Should pensions be personal?

I’m surprised to say that for the first time, the Pension Play voted unanimously after the 25th London lunch held at the Counting House on Monday December 5th.

What, you might ask, could bring the following fine minds together in accord?

Bill Whitehead- Pentrus

Steve Barker- Barker Tatham

Simone Utermark – S& P

Judith Donelly – Greenburg Traurig Meher

Henry Tapper- First Actuarial

Andy Leggett – De Faqto

Jennifer Stillman- Caliburn Capital Partners

Parvis Jamieson –  EC2 Consultants

Ben Mulroney– Mallowstreet

Simon Kew- Jackel Advisory

Nigel Winterburne -Aon

Neil Morgan – Bluefin

Martin Freeman – JLT

The answer?

None of us could find a decent apology for personal pensions in their current form. True , arguments were made for the Self Invest Personal Pension to avoid tax and possibly keep wealth – but not as a “pension”.

The language of the room was revealing. Bill Whitehead about the corporate desire to use GPPs as a means for overseas banks to “wash their hands of pensions” in the 1990s. Others spoke of a sales process that encouraged prospective members of group personal pensions to have an expectation of ongoing hand-holding, expectations that were dashed by the lack of portability of the pension from employer to employer and the reluctance of advisers to advise where no further commission might arise.

Throughout the meeting, the theme was of promises broken, of expectations not met. The conclusion of one diner was that not only did we fail to educate our members to take the decisions demanded of them but we failed to understand that the decisions we were asking them to take and retake and retake were never realistically going to be made – let alone made in the right direction.

While personal pensions were being buried beneath this onslaught of retrospective bile, thoughts turned to whether the new “collectives” could do any better. Interestingly, debate centred around the capacity of pension schemes like Now and NEST and the People’s Pension to set a new benchmark for charges at 0.5%pa, half the original stakeholder cap and a third of the extended (10 year) cap.

That the new benchmark for charges was half that set only ten years ago seemed a massive step in the right direction even if it did mean that the bells and whistles of unlimited fund choice were lost to the default.

While there might have been unanimity about Personal Pensions, the same could not be said for Collective DC. Peter Weiner sagely suggested that for Collective DC to have any meaning to it, it would need to provide some meaningful guarantee, either of pension or of accumulated cash. In this context, Bill Whitehead’s pronouncement that “Collective DC was a pale imitation of DB seemed sensible and it was not long before we were lost in definitions , urged on by the ever provocative Judith Donnelly who rightly pointed to the difficulties presented by recent judgements, noticeably Bridge and KPMG.

Maybe this lunch will not be quite as epoch making as those of us who adjourned, exhausted but united, might have thought. We know the problem but do we know the answer. But I’m encouraged though that the debate seems to b e moving on , to no small measure due to groups such as ours who, by our getting together in ways such as this, not sponsored , not overseen but as a genuine playground for fee-thinking – are beginning to put the wold to rights.

BRAVO to the Pension Play Pen!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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