What can go wrong now? Pension Play Pen 2015 risk register

risk register

The Pension Play Pen London Lunch Group met for the 62nd consecutive month to establish a Pension Risk Register for the UK in 2015.

This might be considered ambitious for an hour long session, not least as our conversation competed with the consumption of Mrs Miggins’ famous range of pies and a glass of Pride.

However we had a select group of thought leaders around our table, plucked from the 5800 members of the eponymous linked in Group.

To boot;

Bob Campion- former journo with Engaged Investor- now Charles Stanley

David Rowley- former ed – Pensions Week- now transported to Australia

Bob Ward- bearded maestro of Friendly Pension

Ralph Frank- acerbic commentator at Charlton Frank (South African)

Henry Tapper of First Actuarial and Founder of http://www.pensionplaypen.com

Stella Eastwood- Group Pension Director- LBG

Mark Scantlebury- bearded guru of the Quietroom

Mark Yeates- Axa Investment Managers

Stephanie Condra- Axa Investment Managers (Canadian)

The discussion drew upon the considerable diversity of the group to garner global perspectives on the potential predicaments that the UK could find itself in.

In no particular order, the five risks that were alighted upon were


Political -regime change

With a General Election around the corner, the potential for disruption was high. David Rowley evidenced Australia as exemplary of a political culture where Pensions has become a football hoofed between industrialists and unions, right and left wing politicians.

The group noted that the advances made in this electoral term were down to strong leadership and a strong opposition. It was noted that both Steve Webb and Gregg McClymont , generally accepted as forces for good, could not be guaranteed seats in the next parliament and it was hoped that the voters of Thornbury and Yate and Cumbernauld would set aside local differences and re-elect the lads. Failing that, the Group wished both a speedy elevation to the House of Lords to continue their good works.

With the alternative appearing to be decision making by Candy Crush, the group considered the potential threat to UK Pensions from regime change considerable and this policical risk was accorded an amber warning.


Pension Freedoms – unmet expectations

There was considerable concern about the potential for the much vaunted pension freedoms to arrive with no train in the platform and with confusing announcements from the station master.

Absence of developed product together with a less than compelling solution to the Guidance Guarantee was considered a potential banana skin for pensions.

Concern was voiced by Stella Eastwood that the Freedoms could turn out illusory and that unless a mass market solution arrived to meet the needs of those need a retirement income but worried about annuities, disillusionment among the UK population could follow 2014’s pension euphoria.

Concern was raised by Mark Scantlebury , inter-alia, that the Guidance process simply led to the existing answer (take advice) though there was no indication that the population were any more ready to pay for this advice than in the past.

In view of the hype surrounding Pension Freedoms, and the lack of progress towards a solution, this risk was accorded red status.


DB Funding – the widening gap between assets and liabilities

Ralph Frank eloquently laid out the risks attaching to 2014 valuations published in 2015 which would show higher than expected liabilities resulting from continued depressed yields.

Bob Campion spoke about the discomfort of employers being asked to agree new deficit plans in the light of the failure of previous plans. The words “running out of patience” were uttered several times.

The concern seemed focus on the potential for a deteriation of trust between employers and trustees over the ongoing struggle to keep DB schemes solvent.

To the question from the chair “does this really matter” , it was unanimously agreed that with £1.5tr  of remaining liabilities,  UK Defined Benefit plans continued to pose a considerable risk that they would not pay out in full to members, would become an increasing burden on employers and on UK economic growth, on which the success of our pension wealth is predicated.

Deficet funding remained a red-rated risk



It was noted by Stella Eastwood that while we have scotch’d the devolution snake, we have not killed it (clever Scottish link there). The promises dished out to the Scottish Nationalists to avert devolution may still come back to bite UK pensions in a nasty way.

Despite passionate articulation, Stella was alone in her protests and this risk, while recognised, was assigned a green status


Workplace pensions and auto-enrolment

Bob Ward ably explained the potential for a capacity crunch, Henry Tapper wittered on about the need for better buying by employers and there was general concern about both a crunch on advice and a crunch on capacity as we move towards the end of 2015.

With 100,000 employers due to stage in October 2015, the risk of non-compliance with AE regulations and the failure to install and manage the pensions for so many companies was considered scary.

There appeared to be a Mr Micawber like optimism in the room that something would turn up, so much to the frustration of Henry and Bob, this risk was not considered critical and was awarded an amber risk rating


In conclusion

Five risks

Two red- Deficit funding and a failure to deliver the Pension Freedoms

Two Amber– Regime Change and the failure of Auto-enrolment

One Green– the risk of Scotland coming back to bit us from behind


If you aren’t one of the Pension Play Pen risk committee but want to add to the discussion, please append your comments and suggestions below.

The next Pension Play Pen lunch will be on Monday February 2nd- same time (12.30) -same place (Counting House pub). Put it in your diary!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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8 Responses to What can go wrong now? Pension Play Pen 2015 risk register

  1. John Moret says:

    Hard to argue with any of these Henry – but surprised all the issues associated with public sector pensions didn’t get a mention.

    • henry tapper says:

      We did talk about LGPS John and I missed it our- the concern was that we would see back-sliding from the proposed reforms and LGPS would continue to flounder in a wash of cost that benefits no-one but those in financial services

  2. Darren Say says:

    1.4 million of ‘most at risk’ consumers being enrolled into schemes or already members of schemes which are guaranteed to fail with an average shortfall of liability estimated at £250k+

  3. Anything that raises awareness of the many risks associated with pensions is a great idea, and I really like the straightforward red, amber, green approach. Personally, I’d classify pensions auto enrolment as a red; there really is so much that can still go wrong largely because of market capacity issues. Standard Life’s Jamie Jenkins made a great point a couple of weeks ago, that we are only something like 3% through the number of employers that need to be staged, so the last thing we need to do is allow ourselves to be lulled into a false sense of security because of the success of AE this far.
    A rule of thumb with anything to do with risk is to plan for the worst; and if it doesn’t happen then that’s great. Hoping it all works out OK without knowing that it will is simply a foolish, high risk strategy.
    If AE were to fall over for market capacity reasons (and it is just an if) then the reputational damage to the pensions market will take decades to recover from and as a result move us away from solving the pensions crisis.
    None of us want that.
    In a nutshell, January 2016 and onwards is still looking like a huge operational challenge to me, and on top of all the operational challenges there are many reasons to think that mistakes are being made about scheme selection, as you say.
    Your risk register is a great initiative Henry, and best wishes for the continued success of the Pension Playpen
    I hope to attend your next London meeting if I may.
    Andy Agathangelou

  4. John Hutton-Attenborough says:

    Surely it is not just October 2015 that has an issue with staging dates. Momentum builds thereafter with a “tsunami” of small businesses all having to stage and yet may have done very little to prepare for it even before the providers are engaged (assuming that they can). I fear that employers will just grab what they can if at all. Good/ Bad or indifferent! Is that really the landscape for future pension provision which was to be expected at the outset?

    • Bob Ward says:

      Yes, you’re right John but that was just quoted as the peak this year which will serve as a main crunch point to test how well the industry is ready for the ensuing tidal wave. Worst scenario is if providers can’t cope by 3rd Q this year then timeframes may need adjustment (I’m sure regulators have a disaster contingency provision ??) but as all are aware of the numbers there’s lots going on in the background with the technology development which holds the key plus stronger governance and tidying up of legacy scheme charges. The message is to ensure competitive value for money so it shouldn’t be a case of hobson’s choice. The whole AE scene will change during this year and as momentum increases the improving knowledge and awareness of employers and previous case studies will point us in the right direction. I think this is a once in a lifetime spectacular opportunity for the whole industry to engage in and there is wealth of pooled expertise working together and putting aside competitive jealousies of the past to make sure it happens. (seems like I have been allocated a little blue devil icon! How do I fit a beard on it Henry?)

  5. mark scantlebury says:

    Hi Henry – this is a dazzling summation of the meeting. It was one of the best. Thanks Mark

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