I see you are looking into pensions and will be completing a “market study” by August that  will focus on value for money and the size of pension pot savers end up with at retirement. I hear it will look at the following:

• How pension providers compete with one another and how the market may develop over time.

• Whether there is sufficient pressure on pension providers to keep charges low, and the extent to which information about charges is made available to savers.

• Whether smaller firms face difficulties in making pension decisions in the interests of their employees.

• Whether smaller firms receive suitable help and advice in setting up and maintaining workplace pension schemes.

• Barriers to switching between schemes and a potential lack of ongoing employer engagement in setting up and managing pensions.

I don’t suspect that you’d be contacting me so I’ll contact you.

Pension providers compete with each other using all kinds of tricks, this morning one offered to fly me to Dublin , put me up at a swanky hotel and pay for me to watch the 6 nations. This would suggest that there is not enough pressure to keep charges low. Hope you’ll put a stop to this kind of nonsense.

I’d like to think the market will develop so that the 1.2 million companies buying pensions and the 100,000 that already have one, see their contributions benefiting members rather than salesmen.

So I’d like to discuss with you ways that we can get companies staging auto-enrolment with schemes that meet whatever the auto-enrolment qualifying test (whatever that turns out to be!).

For this to happen, employers, trustees and (as you say) savers are gong to have to know what they are paying for.

We know some of the charges – the AMC and some fund expenses but did you know that according to expert assessment between 1.08 and 1.4% pa of a typical pension fund is lost in portfolio transaction costs?

I’d like to show you what 1.4% pa undisclosed yield drag does to a saver’s pension pot – it’s the financial equivalent of smoking 20 a day and they can quit just like that!

We think small firms will have great difficulty making pension decision in the interests of their employees, especially if they don’t know the charges their employees are really paying. If they are going to make choices which make sense , they are going to need information and a clear path to follow, they are going to need help documenting what they’ve decided and help making sure they get what they think they are buying.

This is not going to happen unless things change. Advisers charge too much and their processes are too manual. We need to move to guided self-service and fast!

You may not know what I mean, let’s meet and I’ll show you a model and some costings of what can be achieved, I think you’ll be surprised.

You know most employers don’t give a flying f*** about pensions. That’s because pensions are a rip-off. They are far too expensive and advisors often make them sound complicated and dull.

Don’t listen to all the providers and advisers who say you shouldn’t concentrate on charges – they would say that- the whole shooting match is funded out of member charges and that lot have had it too cushy for too long!

I want you to kick arse not lick it!

I run a Pension Play Pen which tries to make pensions better. One of the rules is that we turn down hospitality and ask that the savings be put towards improving products and reducing charges. We want to help employees get pensions – in both senses of the word!

So when I heard what you were up to – I was glad – really glad! I do hope you’ll take my offer in the spirit it is given and invite me to talk with you about my ideas , the pension play pen’s ideas and the ideas of my company .

Yours faithfully

The Pension Plowman

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