it is their way of dealing with the impossibility of competing with the baby boomers on the baby boomers terms.

A car stand with no cars

The motor industry is first to feel the wave of change. The shift towards car- leasing or in the most extreme – Zip car – is illustrative of a new way of dealing with ownership – that moves from the balance sheet to profit and loss. Kids no longer want a balance sheet weighed down by personal possessions which they see as liabilities as much as assets.

This has profound implications for the savings industry too.

We must recognise it is not the valuation of an asset that is most important to a young person but its utility under ownership.

People are already moving away from conventional measures of worth (the valuation) to a different measure “the value of their money”. If you start valuing your money by what it is doing , then your interest is in the investment itself – what it does – not what other people will pay for it. People are interested in cars as a service , not as objects and property and even savings  may follow.

How this plays in pensions

There seem to me to be two competing views of pensions . Those who see pensions as part of wealth are owners. Those who see pensions as a means of doing things, are renters.

We do not of course own ourselves freehold, our lives are on leases which expire when we do. Younger people do not even take for granted ownership of the planet which they see as under existential threat, they may possess a blighted planet when their parents are gone.

This sense of possession rather than ownership could mean a reversion to a view of a pension as something that does something rather than as a balance sheet item.

Currently the  “pensions are wealth”  brigade dominate the agenda and have pretty well excluded the idea of pension as a utility.

But that is likely to change over generations. The question for pension providers today is how to ride both horses in mid-stream.

horses stream

Posted in actuaries, advice gap, pensions | Tagged , , , , , , , | 7 Comments

Pension PlayPen lunch – “are we better off out?”

Pension Play Pen lunch – Monday June 3rd 2019

Brexit and Trexit

Brexit and Trexit are in the news, we all know about Brexit – some know about Trinity College Cambridge’s unilateral departure from USS (Tr-exit). Is Trinity College better off out….. and is Britain?

Does collectivism have a role in today’s world?

Should the strong shoulder the weak?

Who picks up the bill if they do?

Is the bill worth worrying about?

The Pension Play Pen meets as it has met the first business Monday of the month for the past 10 years. We will this week be downstairs at the back (not upstairs) in the Counting House and we will be meeting at 12pm, eating at 12.30 and breaking at 1.30 for a more formal conversation.

All are welcome, the cost will be c £15 shared between us and I look forward to seeing you in the Counting House at Monday lunchtime.

Posted in pensions | 1 Comment

We all love disruptors till we feel disrupted!


Yesterday I wrote a blog in favour of annuities and Britain’s favourite annuity broker – Retirement Line. My argument was that some of the best retirement income ideas and one of our best brokers are unknown.

What a hullaballoo ensued! My blog was unbalanced

My blog said nothing new


My blog was an advert

I was monetising my blog


My blog wasn’t worthy of my blog

My blog was deeply misleading


Just what is wrong with Retirement Line, Annuity Broking and advertising a service?

I get the feeling that Retirement Line are eating someone’s lunch and that I’ve just walked into an advisory war-zone.

I’ve no idea why my post should be reckoned deeply misleading, I do believe there is a strong case for fixed term annuities as I reckon annuity rates are likely to go up, not just when we see QE unwind but because mortality assumptions are changing in the direction of better annuity rates.

I appreciate that fixed term annuities carry certain risks which are advertised in the link to the MAS guide which you can follow here. If anyone thinks that annuity rates will go down , they can lock into lifetime annuities today. They would do well to use the open market option offered by Retirement Line and to make sure they get any enhancements available to them.

That I didn’t know about Fixed Term Annuities, suggests that most people don’t know about them. Most people don’t know much about annuities at all, which is a shame as they suit a lot of people who want a wage for life.

Research from Aon and from Tilney BestInvest suggests that annuities remain the best way for many people to turn their pension pot into a pension income.

What is wrong with adverts?

My blog is a series of adverts. I advertise Pension PlayPen, AgeWage, First Actuarial , FABI, CDC  and annuities.

Some of these earn me money (AgeWage, First Actuarial) some lose me money (Pension PlayPen) and the remainder are advertised out of my conviction.

People want conviction. If along the way, my conviction gets in the way of your business model then so be it. We are unlikely to work together!

If my blog did not have the courage of my conviction, no one would read it. I will continue to promote ideas and businesses that I support and Retirement Line is a business I support. I may well speak with them about my pension pot if I cannot see a way to exchanging it for a CDC pension.

What is wrong with adverts?

Feeling disrupted?

If you are one of the people who feel angry about my blog, ask yourself why.

Screenshot 2019-05-31 at 07.13.05.png

If you feel I have been disingenuous, as Brian Gannon did, then you can say so in the comments on my blog. I don’t edit those comments or take them down – unless they are spam

But the passion of your response is probably born out of insecurity with your current views or those of your business and you should ask yourself whether you’re angry about my being misleading – or my being challenging.

CDC and Annuities are linked in several of the responses I’ve got and I suspect that both are seen as a threat to advised drawdown. I don’t think that advised drawdown is under threat, there is high demand for it and low levels of supply. At the moment, advisers can make a good living out of it with relatively little challenge. It is not a particularly competitive market and the FCA knows it.

CDC and Annuities have the potential to challenge advised drawdown and the margins it is paying fund managers, platform providers and advisors.

If annuities  are offered to ordinary people by Retirement Line then that is good. Retirement Line tell me they refer many inquiries on to advisers for help on drawdown , equity release and other advised products.

Rather than feeling angry about Retirement Line and the ideas in my blog, advisers should be beating a path to Fletton and join the increasing number of intermediaries working with David Slater & Co.

Posted in pensions | 1 Comment

Risk-taking , ground-breaking academics in our universities

Jo Grady

I have been impressed by the way academics , through their unions, took on university employers and the received wisdom of the pension industry and refused to let their defined benefit scheme close to future accrual.

I’m pleased that one of the leading lights in their demand to keep USS open was last week elected to General Secretary of the UCU – the university staff union. Congratulations to Jo Grady.

Screenshot 2019-05-28 at 06.07.41.png

As her twitter header reminds us, the USS dispute has asked fundamental questions not just about pensions but about affordability and groupthink..

Jo’s points are central to the arguments that Hilary Salt and Derek Benstead have been putting forward to UCU. Hilary was quite explicit at the First Actuarial conference in challenging the Pension Regulator’s position on self -sufficiency (since modified to partial dependency). Pension Schemes do not have to behave as if they were insurance companies, unlike insurance companies , they can call upon a sponsor – in the case of USS a sponsor with a history going back 600 years.

Risk can be taken collectively

One of the sadnesses of the University dispute over pensions was that it broke the mutual bonds between trustees, employers and members. Since the dispute we learn that one of the Trustees – Professor Hutton – had to whistleblow to get information from the scheme which she feels would have allowed her to push back against the reckless conservatism of scheme funding.

Now we learn that one employer, Trinity College Cambridge, is seeking to break from USS because it feels too tied by the obligations of mutuality. This too is very sad.

When those who have greatest strength (strength not earned but endowed) , choose to compete rather than collaborate, we see the beginnings of the end of Britain’s academic greatness.

The capacity for risk, that is inherent in our university system, depends on established institutions such as Trinity, enabling new risk-takers to come through. If we lose the solidarity of the pension consensus, we lose much else besides.

Jo Grady 2

A return to good order?

Much has changed in  University pensions, the JEP reported that the information that Professor Jan Hutton had asked for, would – had it been disclosed – confirmed that the USS position on de-risking was unnecessary, that funding of USS need not have increased to the proposed levels, that the scheme was affordable and that the teachers had reason to strike.

Despite the employers (generally) accepting the JEP position, the USS continues to follow the accepted wisdom – espoused in the Pensions Regulators current strategy, that schemes should seek to  be funded independently of employer’s future contributions.

This may work for the PPF – where there is no economic interest in disconnected employer paying levies – but it does not work for the USS, where the bond between employer and staff is to a high degree – through the pension scheme. The principal of deferred pay assumes just that – ongoing employer contributions to USS.

It may be too late to restore the principles behind pensions as deferred pay to the provision of  private sector DB , but it is not too late to save further value destruction in the name of “de-risking”. Indeed there is much to be gained by reintroducing the concept of risk-sharing into pensions – rather than dumping all risk on individuals.

Without the tremendous determination of the UCU, Jo Grady to the fore, the buds of risk-sharing we see in the adoption of CDC by the DWP, would have been frozen.

Jo Grady 3

Better off together

This country funds universities through taxation and  student grants. Universities are able to pursue greater outreach by their entrepreneurial activities – including funding many start-ups that are going on to drive our long-term economic growth. Whether in science, the arts , engineering or economics, we rely on our academics to drive progressive thinking – to be a force for good and to encourage risk-taking.

Without risk taking, the great experiments on which our society is built, would not have happened. Without universities , the science that has driven Britain’s pre-eminence would not have happened. We need to pay our thought leaders to lead and we do not have to make them the CIOs of their self-invested personal pensions.

University academics are no more ready to manage their later life finances than postmen. They are built for better things.

We have trustees a plenty who can manage schemes that give them scheme pensions or “wages for life”.

This is not to discourage those in USS or Royal Mail who want to become pensions experts. Sam Marsh, Mike Otsuka, Denis Leech, Jane Hatton – indeed Jo Grady are all quite capable of managing USS as Member Nominated Trustees. They undoubtedly could run their own pensions but choose not to. They realise they are better off together

Jo Ogrady 4

As an entrepreneur – I do not need or want to manage my own pension

There are some who argue that their business is their pension, they are taking a great risk relying on their entrepreneurial activities to fund their later life. They are entitled to take that risk – but I am not with them.

I use my endeavours as a businessman to create for myself an income for life and I know that when I have achieved what I want to do with AgeWage, I will be able to move on to a different kind of living – I will call it retirement. Whether I ever get to the point where I fully retire- I doubt – when my father gave up work – he gave up the ghost and I may be like him.

But my father had an NHS pension and I have a Zurich pension and it keeps me going, helping me so I don’t have to drawdown on shareholders funds to meet my financial needs. I am also grateful for the work and pay I get from First Actuarial (including their pension contributions).

To a great degree, the USS are not just struggling for academic staff but for us all. We want to be free – free of financial worries in retirement – for most of us that means having a properly funded pension. Jo Grady and others are holding the red-line for their scheme and raising the bar for the rest of us,

better off together.png


Posted in pensions, USS | Tagged , , , , , | Leave a comment

Retail platforms – a boat worth missing?

I hadn’t realised until yesterday that the FCA has a SIPP and Platform team in the Retail Investment supervision department.

For most of us , the idea that we are buying into a platform when we save into a pension is counter intuitive. Most of us don’t stop to think where our money is going , let alone embrace the concept of an investment platform.

I remember at Port Talbot, watching the eyes of steel men glaze over as advisers talked to them of the merits of the various platforms they were being offered – platforms mean different things to different people but if you work in a steelworks – it has a particular meaning which does not translate into money matters.

How platforms changed retail

Clive Waller has been dubbed Mr Platform (as John Moret is called Mr Sipp), both get their names from understanding early in their gestation, that the Self invested personal pension and the platforms they provide, could radically redefine the retail financial services market.

When Ian Taylor and Transact started offering advisers the opportunity to put together their own funds using Transact’s platform technology, the IFA moved from distributor to manufacturer and vertical integration had begun. Now a few other entrepreneurs have followed and there are rival platforms to Transact – Novia, Nucleus, Cofunds, AJ Bell and a few insurers who have bought into the technology. Platforms are immensely powerful making their founding entrepreneurs every rich.

Add to that list a Kiwi – Adrian Durham – who brought FNZ to these shores and you get a reasonably complete picture of the platforms that IFAs use to make a living and build embedded value in their businesses.

Any IFA reading this will smile and ask me to tell them something that they don’t know. Anyone other than an IFA, will marvel that platforms and the SIPP tax wrappers that come with them – are important enough to merit a department of the FCA.

Platforms may not have changed the world but they have changed the dynamics of the funds industry.

Institutional platforms miss the boat

I noticed that Professional Pensions ran an investment platform award at last week’s shindig in Park Lane. Mobius won the award, a company that most people have never heard of. I was head of sales for a time for its previous incarnation (Investment Solutions) and since I’ve left it’s stopped pretending it can sell funds of funds to investment consultants and learned from retail platforms to empower consultants to do that for themselves.

Mobius is allowing institutional advisors to offer vertically integrated products to their clients and to benefit from those products precisely as the retail platforms did. The difference is that rather than being a pure funds platform, Mobius is an insurance platform and the funds it offers come wrapped (reinsured) by Mobius and have to obey the permitted links rules pertaining to insurance companies.

These rules prevent the insurer offering inappropriate investments to its policyholders. Permitted links are currently under review by the FCA. 

The review has been prompted by protests from insurers and advisers that insurance platforms cannot provide the flexibility to advisers available from retail platforms and in particular cannot offer what is referred to as “patient capital”.  The issues are to do with illiquidity, particularly the illiquidity of property and other forms of infrastructure investment.

Institutional platforms like Mobius have not been able to be as racy as their retail cousins because they use reinsurance wrappers which require them to abide by permitted links regulations.

Meanwhile the non- insured institutional platforms offered by custodian banks, have failed to pick up on the prevailing trend toward vertical integration and have missed the boat.

 A boat that may have been worth missing

Many of the SIPPs and platforms that they use, are now polluted with toxic assets like Dolphin Trust (that I discussed yesterday).

Allowing advisers to shove rubbish into your SIPP and on to your platform is a risky business. SIPPs have argued in the past that they cannot be responsible for what regulated advisers choose for their clients and that they don’t have a supervisory role.

Because the platforms don’t reinsure funds – the permitted links rules don’t apply and there is little or no friction.  This has led to many funds and vertically integrated funds of funds appearing on reputable platforms , going belly up and leaving the platform, the SIPP and the adviser with a lot of explaining to do.

Typically the adviser walks away and either sets up abroad or phoenixes into another entity in the UK leaving the SIPP manager and the platform holding the baby.

It is the FCA’s job to find somebody accountable for what is happening and that is proving very difficult.

It is extremely difficult to recover the money that is lost from a fund failure and often the cost of recovery wipes out any gain to the investor from the recovery process. That is why retail investors have direct access to compensation from the Financial Services Compensation Scheme (FSCS).

But FSCS – like the PPF – needs protecting, There are only so many claims that can be passed on to other advisers , platforms and SIPPs before the costs of claim make the whole shebang unviable.

Permitted links may have saved insurance platforms from the agonies that retail SIPPs and platforms are waking up to. The custodial banks that refused to play, may feel the boat  was worth missing.

Hargreaves Lansdown and St James’ place

In different ways , these two organisations have redefined the way that retail platforms can operate successfully.

Both have unashamedly targeted “wealth” and kept a tight ship. To follow the conceit, their boat had pretty exclusive passenger lists and their crews make sure that those who are onboard are well vetted.

Hargreaves Lansdown has offered an execution only service that appeals to experienced investors who don’t want to use advisers while St James Place offers an advised service where the cost of advice is born by the platform and passed back to investors through higher fees.

Both models are highly popular, both companies have high levels of confidence among their customers, but their boats depend on exclusivity.

A boat for all?

I sense when talking to regulators , that they would like to see the kind of model that works for Hargreaves, SJP and for the wealth managers who use platforms responsibly, available to everyone.

We are beginning to see mass market products emerging. Pension Bee could be called a “boat for all”.  Surprisingly – the workplace pensions have yet to realise their position as mass market pension providers and are failing to build the level of trust and engagement that the Pension Bee-keepers are creating with their SIPP- holders.

Organisations like Smart Pensions are getting there and it’s easy to see NEST and People’s providing a Pension Bee type service in time. The large insurers are generally caught between offering a direct service or relying on advisers. Some – such as Royal London, have decided to work with advisers exclusively, others -such as Quilter – are looking to follow the route pioneered by Allied Dunbar and now operated by SJP, the adviser platform.

All of these models are looking to provide a boat for all but none have yet found the way to meet people’s desire for a wage for life. Retail pension products remain anything but pension providers.

The future is in “Customer need”

I remain obdurately of the opinion that the boat for all is a boat that treats everyone as one and offers benefits collectively through some form or other of CDC.

I don’t see CDC as an institutional produce -even though its first UK incarnation – Royal Mail – will be an institutionally sponsored and devised product.

I think that the trust based pension structures – the master-trusts – are ideally suited to using the technology of platforms to deliver a simple one size fits all collective pension which still allows people the option to opt out into the flexibilities of SIPP platforms.

Indeed – the ongoing dynamic for pensions may be between a choice between the simplicity of a wage for life and the complexity of the DIY SIPP.

I mentioned this to the FCA’s Charles Randell when I met him last month and I’ll talk of this again when I meet the FCA’s pension team in June.

I believe that there is a middle ground that brings collectives and retail platforms together and it can be best defined today by “Customer Need”.

We need platforms, tax wrappers, advisers and regulators that recognise that customers need the choice not just of SIPPs but of not having to take any choice at all. CDC offers that other choice,

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

Grand designs from Dolphin Trust

Screenshot 2019-05-25 at 07.04.21.png

If you want to invest in Dolphin Trust , you can still do so by following the link behind the advertisement above.(though the telephone number doesn’t work and you’ll just be handing your contact details to a sales team if you fill in the capture form.)

The people behind BPI are Rajan Aggarwal and Mithun Vagdia. I’m sure they’d be pleased to talk to you about Dolphin Trust.

You can even watch a video advertising Canisius Careee, one of Dophin Trust’s investments. These are “real pictures”.

It’s property backed – it’s German – you get a first charge  and the bloke doing the voiceover sounds like someone you’d have a drink with – what could possible go wrong?

Screenshot 2019-05-25 at 07.12.07

Remember – these are “real pictures’ (even if the video is 2 years old).

Alternatively you can contact the Landlord’s Pension and find out that the truth about Dolphin Trust is exactly as Best Property Investment would have it. The “truth exposed” turns out a ringing endorsement after the Landlord’s “due diligence”.

You can contact Landlord’s Pension consultants like Simon King, who promises that he “can visit you at your home or office to help you invest in property securely and profitably using a pension”.

You can meet the whole team here

Neither the Landlord’s Pension or BPI appear to be FCA regulated.

The reality is rather different

The true narrative behind the Dolphin Trust scam is brilliantly told on Radio Four’s You and Yours program.

Listen to the program here

You can follow the sad stories of the victims through this BBC article by Shari Vahl.

It’s a narrative that – told by an unregulated investment salesman- proved irresistible to thousands of people with savings and pensions.

I know who these salesmen are, some are in my Pension Play Pen linked in group and one or two are actually connected to me on linked in. They are integrated into the financial advisory community but they are not regulated.

Here are some more of  the people who have been selling Dolphin Trust

There’s Tim Blogg (@tractorboy on twitter)

There’s James Hall

There’s William Butterwick

and in Ireland , there’s Cormac Smith

Then there’s the man who’s responsible for producing financial accounts for Dolphin International- Tom O’Connell.  The problem is there are no recent accounts

And of course there’s (ex) CEO Charles Smethurst , the man who promised to send a million dollars every day to Singapore to pay back the Singapore investors.

This is the video used to explain what Dolphin was about to Far Eastern Investors

Here’s Charles being interviewed in 2012 about Dolphin. Explaining how secure Dolphin is to investors. It includes at minute 6 a detailed explanation of the exit strategy.

Where there’s no financial capability – there’s Dolphin Trust

You can of course find out more about Dolphin Trust and its nefarious behaviour by visiting Angie Brooks’ pension life site.. Angie has been campaigning about the risks of investing in Dolphin (now German Property Group) for some time.

In September 2016 she wrote about  the exposure of the Trafalgar Multi Asset Fund

After the disasters of failed pension schemes Capita Oak, Henley and Westminster (aggregate of £20 million lost to over 500 victims through investments in Store First store pods – wound up by the Insolvency Service), there are now concerns about the suspended Trafalgar Multi Asset Fund of £20 million.  The board of directors have published the below report and are investigating how this fund came to be mostly invested in one asset: Dolphin property development loans.

In fact, Dolphin was one of the assets of Stephen Ward’s London Quantum scam which is now in the hands of Dalriada Trustees (appointed by the Pensions Regulator).  Dalriada stated a year ago that Dolphin was not a suitable investment for a pension scheme and yet the investment manager of Trafalgar has invested most of the fund in Dolphin.

The unlicensed adviser to the victims was also the investment manager of the Trafalgar fund.  The advisory firm, Global Partners Limited – which then changed its name to The Pension Reporter – was an agent of a firm called Joseph Oliver and was not licensed to give pension or investment advice.

It seems that certain vulnerable people are condemned to suffer scams such as Dolphin because no-one is prepared to shut down firms like Dolphin and stop the salesmen selling this rubbish from doing so.

Dolphin Trust is not new news, but the You and Yours expose makes doing something about the sales ecosystem that still exists in the UK , that much more possible.

In the couple of hours that I’ve been looking at Dolphin Trust, I’ve noted that Dolphin Trust was recommended by Darren Reynolds and Andrew Deeney of Active Wealth Management to people he was advising on BSPS benefits

Andrew is now at Fortuna Wealth Management having left Active behind him. Darren Reynolds has not been heard of since trying to explain the charges on the pension solution he sold to those transferring out of BSPS.

I’ve noted that Dolphin Trust was also linked to FCA regulated advisers Gerrard Associates, which like Active Wealth Management – used its regulatory status to scam the vulnerable.

Last weekend I said in the Times that it is time the FCA and tPR got on the front foot and stopped the ongoing sales of unregulated investments and the kind of fractional scamming sold by Active Wealth Management under the cover of legitimate SIPPs.

I will say it again, as Baroness Altmann said on You and Yours. It is not enough for the FCA to know what’s going on, it’s got to stop what’s going on and that means making it clear that those who have sold these funds in the past, don’t sell funds in the future. That means just about everyone mentioned in this blog (though I exclude Ros, Angie and the presenters of You and yours!)

Of course this isn’t an inclusive list and yes there are probably hundreds of other salespeople both in the UK and abroad who’ve sold Dolphin Trust and would sell similar as long as it had a 20% sales commission sticker on it.

And if you go back to the top of this blog, you’ll find the people who are still promoting Dolphin Trust on the web and – guess what – they all live in this country and can be contacted using the links supplied.

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

British Steel – workplace pensions go missing


Maria Espadinha’s  excellent article in the FT’s Advisor clarifies to financial advisers that were Greybull to go into administration, there would be no impact on the new BSPS.  It’s a timely reminder as there will undoubtedly be increased vulnerability amongst traumatised British Steel workers in Teeside and Scunthorpe.

The Facebook page that members of the new BSPS use to talk with each other , post her article to clarify the position for pensioners and deferred members of the scheme. The scheme does not depend on Greybull’s money and therefore it is business as usual for BSPS. As ever, it is Stefan Zait who provides the information.

Such articles keep the lead generators stay away from these sites.

British Steel’s Workplace Pension

The FT article ends with sombre words from Paul Stocks

“there may be a little relief that their DB pensions are no longer at risk from British Steel’s potential failure, for the majority this will be scant comfort given that their livelihoods (and those of families, friends and neighbours) are on the line.”

With the jobs come pensions , not the defined benefit accrual of yesteryear but a healthy contribution into a Legal and General workplace pension that covers the staff in the Teeside and Scunthorpe plants.

It is a good plan with very low charges and a high contribution rate (relative to auto-enrolment minima).

The plan , like Tata’s equivalent (which is with Aviva), is little discussed but it too is under threat from the very probable collapse of Greybull. The plan was funded to offer some continuity with what came before. But if Greybull’s business does get taken over, it is only too likely that what will replace the current contribution rate, will be something a lot less generous.

It is in the nature of modern pension policy that the minimum viable product is set at the bare bones auto-enrolment rate.  Let’s hope that Greybull survives, but if it doesn’t, let’s hope that the jobs of the British Steel workers are preserved – with salaries and pensions unreduced.

Putting staff last

We have now reached a point in corporate management where pensions are considered as “costs” rather than “benefits”. The business of private equity firms such as Greybull is to reduce costs, part of the attraction of British Steel to them was that it came without the long-tail pension liabilities that stayed with Tata.

The sorrow is that even with their pension-lite staff liabilities Greybull has not been able to turn British Steel into a viable business.

As with Monarch Airlines , Comet and Ryland Snooker Halls (all funded by Greybull Capital) the debt that has been pumped into British Steel has been created by the Greybull management and it looks very likely that that debt will be the first credit in line , if British Steel crashes.

As this article in the Guardian points out, the financiers  of Greybull are unlikely to have suffered if British Steel goes under.

The people who will suffer as Paul Stocks reminds us – are the staff.

Workplace pensions matter too

There is currently protection for defined benefit promises through the PPF, but there is no protection to employees for the loss of future defined contributions into workplace pensions.

The implied contract between employer and staff to meet pension contributions lasts only as long as the employer chooses to fund both salary and pension.

While the funds which have been built up to date are safe, the future pensions that they buy are now under threat as the jobs that fund the pensions are axed.

It would seem that at British Steel, the future of the British Steel workplace pension is so small a matter as to not be mentioned in any article I have read on the impending closure.

But the workplace pension does matter, it comes with the job and the funding of the workplace pension reflects the importance historically that pensions played to steel workers.

A pension is a pension

If you are a British Steel worker, you will probably not be thinking about your workplace pension right now. You will hopefully be consoled by Maria’s article that your rights under new BSPS are secure. But your rights to future contributions into your workplace pension are under threat and those rights are part of your remuneration package.

While the eyes of the world have been on the defined benefits within BSPS, you have been building up a personal pension with Legal and General which supplements your state pensions and any DB rights you have.

I wrote at the beginning of last year that both Tata and Greybull have under-promoted their workplace pensions and you can see why.

They did not want these workplace pensions connected in any way with BSPS transfers. They succeeded,  the Tata and Greybull workplace plans were treated as irrelevant then so that they  can now be sidelined. That’s what’s happening.

I have pointed out  on this blog that Aviva and Legal and General – their management and their IGCs stood to one side and did not promote their workplace pensions to Tata and British Steel staff (respectively). I have complained that these excellent plans, capable of taking transfers, were ignored by IFAs and by the FCA and tPR. Had these plans been promoted , rather than some of the SIPPs into which steelworker’s “wealth” were invested, many of the problems that are emerging today would have been avoided.

Where was the protection for staff interests from the employers? Why did the plan providers stand back and where were the Regulators? Who was protecting your BSPS pension then and who is protecting your workplace pension now?

You deserve protection and so do your pension contributions. If your defined benefits were at risk (and there is every chance that Tata Steel will come under pressure following the break up of Thyssen Krupp’s partnership) then the Pensions Regulator and the Work and Pensions Select Committee will swing into action.

But a pension is a pension and who is fighting for you and your workplace pension?

Government – British Steel worker’s workplace pensions matter too!

BSPS Missing


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

MPs call the conflicts of contingent charging

This is good news. The pressure on the FCA to ban contingent charging for pension advice must continue. Because it opens the door on wider issues which I will explore in this blog.

You can read Frank Field’s letter to the FCA’s CEO , Andrew Bailey here (someone should tell him the FCA has moved!). Field is urging the FCA to look at compromise solutions, I agree. There are people who need help on DB pensions who cannot afford that help and there may be ways to accomodate these special needs into a framework that stopped the use of contingent charging in the generality.

Why hasn’t the FCA acted so far?

It seems the FCA are running scared of investigating the links between firms that charge for pension transfers on a “no transfer no fee” basis and the provision of bad advice

I am genuinely surprised to read this.

The FCA has called the industry for evidence of the damage that contingent charging has or hasn’t done, but it has its own data from its own investigations. What is holding the FCA back?

Isn’t it time that the FCA took the issues surrounding contingent charging more seriously?

The issues are conflicts of interest between an advisor’s business model and its client’s needs.

Take the lid off the contingent charge powder keg and any spark will ignite not just pension transfers but the wider issues arising from vertical integration.

This is what I suspect holds the FCA back.

Financial planning as lead generation

There is a conflict of interest between the needs of wealth managers (wealth to manage) and the work of financial planners (protection against living too long, dying too soon or losing an income).

Since the big bucks are in wealth management, financial planners (including those offering financial well-being in the workplace) are becoming little more than lead generators for wealth managers.

If every solution to the financial planning involves using an allied wealth management solution, it is not hard to see how financial advice gets distorted.

This is at the root of the contingent charge problem.

It is not just that contingent charges take the friction out of  the charging and collection of fees for transfer advice. They also liberate the wealth stored in DB plans for the benefit of wealth managers.

It is hardly surprising that the contingent charging model was created and deployed by Tideway, a wealth manager.  For Tideway, DB transfers are the basis of the wealth management business. Much the same can be said of St James Place and Quilter. Take away contingent charging and the whole funds eco-system is starved of the oxygen of new business.

The Treasury angle

The wealth management lobby is a powerful one. It influences the Treasury, The Work and Pensions Committee, has the interests of the public’s financial futures at heart. The Treasury has to balance the books.

This is another conflict, but a more fundamental one.

The impact of pension transfers in the short term is to bring forward revenues for the Treasury at the expense of the long term financial futures of ordinary people who otherwise would have had a defined benefit pension scheme.

The wealth management industry, including advisers, platform managers, fund managers, asset managers and the host of those who charge to the funds, is what the UK financial services industry is.

It needs constant feeding and the best source of its nutrition is the trillions locked up in occupational pension schemes (especially the DB ones).

This could be why the FCA are dragging their feet

Thankfully we have a parliamentary democracy that isn’t going to let this lie.

Well done Nick Smith.

Screenshot 2019-05-20 at 06.24.04.png

The long term solution is collective

If we are to break this cycle of conflicted lead generation , we will have to take on the demands of wealth management and create an effective lobby for collective pension provision.

DB pension plans are an effective way of delivering a wage for life. They are unaffordable to some employers and so we need to look at other ways to deliver effective pension planning. CDC is one other way.

De-risking DB plans by promoting DB transfers – as happened in 2017 through the irresponsible behaviour not just of advisers, but of trustees, journalists and (through the absence of action) regulators – is not a good way to deliver pension outcomes.

The wealth advisory model has its place, but its place is not Port Talbot.

Nor is wealth management the answer for most of the £36bn that left occupational schemes in 2017.

The tap that was turned on was marked “contingent charging” and that tap is still open. Though transfers are less common today, it is not because of a change of sentiment among wealth managers, it is because the cost for their lead generators has risen due to PI premiums. Many Pension Transfer Specialists can no longer generate leads for their wealth managers because of the cost of Professional Indemnity Insurance.

This is a crazy way to regulate the flows of assets.

The FCA belatedly are looking into advisory practices and I would be very surprised if any of the 30 firms that they are investigating conducted transfers using upfront fees.

Sadly, for those who have paid for poor advice out of their funds, the findings of this review may prove too little too late. For those advisers who have not been caught up in the contagion of conflicts, there is little to feel good about. They will have to pay higher fees to fund compensation through FSCS and the reputation of their (good) work will be tarnished.

Contingent charging should be banned and the murky world where wealth managers use financial planners as lead generators should be investigated.

Above all we must promote the power of collective pension schemes to deliver good outcomes to ordinary people and stop pretending that liberating these pensions into wealth management solutions is the answer for ordinary people.

port talbot 4


Posted in pensions | Tagged , , , , , , | 1 Comment

AgeWage is closing its investment round (but you’ve still got a week to invest)


We’ll be closing our investment round with Seedrs on Friday 24th May. As I write, that gives readers a week to invest. You invest by clicking the link above, if you want to invest more than £5,000, drop a line and I will send you a full prospectus (you can also download the prospectus together with other supporting documents from Seedrs).

We are of course over-funded to the tune of 157%, a tremendous vote of confidence from the 427 people who’ve invested via the platform and to the larger investors who’ve come to us directly.

I’d particularly like to thank John Roe, who has – in the latter stages of the campaign stepped up to be our lead investor. John, as a private individual is responsible for nearly one third of the money we have raised in this round. He manages my pension and many billions of investments for people like me who invest in Legal and General Multi-Asset funds.

Proving the concept

In an abstract way, we have already proved that people are prepared to invest in an idea which though not fulfilled – is now reckoned to be worth over £3.5m.

But I am under no illusion, turning a good idea into a minimum viable product that can influence people to take better pension decisions is a major undertaking in itself.

The first thing to do is to build around us founders, a group of talented diverse people who share our entrepreneurial zeal. Thanks to the success of the round, I have found several high calibre people who will be working at AgeWage.

We have moved from camping out on the sofas of the 7th floor of WeWorks in Moorgate to our own office.

office for agewage.jpg

We promise to spend the money we’ve raised carefully and we will not be awarding any founders bonuses for the success of the round, every penny is to be spent on delivering the proof of concept.

That POC is simple, to demonstrate we can produce accurate scores from bulk data and to prove that those scores positively engage people with their pensions.

There is much more beyond the MVP. We want to help people take action to bring pensions together , to invest more responsibly and ultimately to turn pots to wages in older age.

We will also be seeking every penny worth of grants available in the UK (and still from Europe). We would rather not lean on our shareholders for further development, though a further round of funding will follow later in the year as we build our digital support service through phone and web apps.

If you are an investor

We don’t take our investors for granted, whether you invested in pre-seed or in this round, you will not just be kept informed but invited to participate. Next week, as part of our POC we will be opening our doors to investors who want their pots analysed for value for money.

If you would like to share your pension details with us, then we will issue data access requests to your providers so we can compare your investment value (NAV) with what you would have got if you had contributed to the AgeWage index. We will give you scores.

We want our investors to be first in the queue of people we help.


Doing not talking

I look forward to the next few months as a time to do rather than talk. For years I have heard my friends and colleagues moan about the lack of support for people as they save and spend their pension pots.

Now you have given us the chance to do something about it and to do so on an industrial scale.

Thanks to our investors, big and small, AgeWage is in a position to work with Royal London and many other pension providers to improve engagement, decision making and ultimately the age wages of millions of people.

If you are not yet an investor, here again is the link- if you are and you want to top up, the link is still open to you.



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

No meat in the pie! Investment pathways

Screenshot 2019-05-14 at 06.13.14.png

So what do we think?

Yesterday’s pension play pen lunch brought together a small but enthusiastic group of us to discuss whether the FCA’s planned in retirement investment pathways, would bridge the advice gap identified by FAMR and the Retirement Outcomes Review.

If that sounds pretty technical, then it wasn’t, having over ordered pies and fish and chips this was a chance for bellies to be filled and conviviality overflowed. Thank goodness there is still a place in the City where we can discuss serious issues in a relaxed and harmonious way! These lunches happen the first business Monday of the month, May was odd in that the lunch fell on the 13th. Lunches are advertised on social media and they always happen in the partners room at the back of the Counting House pub in Cornhill.

Pension playpen logo

No meat in this pie

John Quinlivan referred us to a paper delivered by Willis Towers Watson in November last year. You can download the paper from this link, but to give you a flavour, here is how it starts

Something is missing from the defined contribution (DC) system.

If DC is meant to be a retirement system, then it should provide income that supports participants throughout retirement. However, retirement systems do not come into existence fully formed; they begin with fairly simple design features and evolve over time.

In its earliest days, the DC system was a savings (or accumulation) system, primarily a supplement to the defined benefit system. Managing the payout phase was not a priority. Several decades on, the system has matured. The absence of this feature cannot be overlooked any longer.

And this is how the paper ends

the DC system of today has work to do.

The bit in the middle explores various options for “managing the payout phase” without landing on any one as a way forward. The working group that produced the paper was formed by Roger Urwin who I remember grappling with the problem of turning individual pots into what we used to call “scheme pensions”.

The paper comes to the same conclusion – that only through pooling can this be done. Oddly the paper does not discuss pooling longevity risk in the way collective DC does it. Instead it discusses three ways to help individuals take the complex decisions needed to turn a pension pot into a wage in retirement

In summary, demand for lifetime income solutions has been anaemic in the past. It could be strengthened through a more explicit focus on longevity tail insurance, through thoughtful choice architecture, and through the application of new technologies.

The meat in today’s pie is a little gristly for me. Long-tail insurance is only happening in annuities, choice architecture can be delivered by new technology but in a world where the employer no-longer wants to play a part, there is a missing link, WTW don’t do retail.

Is there need for a non-advised solution ?

WTW do have a product that they have built that could deliver much of what is missing in DC (and annuities could do the rest). I am not sure however whether LifeSight – WTW’s mastertrust, has a retail offering. If it has – it has kept it pretty quiet.

The fact is that most master trusts have been built around the needs of employers to stage auto-enrolment or to consolidate failing legacy DC plans on a B2B basis. WTW’s solution is no different, even if it has the capacity to offer disconnected individuals a way to get their money back.

The insurer’s have similarly isolated their workplace pension offerings and do not advertise the capacity of workplace pensions to spend your savings. The assumption is that if you have a pot worth spending, you’ll have a financial adviser guiding you into a SIPP drawdown program.

But most of the “claims” from workplace pensions are far too small for advisers to worry about, advisers will only get involved if the workplace pension can be subsumed into the adviser’s vertically integrated solution. For WTW’s Lifesight (sitting on an LGIM fund platform, read a wealth management solution sitting on Transact). Both solutions are placing advisers at the heart of the solution

If you are running successful businesses, the problems of those who don’t have access to Lifesight or the specialist skills of wealth managers, there remains a gap – an advice gap. There is a need for a non-advised solution which is what the FCA want to encourage with the yet to be fully revealed in retirement “investment pathways”.

The risk of Implied outcomes

I was left scratching my head as to why a non-advised solution to the retirement outcomes review isn’t emerging.

Short of Royal Mail’s CDC proposal, the thinking around choice architecture, technology and long-tail insurance is pretty much the same as what it was in Roger Urwin’s heyday 20 years ago.

The new fund platforms have given life to the wealth management industry and allowed consultants such as WTW to provide solutions for the workplace. But we have yet to see the emergence of a genuinely mass-market pot aggregator capable of giving us our money back in an orderly way.

I suspect that this is down to fear, fear of the implied outcome of offering people “pensions” and of people not quite getting what they thought they were going to get.

The implied outcome of a pension plan is – to most people- an income that lasts as long as you do.

Whatever solution the FCA finally end up with, it won’t be collective as a CDC is collective. It will have to rely on annuitisation and individuals pressing buttons well into their senior years,

If the outcomes of their pensions aren’t what they implied at outset, elderly people (and their families) are going to be disappointed and will point the finger of blame at someone.

This is the risk of an investment pathway that implies it is sorting out the pension problem. It is only addressing one aspect – the choice architecture. It is not dealing with the issues of people living longer and it certainly doesn’t address people’s natural assumption that their workplace pension provides a wage for life.

In a recent survey of its membership, NEST found that an alarmingly high proportion of its members believed that because NEST is the Government pension it would provide them with a Government or State Pension.

There was meat in the Pension PlayPen pies but there was no meat in the debate, because despite our talking for nearly 90 minutes we were still no nearer answering the question we had posed ourselves.

“Will investment pathways bridge the advice gap in retirement?”. I leave it to Anthony Morrow – who couldn’t get the meeting to sum up the mood of the meeting as we broke.


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

How glorious to be English!

marlow 3


I am sitting aboard Lady Lucy in the millpond at Hurley awaiting today’s guests. The sun is shining and there is only the slightest of breeze. Coots are nest-building and swans glide past me hoping that I will feed them from the bread bin.

The sound of water comes from below me and from Radio 3 which is this week celebrating along British rivers


I am thinking about football and the events which will unfurl today. Will Manchester City succumb to nerves and fluff their lines? Will Wolves spoil the scouse party?

Despite all the brouhaha about Brexit, Britain is quite the place to be.

Marlow 2

If you’d like to spend a day on the river aboard Lady Lucy, you can book yourself and friends and family on any of the days on the dropdown,

It is absolutely free.

Just follow this link

Posted in pensions | Leave a comment

So what the f**k is pentech?


People often ask me what the f*ck is “Pentech”. Well they don’t really – I ask myself that and then imagine that everyone is asking the same question.

But as people continue to follow and maybe read my blog, I have to assume that what troubles me – troubles them- I mean you!

We have fin-tech – which covers a multitude of techs, including insure-tech, reg-tech and even prop-tech. But Pen-tech hasn’t really made it into the tech family (yet).

I have often wondered why we find the idea of a pension dashboard so odd. After all, we were close to having combined pension forecasts 15 years ago and the idea of populating a few fields with data from different sources is not that advanced. But the pensions dashboard remains a kind of technological nirvana, so near and yet so far.

As I’ve noted before, the worry people have with technology is that you can’t really fiddle it. If you ask your data a question, you get a straight answer – a “straight through” answer. Which rather reduces your capacity to explain why something unpleasant is about to happen, like a realisation that all in the pensions garden is not rosy.

Pentech is slow to be adopted in some quarters because it can expose to common view the venality of some pension practices but much much worse, it can give people ideas that many pension providers would rather they didn’t have. If for instance you can, with a keystroke summon up a number that tells you what you own, what you’re paying someone to manage what you own and how successful that management has been… are not far from soliciting a second keystroke -“delete” . We are nearly deleted if we give people the pension technology they require. Pentech is a dis-intermediator and intermediaries do not vote for existential risk.

Pentech not only dis-intermediates, it also exposes whoppers. For instance it can show you that the data held on you is rubbish, This is very likely to be the case, because a lot of data is not static, we move house, change names and of course change jobs. Pentech puts us back in touch with our data (the pension finder service) but what we discover is often corrupt, data may have been badly input or not input or it can (occasionally) go wrong. The find/replace button is a scary one.

Pentech is – to those who see the word risk as bad news- bad news. It creates risks, risks of people finding out what is really going on , finding out that their data is dodgy, risks that people may decide to delete you from the management of their money.

All of this is behind why pensions has been slow to adopt technology, while other areas of financial services have been steaming ahead and getting their “tech-titles”.

To a techy, pensions really aren’t any different.

The business of getting data, and representing it to people so it tells them meaningful things is the same whether you are working out  a loan, a life insurance policy or a wage for life. There are assumptions in all financial services that underpin projections into the future but other than those assumptions, the only variables are the data inputs, the rest is a matter of fact.

Where pentech is so difficult is not in the representation of the data, but in controlling the reaction to that data. Give someone a number representing the amount they paid you to have their pension managed last year and they could fire/delete you. Tell someone how much money they have and they might ask it back.

Pentech is a very simple but a dangerous thing because it takes pensions off their pedestal and simplifies them, to a point where they can become meaningful to people.

Pentech is the way we unlock the gates of engagement, but to allow people to walk straight through, we need to be brave – a lot braver than we are today.

We need to be brave

I want to restore confidence in pensions – that’s what Pension PlayPen does and it’s what AgeWage will do. I want to restore confidence by dis-intermediating and I want to be brave enough to allow the 90% of people who don’t take advice, to make their own minds up on what they want to do.

I want pentech to open the doors for people to do just that.

Posted in pensions | 1 Comment

First Actuarial’s client conference in tweets


The Royal Society of Arts Clubhouse

First Actuarial had its first client conference yesterday, if you weren’t there, it’s probably  because you aren’t a client. Make sure that doesn’t happen again next year!

Here’s what you got/missed

At the heart of what we are about is a quite different attitude to risk

Hilary Salt contribution on risk was the central contribution of the conference

The Regulator spoke through David Fairs,

David Fairs.jpg

David Fairs

though the new funding regime has yet to be fully announced , we heard about their nuanced position. “Limited Dependency” is the new “Self Sufficiency” Not everyone in the room saw this as doing much to halt the decline in DB accrual. David had published his thoughts in a blog released earlier in the day.

Spookily, the Pensions Regulator also published its new funding framework soon after. I said it was an awesome day

Getting technical

Duncan Buchanan and Wendy Hancock talked us through GMP Equalisations by comparing Jeremy Corbyn and Theresa May’s entitlements.

Points were made plainly

There was a lighter side to this technical discussion

Thinking harder

The technical session was challenging, what followed after the break was inspirational.

We heard from UCU’s Sam Marsh on how ordinary members had taken back some control of their pension scheme with the help of independent actuaries.

As Sam was speaking, the USS published its new proposals for the 2018 USS valuation (spookier still)

Sam made it clear that it was Hilary Salt and Derek Benstead’s pioneering report on USS finances that empowered him to push back against scheme closure

And he made it clear that “de-risking” in the coinage of pensions is anything but


Dignity in retirement

Terry Pullinger was typically plain speaking , talking of the need to provide his members and the wider community of working people with the dignity of a proper wage in retirement.

Member power, channelled through unions and MNTs has made a huge difference to our pensions landscape and I was proud that First Actuarial have been at the heart of positive change.

Pension reform comes from right and left

Baroness Ros Altmann brought the conference to a close, talking of her role from Myners to today, in championing those deprived of proper pensions by pensions injustice.

She got some tough questions from the audience , some of who considered it was the unions not here who had created a proper Financial Assistance Scheme. Her retort was clinical “where were the unions when we took a Labour Government to court?”

By coincidence, delegates not at the party were able to watch the first screening of ITV’s documentary that very night

On a less serious note, she revealed that by happy coincidence she will be on holiday in Spain on June 1st. The audience was asked

“has anyone got a spare for the Baronness?”

Celebrating a proper pension consultancy

It’s been fifteen years since nine actuaries set up First Actuarial. It is now in the top ten pension consultancies in the country.

First Actuarial came of age yesterday and the mood of celebration was maintained deep into the night as clients and consultants partied in the RSA Clubhouse basement.

It was a great day, made better by the RSA and best by the massive audience of trustees , and employers who celebrated with us!

Thanks to the people who made this happen- especially Mark Riches, Kate Vickerstaff, Tim Jones and Lisa Orange. Thanks to Mobius, Locktons, Aviva and PIRC for livening up our coffee breaks- most of all thanks to our guests who were FABI !

Mark Riches.jpg

Mark Riches

Posted in First Actuarial, pensions | Tagged , , , , , , , , | Leave a comment

Buy and Suppress the pensions dashboard

Asmund paulsen.jpg

Asmund Paulsen

I designed, launched and sold the first – and still only – Norwegian pension dashboard some 15 yrs ago.  “” is the pension dashboard service that the Norwegian pension providers, after we gained traction with it, insisted that they should own. It is (therefore) now still – some 10 years later – no more than our initial “minimum viable product”. We avoided “buy & kill”, but got “buy & surpress” …

These are the words of Norwegian pensions champion Asmund Paulsen.

I hope they will not prove prophetic for the UK pension dashboards but I fear that we are already seeing the degeneracy of the Norwegian model.


Today I will talk to a group of insurers about the pensions dashboard. It will not be an easy session as I don’t intend to pull any punches.

We are now 6 months on from the latest relaunch of the pensions dashboard and – other than a tame response to a tame consultation – nothing much has happened. This despite the protestations of the chief protagonists, the ABI, the DWP, MAPS and Origo that we would see a dashboard this year. The chances of that are fading as fast as Brexit and what we get is likely to be as unsatisfactory.

Nothing will happen without bravery

If I could characterise the one quality that the pensions dashboard project is missing – it is bravery.

Here I mean the bravery to speak out against the conventional wisdom of “buy and suppress”.

Those outside the tent, and I think back to previous iterations of the project, have been consulted and mollified, but they have been excluded. When they have questioned what is going on within the tent they have been pushed away.

The pensions dashboard is like a royal court , the courtiers bow and scrape to the Pensions Minister while carving up the kingdom between themselves.

There are only two strategies that the established pension providers are pursuing.

The first is to maintain the status quo and see as little disruption to their legacy books as possible. This enables them to maintain their embedded value, on which their share  solvency depends.

The second is to increase new business flows through pensions “project fear”. Project fear in this context means telling people that without radically increasing the contributions they commit to pensions, they will be bereft in retirement. The purpose of pensions project fear is to increase the value of the pension providers to the market, principally (but not exclusively) to shareholders.

It is the solvency of insurers (and now master trusts) that is at stake and it is the boost to future profitability of these same institutions that excites them. The dashboard could be the key to making workplace pensions profitable – a whole lot sooner.

There is no one who is prepared to call this, the court is a powerful persuader to silence.

Hiding behind poor data

We are moving towards transparency in financial services, that is what open banking gives us.

But the pensions dashboard will not be adopting the principles of open banking , laid out by the CMA. Instead it will be run – like the Norwegian dashboard – by those who own the data as a closed shop. We will not be getting open pensions any time soon.

The reason, we are told, that we cannot have open pensions , where dashboards can use the technical architecture of APIs and authentication, each to their own, is practicality.

Those who wish for a centralised system of management argue that having multiple dashboards finding their own data , will increase costs, increase risk and open the doors to scammers.  They also argue that it would expose those organisations who own dirty data , for what they are – poor record keepers,

Transparency being the best disinfectant, I would argue that the best way to clean up a problem is to shed light on it, not to keep it hid.

But this is not the view of the court, who argue that we should wait until the data is clean, before it is mandated that we can see it on a dashboard.

The minimum viable product

This phrase is much used by start-ups to mean the least they can build to prove their concept. We have already had a couple of rounds proving the concept of dashboards and they have taken us three years to complete.

It would seem that we are now to have another minimum viable product, produced within the Money and Pension Service which is called “the pensions dashboard”. The Government expects other dashboards to be built as satellites to their minimum viable product.

But nothing will compete with the minimum viable product which will be controlled by a steering group appointed by Government and a Governance Committee appointed by Government and anyone outside those groups will be outside the tent.

The Government Dashboard alongside the quangos that are growing up as part of the pensions court will so atrophy innovation that the pensions dashboard will join Pensions Wise and very like the Money and Pensions Service, as white elephants.

Meanwhile life goes on

I will be happy to be proved wrong. I would very much like a dashboard to restore confidence in pensions. But I see no sign of it being used to do the things people want to do

  1. Work out the value of their pension pots for the money they’ve saved
  2. Find a way to bring pots together to make them easy to spend
  3. Find ways to ensure their money lasts as long as they do
  4. Establish whether their money is being managed in a responsible way

The ABI and PLSA are so fearful of giving people the information they need that last year they blocked an initiative to show people what – in pounds, shilling and pence – they were paying for their pension pot. The monetary figure was excluded from the single pension statement produced by Ruston Smith and Quietroom and it remains excluded.

Insurers, when given the choice will not disclose to their disadvantage and – when unsure of the consequences – will refuse to take the risk

That is why there is a very real risk that the dashboard will remain on the drawing board for a good time yet and when launched – move little beyond the minimum viable product.

A braver way?

I believe there is a better way to run pensions, a way that allows people to see what they are buying into by looking at what they’ve bought. I don’t think finding pensions is that hard and that modern technology should allow people to ask questions of their various pension providers and get answers in real time.

This “better way” is already emerging in other areas of life- indeed in other areas of financial services.

Pensions would like to think of itself as a special case, but it isn’t. It is part of the retirement eco-system that includes houses, inheritances, business interests and other forms of savings. People are looking to take back control of their retirement finances and are getting lifestyle answers delivered to them through digital technology.

But they are not getting this with pensions.

The pension dashboard continues to be an embarrassment and until someone is brave enough not to be “silent in court” we will go on praising it as a great initiative while suppressing innovation.

Asmund Paulsen is  likely to be proved prophetic, unless we face some uncomfortable truths and start behaving with a little more bravery.

Posted in Dashboard, pensions | Tagged , , , , , , | 1 Comment

Why we must guard against ESG profiteering.


There is a great wave of enthusiasm amongst the investment community for responsible investments, the three factors underpinning it, Environmental, Social and Governance came into almost every discussion at this week ‘s Public and Private Pensions Summit.

But with such waves of enthusiasm, there must be eddies of caution. ESG is essential if we are to encourage good behaviour in the organisations into which we invest, but we must not allow the keys to ESG to be handed to an elite group of specialists who can hold us to ransom to unlock its secrets. Nor can we allow fake green to paint over the real thing.


The price of ESG

I am not suggesting that this is happening, but the chances are that profiteering from ESG will happen and that as I write the more unscrupulous fund managers are dreaming up ways to compensate for margin erosion by the “beta brigade” by fixing the price of ESG at the wrong level.

If you don’t believe that ESG has a price, look at the pricing differential between LGIM’s Futureworld Mutli Assset Fund and the LGIM Multi Asset Fund. The latter is considerably cheaper and this is explained by it not having the tilts and screens of the former. The difference in price is the current price of ESG. I am prepared to pay that price for now, I invest in the FutureWorld versions of L&G’s funds because

  1. I believe that they will bring me better performance
  2. I see them carrying less risk
  3. I like the idea of my money being invested responsibly.

But the price I am paying for Future World is twice what I could be paying for the global equity equivalent. I am hoping that the price differential will fall over time as the upfront R and D costs in setting up the fund are diluted and the ongoing management charge converges with those of non ESG funds. Indeed I’d like to think that in five years time that the idea of a non-ESG fund won’t exist. After all – who wants to invest irresponsibly.

The impact of the price differential

One impact of differential pricing is that it makes it very hard for workplace pension providers to make the ESG fund the default.

Put simply, no matter how much the IGC reports clamour for green defaults, so long as a price differential remains, those running the fund platforms which drive long-term profit for workplace pensions will go for the cheapest version.

They have only three choices

  1. Stick with the cheap and not so cheerful default
  2. Upgrade to the ESG version and absorb the margin hit
  3. Upgrade to the ESG version and pass on the extra cost as a price hike.

Of the three options (1) is the obvious winner for now. It is not until the clamour for ESG defaults becomes deafening that (2) and (3) come into play. Exactly the same issues occur for trustees as for IGCs, no matter how they might want ESG in the default, until there is a compelling business case for it, it ain’t going to happen.

What we can do

Personally I have little sympathy for fund managers who complain about margin erosion. I work in a WeWork that looks into Schroders and I see the corporate gym, the workers canteen and the pleasant balconies on which fund managers can soak up the sun. It does not look like that fund manager is suffering a lot of margin pressure to me.

I suspect that a lot of the costs of ESG can be absorbed out of the fat margins identified in the FCA’s Asset Management review and the CMA’s subsequent market study. After all, most people would assume that when they gave their money to someone to invest, they would get a degree of stewardship that as the bare minimum , would be called “responsible”.

It’s a bit like buying a car and discovering that the brakes are extras. ESG is not the equivalent of leather seats (though you’d expect leather seats for the price we pay for most active management).

What we can do is complain, complain to IGCs , to Trustees , to the FCA and tPR and write to Government (the DWP and Treasury) and ask why ESG is not standard.

We don’t have to pay more for something we should have always have been getting and if we are getting more than we expected, then we should politely ask fund managers whether they might take a little less.

ESG profiteering

The more fund managers I hear explaining how much they are now doing to keep our funds responsibly invested, the more I question what they have been doing the rest of my days. I don’t think that the concepts of climate change, sustainability and good governance began in Paris in 2015. I seem to remember that most of the ideas behind ESG were being discussed when I was at primary school in the early 1970s. Wasn’t the world about to run out of fuel by now?

What is happening today is that there is a crisis created by our complacency over the intervening years and that is leading to everyone wanting to do ESG now. And so , instead of getting on with it and fixing things which were broke, we see fund managers passing on the bill to the customers.

I am not sure that we should be picking up this bill. I think it is the bill for repairing a research system that should have been in place 20 years ago.

So instead of ramping up prices so we can have our funds invested responsibly, perhaps we should be asking for a fund management rebate for not having our funds invested responsibly over the past forty years.

A little radical? Well maybe- but let’s not accept price hikes as a gimme. ESG profiteering is going to be a big theme of the value for money debate and this is the first salvo on my blog of a theme you will hear a lot more of!

profiteering 2



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

Our pensions need you!

DWP line


I got some fierce feedback on yesterday’s blog where I moaned at the lack of progress in helping people convert DC pension pots to a wage for life/salary in retirement/agewage.

Here’s Richard Chilton

There is an implicit assumption in much of this that DC pension funds are the main source of money in retirement. For very many people, they aren’t. They are often just the icing on the cake. There are DB pensions, the state pension, income from property and inherited money or money from downsizing a home. It is difficult to understand the significance of taking some DC money without understanding the overall financial situation.

Richard continues

People taking pension money are also not always retiring. They can be taking it to invest in a way not available within a pension fund.

I sat as a judge yesterday morning for the Money Marketing “best retirement adviser” award and had a number of excellent conversations with top IFAs. Retirement Planning is – for those lucky enough to have such advisers, the art of financial well-being.

In their recent book “A salary in retirement”, Richard Dyson and Evans estimated the value of the state pension to be over £280,000. This beats by a factor of 9 , the value of the average DC pot. If your state pension is worth 9 times your DC pension , then Richard Chilton and Brian G are right, all that workplace DC pensions are – are icing on the cake.

Your workplace pension isn’t the half of it!

But statistics are bald and don’t take us half way there. I had 10 pension pots (mostly workplace derived) and apart from the one with a GAR, they are all now in one pot, managed by LGIM through a Legal and General workplace pension.

There are many like me, what sociologists like to call mass affluent, people who do not become clients of high quality IFAs and need self-help books like Dyson and Evans’. AgeWage will be built around their needs.

But if all financial services aspires to – is to help the “haves”, then it will be failing in any kind of social purpose. If we are serious about democratising the savings culture through auto-enrolment, we must have an expectation that the average working person will – as they have in Australia – come to regard their retirement savings as a key personal asset. As much an asset to be cherished as their house and the inheritance.

This sense of ownership is sadly lacking and it’s what the AgeWage score is trying to do. The score aims to make the money we have saved tangible to the savers. In time, we can hope that workplace pensions will become as important to people’s later life finances as the state pension (and not from dumbing down the state pension). We have to plan on success .

Proper help for the mass of us

Richard Chilton is one of the good buys, he’s a pension expert who gives of his time to help people understand their  pension freedoms. There are many like him helping people through Citizens Advice Bureaux and the Money and Pension Service (MAPS). Pension Wise relies on people like Richard.

I hope that they can find ways to be more effective over time as I see much of their experience could be better deployed if they were released from the shackles of guidance and allowed to help people make better decisions as advisers.

The Citizen’s Advice Bureau, the Money Advice Service and The Pensions Advice Service must now be re-risked and de-risked into the guidance model.

MAPS says it is in “listening ” mode , the FCA are consulting on whether to extend their consultation on the impact of FAMR and the Retirement Outcomes Review. Everywhere Government is deliberating on how to help people who have very real financial problems in retirement and only a handful of IFAs and guides (like Richard Chilton) to talk with.

The silent majority (a phrase made famous by Bernard Levin) do not shout the odds over the lack of support they are getting on retirement planning. They don’t because they are silent.

But that doesn’t make their plight any less real. Each year that ticks by without Government biting the bullet and investing in new product (CDC) and new advisory support (the potential for MAPS) , the worse the impact of pension freedoms will become.

The private sector will fill this gap

The entrepreneur in me has seen this opportunity and is determined to meet it. I nearly said “exploit” it, but that is the wrong word.

I believe that the small pots that Brian and Richard talk of, are getting bigger and more numerous. I see people taking more interest in their pension saving and I see a growing need for mass market advice which I hope (in part) to meet.

AgeWage is the platform on which I hope to build this service. Three months ago it was a pipe dream, now it is a business with a £3.5m valuation validated by over 400 investors with getting on for £450,000 in inward investment.

We are already receiving help from insurers and trustees so that are scores can be in production by the autumn, plans to help consumers directly are well advanced. If you would like to join us, you can do , by investing as little as £11.50 (net) for a share in AgeWage.

Press this link to do so and help me put your money where my mouth is.


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

What’s normal?

workplace pension dispersion

normal’s that line in the middle

When we allow money to be taken out of our salaries , we don’t really know what to expect.

That’s why the FCA want the independent governance committees that oversee workplace pension providers, to tell us what value for money is and whether we got it. The DWP are doing the same thing for workplace pensions run by trustees.

The idea is that we will be able to log onto a website and see if we’re getting what we should from our investments – and the administration and communication of our pensions savings plan. In future we may  be able to see whether we are likely to get value for money from our pensions spending plan – better known as “drawdown”.

So far we haven’t done too well and that’s because analysis of “value for money” has focussed on abstract ideas like investment performance, service level agreements and “member engagement”. All of these things are measurable but they don’t mean much to ordinary people who secretly want to know how they did and whether they got value for their money. Some of the things that IGCs focus on like “engagement” depend on whether their’s anything to engage with.

I can define value for money simply.

I have been thinking about little else than this question. Here is the answer I have come up with. See if you think it holds water.

I start at looking at all the contributions that you’ve made into your pension over the years and compare it with what you’ve got in your pot (known as the net asset value or NAV). I can tell you the interest you’ve got on your money – this is known as the internal rate of return (IRR)

Then I can look at the interest you would have got if you’d invested the same money at the same time, into an average fund.

If you have got more than you’d have got from the average fund, you’ve got value for your money and if you’ve got less, than you have not got value for money.

It really is as simple as that. The AgeWage score I talk about simply tells you how much you’ve beaten or lost to the normal score. The normal score is 50 and you can get up to 100 or as little as 1.

I’m pleased to say that this idea has proved very popular on our crowdfunding platform and we are now going to go into production, starting with a period of testing our normal fund to make sure it really is normal

Screenshot 2019-04-24 at 06.43.22

So what is normal?

Surprisingly, there is very little academic research into how your money has been invested since pension savings plans (DC pensions) started. We are taking the start point of pension savings plans as 1980, that’s because most of the people who started saving before then will now be spending their savings!

Our normal fund has a price at which your money is invested for every day of the last forty years. The price is decided by looking at how a basket of actual funds grew or fell day by day. As time went by, most of our money became invested “passively”. Our normal fund is increasingly priced by looking at how the indices rather than the basket of funds have done.

If we get the price of our normal fund approximately right, we will be call it normal.

How we test whether the prices of our normal fund are right is by using “big data”. What we mean by that is that we are taking tens of thousands of our contribution histories and seeing whether the outcomes (the NAVs) beat the outcomes from the normal fund.

When we get it right , we’ll be able to see the same number of your AgeWage scores beating normal as losing to normal. We’ll even be able to see whether the losses and gains are of equal measure.

When we can show that 50,000 contribution histories cluster around the normal score symmetrically, we’ll have cracked value for money. We will know what normal looks like and be able to tell you whether you’ve done better or worse than normal.


workplace pension dispersion

normal’s that line in the middle

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

Port Talbot steelworks – our Notre Dame

port talbot 4

I was woken this morning by radio news of an explosion in the Port Talbot works. My heart sank as my mind turned to people I have met and the livelihoods that depend on these works

It seems that the incident was caused by a train , that there have been no fatalities and only a couple of minor injuries have been reported.

The safety procedures seem to have worked – a testament to how far workers protection has improved in recent years.  18 years ago a blast at the Corus plant killed three workers.

The cost to productivity and the fragile recovery of the steelworks towards sustainability will emerge over time.


 The works , the town and pensions

The Port Talbot steelworks are iconic. The link between the town and its major employer is obvious even as you drive past on the M4.

The blast is felt in India (at least on social media)

The link between the works, the town and pensions is well known. It was here that some of the most egregious advice was given to financially vulnerable steel men and the words “Port Talbot” have resonance in pensions circles.

Wales’ Notre Dame?

 Port Talbot means so much to us.

Port Talbot is relevant to the UK, to India and it has brought the issues that this country faces over pensions into a sharp focus.

We understand that the financial futures of many steel men are linked to the productivity of the works. We want the works to do well because we want the steel men to get good pensions. The town, its people and its future prosperity are so tied up with the works that Port Talbot is to me and to many others a way of understanding what workplace pensions can be about.

Which is why today’s blast seems relevant to me as a pensions person.

And what is of enormous value is that the NewBSPS scheme is pretty well sufficient from problems such as these and that past benefits, whether they are paid from the PPF or from NewBSPS are secure.

We hope that the blasts heard and felt by the people of Port Talbot and nearby towns will not lead to lay-offs and that the works will return to full production soon.

A nation holds its breath, and those who have been involved in the steel men’s “Time to Choose” hold our breath too.

Port Talbot has made pensions relevant for us, we are deeply engaged with the livelihoods of its people and hope that this blast will not endanger the covenant of work and pension accrual, the plant provides.

Port talbot sun 2

Sun rising at port Talbot

Posted in pensions | 1 Comment

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

Screenshot 2019-04-23 at 06.42.11.png


Take a look at this link,

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

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

Screenshot 2019-04-23 at 06.43.21.png

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

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

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

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

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

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

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

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

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

Screenshot 2019-04-23 at 06.30.13.png

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

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

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

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

How can this possibly be right?

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

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

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



The Disclaimer on the website says

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

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

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

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

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

Contingent charging – a conflict too far

Screenshot 2019-04-22 at 06.57.40


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

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

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

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

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

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

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

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

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

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

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

When will IFAs admit defeat?

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

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

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

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


When will contingent charging be banned?

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

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

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

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

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

The FCA will continue to consult.

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

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

They won’t.


Posted in advice gap, BSPS, pensions | 2 Comments

St James Place GAA Chair Statement- a must read

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



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

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

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




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

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

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

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

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

Value for Money Assessment

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

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

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

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

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

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

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

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

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



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

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

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


In the next year the GAA will:


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

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


In conclusion – this is a must read


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

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

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

This statement is of great value.



Posted in pensions | Leave a comment

Are IGCs and Trustees worth it?





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

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

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

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

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

The work I have done in 2019

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

I have read these reports with an eye to three things

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

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

IGCs 2019 bright +.PNG


2019 trends

Transaction costs – a mixed picture

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

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

ESG – a start but only a startESG

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

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

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

The wider context

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

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

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

Port talbot

Reactive or proactive?

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

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

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

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

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


In conclusion

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

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

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

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

IGCs 2019 bright




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

The Government’s pension stealth tax

virgin stagecoach.jpg

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

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

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

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

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

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

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

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

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

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

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

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

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

Same with schools and universities

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

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

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

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

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

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

Posted in pensions | Tagged , , | 1 Comment

L&G’s IGC returns to form




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

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

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

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

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

Getting back on track

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

Our responsibility to you

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

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

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

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

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

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

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

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

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

Tone of the report

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

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

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

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

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

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

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

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

Value for money assessment

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

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

IGC failing small employers

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

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

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

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

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

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

Screenshot 2019-04-07 at 08.39.23.png

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

IGC doing good work for members

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

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

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

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

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

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

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

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


How effective is the L&G IGC?

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

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

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

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

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

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

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

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

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

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

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

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

Later in the same section we read

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

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

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


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

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

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

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

In conclusion

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

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

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

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




Posted in pensions | 2 Comments

Scottish Widows IGC report – a most interesting read.

scottish widows

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

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

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

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

Tone of the report

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

Take this example of reporting on the customer experience.

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

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

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

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

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

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

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

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

Value for money

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

Screenshot 2019-04-02 at 06.18.34

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

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

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

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

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

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

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

Screenshot 2019-04-02 at 06.17.43

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

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

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

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

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


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

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

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

For example, the IGC reports

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

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

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

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


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

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

Posted in pensions | Tagged , , , , | 1 Comment

AgeWage goes public!

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

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

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


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

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

The rules remain the same for large investors

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

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

Smaller investors are so welcome

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

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

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

agewage snakes and ladders

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

What happens next

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

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

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

So get investing and enjoy!

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

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

we need you

agewage snip

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

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

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

Moving into production – the next step

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

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

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

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

A message for larger investors

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

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

A message for small investors

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

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

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

A message to all investors – getting your money back!

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

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

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

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

Whatever your reason to invest – we hope you do!

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

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

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

Thanks to you – AgeWage smashed day one!

agewage wework

Smashed it.

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

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

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

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

Here are the great things!

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

Here are a few of the messages I received yesterday.

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

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

Building on this.

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

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