An advice gap…or a competence gap?

OFTI was able to talk yesterday with the Office of Fair Trading as part of the Pension Review they are carrying out over the summer (publication now due mid September).

It was good to be able to talk about how the Pension PlayPen works, and under their skilled but gentle interrogation , I articulated what we are about.

We do not want to advise employers what to do, there are too many employers and all have their own views, needs, risks and strategies.

We do want to make employers competent in their decision making on pensions so they do not throw contributions down the drain, don’t mess up on the administration of auto-enrolment and so that their staff see being in a workplace pension not as a dent in the pay packet but a positive for their future.

Our customers are employers who act as purchasers on behalf of staff. Historically employers have relied on advisers to guide them through “the pensions minefield” as advisers like to call the decision making process. The use of phrases such as “pensions minefield” is a symptom of the danger pensions bring to companies. In this dangerous world, the adviser is the essential pilot who can steer a course avoiding catastrophe.

It is in the advisory industry’s interests that pensions be complicated and many providers have been complicit in encouraging complexity by building ludicrously complicated products. Just look at the number of fund options on most group personal pensions and you will know what I mean.

But the decision to invest for your future in a savings scheme that buys a pension is not a complicated decision, essentially it involves giving up jam today for jam tomorrow and its one that any employee can make without advice. Provided that is that there is confidence that the “jam tomorrow” will be there.

In my experience, employees trust their employers to act in their interests and employers want to act in their employees best interests. But with pensions, the adviser has got in the way and employers no longer feel empowered to talk to their staff about pension decisions. It is too dangerous.

If you dig deep into why employees don’t trust pensions it is often because they don’t trust the salesman (adviser) and therefore don’t trust the product.

I want to get Britain’s employers to get their pensions mojo back and start talking to their employees with confidence. I want them to feel proud of the pension decisions they have taken and of the knowledge of pension provision they have gained in picking a provider and implementing the scheme as part of its pension duties.

I don’t want to advise employers, I want to make them competent to take their decisions themselves.

The employers we talk to are leaders of men, they are the bosses because they want to take responsibility. The process by which pension decision making was taken from them by an unhealthy (and unintentional) collusion between regulators, providers and advisers, has been a disaster for company pension schemes.

Like a sleeping beauty, UK plc is now waking up to a world where much that has gone wrong, detailed elsewhere in my blogs, can be put behind us and there is a chance to help employers regain their pensions confidence in time for staging auto-enrolment.

It is essential that in a non-advised world, employers become competent in selecting and administering workplace pensions for their staff and sets out to make that happen.

I wish the OFT success in their endeavours, I enjoyed reading their interim paper and I’m sure I will enjoy reading the output of their current research in the autumn. In the meantime, we have work to do.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to An advice gap…or a competence gap?

  1. guyportman says:

    A great idea Henry. Pensions plans are indeed in many instances incredibly convoluted affairs, especially for those employees not familiar with the jargon and numerical complexities used in the industry.

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