“Retirement reforms and the Guidance Guarantee” – The Pension PlayPen’s response

This is the Pension PlayPen submission to the FCA’s consultation CP14/11hi res playpen

Pension PlayPen is a website dedicated to helping small employers and their advisers find good quality workplace pension plans.


It was founded in 2013 by Henry Tapper with the support of First Actuarial who provide analytics to help employers make informed choices. Pension PlayPen regularly contribute to policy reviews as its “thought leadership” has been valued in previous consultations.

This response is submitted by Henry Tapper on behalf of Pension PlayPen. It is not the response of First Actuarial but is informed by First Actuarial’s experience providing guidance.

Henry was invited to the FCA workshops on the Guidance Guarantee and has written extensively on this subject both on www.pensionplaypen.com and www.henrytapper.com

Over the past 3 years, First Actuarial estimates it has given guidance to some 10,000 employees from employers as diverse as Unilever and Centrica to some very small social housing organisations.

Pension PlayPen does not interact with individuals, it operates in the business to business market. However, one of the six key metrics it employs to judge a Pension Provider, is its capacity to deliver assistance to its member or policyholder in retirement.

Copies of these answers have also been submitted electronically to the FCA using the web-link provided,





1.      Do you have any comments on the proposed standards for the delivery partners?


We think it’s right that there is a separate standards regime for the Delivery Partners and agree with the broad headings outlined in 1.23.


We think there is a bullet missing which relates to feedback. Having a record of what is said is important, but a record of what is “heard” is more important.


Immediate digitally recorded feedback either by voice recording or through electronic completion of a “what have you understood?” form, is the best way of doing this


We have some concern that the “content of the guidance session” may get bogged down by the Request for Information at the beginning of the session (2.22).


The beginning of the session is the point at which engagement needs to happen, and it should not be spent checking for minutiae such as the presence of guarantees. The wealth warnings should come in the education section of the meeting.


2.    Do you agree with the proposed use of the FCA periodic fees framework to collect the retirement guidance levy? If no, please provide alternatives and set out how they would be implemented.


We don’t consider ourselves qualified to discuss detail but agree with the principal we feel the levy should fall on those who have most to gain from the Guidance Guarantee.


3.      Do you agree that firms in the proposed 5 retirement guidance fee-blocks (Table 3.1) only should contribute to the retirement guidance levy? If no, please provide your reasons?


We agree with fee-blocks contributing to the levy but do not have the competence to advise on how firms could be identified


4.      Do you agree that firms in the remaining fee-blocks set out in Table 3.2 should not contribute to the retirement guidance levy? If no, please provide your reasons.


We do agree, we can see no way that these firms would directly benefit from the Guidance guarantee



  1. Do you have any comments on the three options for allocating the overall levy across the five retirement guidance fee-blocks? If you do not agree with any of these options please advise us of your proposed alternative allocation options.

We agree and have no alternative arrangements


  1. Do you agree with the proposed content of the signposting information? If not, please provide alternative suggestions.


We are already seeing new ways in which retirement income could be drawn from plans. Some of these will be available from April 2015, one (CDC) will not be available till 2016 and it’s still unclear whether CDC will be able to be used exclusively as a decumulator of individual pension savings.


The most critical issue is that no guidance be given without reference to all options and no doors be closed to options in the future without those options being considered.


We too are monitoring the market closely to see how available these new options will be. Our view is that all options should be available to all retirees, with obvious warnings about the suitability of each.


As regards Providers signposting to the Guidance, we think this is less important than many providers are having us believe. We know that many statements are made by providers (such s advice to use the open market option when buying an annuity) but that these statements are often ignored.


We should be wary of believing that an advert for guidance by the provider will (in isolation) be enough.


We know of some providers (Fidelity being one) that have been proactive with their customers, offering general guidance in a bid to keep those customers using their service. We think this is very good, provided it is made clear that other options exist and that the Guidance Guarantee will give an independent overview.


But while responsible insurers like Fidelity, L&G and Standard Life are likely to deliver such “pitches” in a considered and balanced way, we do not think this will always be the case and the FCA will need to keep abreast of the financial promotions that are being made to ensure that they do not obscure the signposts to other options which may be more suitable.


This is particularly the case with products that the provider may not offer, (from CDC to Lamborghinis).


We agree with the FCA’s light-touch on the format of the signpost at this stage, as the document states, a template may be desirable in time but this is not the time to be prescriptive


7.      Do you have any thoughts on the standardisation of this information for the future?


The future will increasingly be digital and paper based communication will be less important. We don’t think it worth speculating about format but we do think an approach which helps people to understand their own circumstances in terms of their aims ambitions and wealth is more appropriate than simply to list large numbers of options.

People like to do what “people like them” do so an approach which is simple, chatty and genuinely helpful is best. Some months ago I wrote an article that tried to imagine what such a letter from a provider to a customer might look like. The full link to the article is here (scroll past the pictures)



8.      Do you agree with the proposal to align the timing of the signpost with the existing timing requirements for wake-up packs?



Many people have said that the Guidance Guarantee should come much earlier in the employee’s journey and should be delivered many years in advance of the drawdown of savings.

In our experience, people cannot focus on decisions that don’t affect them for some time. Putting the Guidance Guarantee in the same time-frame as wake up packs makes sense- but the announcement must not be lost in the wake up pack.


9.      Do you agree with the proposal to introduce a transitional provision to ensure that those receiving wake-up packs before April 2015 do not miss out on being signposted to the guidance?



This seems a sensible provision.

10. Do you agree with the proposal to add this guidance? (to prevent the Guidance being undermined)


Yes we do. This is similar in spirit to the “inducement” legislation in place to prevent employers encouraging member to opt-out of auto-enrolment.

Including this proposal is important in the future when the temptation will be to let the promotion of the Guidance Guarantee slip as the novelty and excitement wears off.

It would be quite natural for providers to “revert to type” and their feet need to be held to the fire!


11. Do you agree with the proposal that firms should refer to the availability of the guidance whenever they are communicating with a customer about retirement options?



For the Guidance Guarantee to work, it needs to be in the DNA not just of those benefiting from pensions but those providing them.

Firms that have contractual obligations to annuitise customers at some point must be particularly careful to remind customers that this is the default position and that action is needed if an annuity is not to be purchased with the customer’s savings.


12. Do you agree with our proposal to clarify the information provision requirement and add guidance on information that should be included?


We are very concerned that this is done right. Until quite recently, the information on retirement options put out my MAS was wrong. When MAS were questioned on this they stated that there were logistical problems updating written literature. We think that there are fundamental problems with MAS’ process and that they need help from an outside source.

They need to move into the digital age and start using social media a lot more. The information that people need has to be on the money and up to date and we are not impressed with the recent performance of MAS in this respect.

We think there is a strong case for more collaboration here and that communication consultants, technical specialists and those with skills in getting messages out “to many” need to work with MAS.

This is especially true in the run up to 2015 when the messaging needs to be clear and instantaneous.


13. Do you have any comments on whether further requirements should be placed on provider behaviour and communications?




14. Do you agree with the proposal to remove the reference to maximum withdrawals and require a general statement about sustainability of income?


We welcome any work that is done to help people understand the need for a sustainable income. For us, pensions have always been for life and helping people to understand “for life” is part of the job of an adviser. First Actuarial (one of our shareholders) has developed a “Death Predictor” that allows people to input their lifestyle data and be told an anticipated date of death. We have shared the link to this with TPAS who have expressed interest in using it more widely. The calculator is currently being adopted by a number of commercial organisations and we would be pleased to demonstrate it (at your request).


15. Do you agree with our proposal to remove the reference to maximum withdrawals in COBS 13 Annex 2 2.9R?




We think that the KFD should be helping people understand their pension options. Simply using current projections is inadequate.



16. Do you agree that there do not need to be any changes to the key features contents rules? If you disagree, please explain why?


The methodology should be changed to show three differing approaches to drawing a retirement income


  1. Using an annuity (no risk)
  2. Using a CDC approach (pooled risk)
  3. Using individual drawdown plan (individual risk)


We don’t think that people should think about retirement purely around a “no-risk” option.

17. Do you agree that the projection of an annual income in retirement and a projection of the total fund is still useful and therefore this rule should not be amended?




We think this is sensible but subject to a risk-adjusted basis for presenting income


Guarantees are not the only fruit!


18. Do you agree with the proposal to add a requirement for providers to provide their customers with a description of the possible tax implications and of the availability of the Guidance Service when they are applying to access some or all of their pension fund using any of the options available?


We think this is a very good idea. This is like a cooling off notice and is an essential piece of consumer protection. It is in everyone’s interest that retirement income is sustainable and while we recognize the need for freedom, we also think people want guidance as to what the impact of liberating cash will be.

The extra cost to a provider of this additional calculation is commercially justifiable. It’s very much in the provider’s interests that money is retained within someone’s pot.




19. What are your views on the benefits and costs of these proposals?


Pension PlayPen’s views on the cost effectiveness on money spent on guidance are well publicized.

If we define Advice as the provision of a definitive course of action if is not what is said but what is heard that defines “provision”. Many people think they have been given advice from guidance when this was not the intention

So we believe that Face to Face guidance is always at risk of being taken as advice, not least because verbal communication is only 30% of what is heard. Body language and tone of voice makes up the other 70% and while you can regulate the words, you cannot regulate tone of body language.

This is both why face to face is both so dangerous and so expensive!

Face to Face is actually destructive both to the budget and the advisory framework which is signposted from the Guidance Guarantee and is not necessary for those who are simply trying to understand options.

So the objective of those running the Guidance Guarantee should be to minimize demand for Face to Face and maximise the delivery of guidance over the phone, using webcam and by following online resources.

We are submitting proposals to Government to help reduce the need for advice and increase the use of guidance through “one to many” sessions and the use of online modelling equipment. We think that the internet and the congregation of people into groups as the key to delivering value for money and maintaining a sustainable budget for the provision of the Guidance Guarantee.



About henry tapper

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