Time for a “4G” Pensions auction?

If you want to have a mobile phone company you need a 3G licence which costs money. The Government made a lot of money from selling the use of our 3G radio waves to Vodafone and the like and are set to make a lot more with the sale of 4G. Good thinking Treasury. Upfront cash with the phone bill a surrogate tax mechanism. Much the same can be said about PFI including the impending sale of the next attic load of family silver to pension funds,

Ironically , one of the few areas of capital expenditure which the Government have directly committed to has been the establishment of a super-pension called NEST. A super pension that is looking like a shiny white elephant. You’ve got the message before, if you read these pieces, between £3-600m sunk into a project to produce the ultimate pension plan. About 3-600 people using it! Nobody using it because the people who do have to repay the loon made by Government to set it up!

NEST was set up to fulfill a public service obligation to provide a savings vehicle for people not in company pensions. Companies have chosen to use every other pension under the sun other than NEST.

Access to the billions of pounds that will flood into private pensions as a result of auto-enrolment has made many fund managers salivate to the point that without any obvious business plan, they have decided to become “DC providers” in the UK. Hardly a week goes by without a call from an executive search firm picking my brains for candidates to run one of these new ventures, I am happy to talk and provide input , they are not happy to listen, they want what slice of the cake they can “carve out” for their (usually American) bosses.

There is no barrier to entry, if you fancy you have a brand that appeals to companies or their advisers, you can stick your hand up and off you go. If these fund managers were mobile phone companies they’d think twice.

If we are serious about providing funded pensions for everyone, we have got to cut the crap. By and large the insurers have got their acts together and we now have a hardcore of ten or so who are credible group personal pension providers.

Unfortunately they cannot stop at that, most of them are now bringing master trusts to the market Black Rock, L & G, Standard Life, Zurich and Friends all offer or threaten to offer a master trust. They want to offer SIPPs and ISAs through corporate wraps, they want to run investment only fund platforms and they openly talk of competing with payroll software providers for the operational interfaces that wire all these things up.

Besides these insurers there are a motley crew of other organisations offering pension saving vehicles. These include the new master trusts, NOW, Blue Sky Pensions , Supertrust, Spinnaker and a plethora of others I haven’t got time to research or energy to talk about here.

We do not allow this free for all when we licence mobile phone providers, should we allow an unseemly scrum for our retirement savings.

Or should we think seriously about selling the right to sell auto-enrolled pensions to a few responsible providers, sufficiently capitalised to last the course and with business plans that really stack up?

Maybe we could use some of the money raised to pay back the DWP loan to NEST.

Certainly it would stop the good providers we do have wasting money on vanity projects like corporate wrap.

About henry tapper

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