Help us spend a penny


Britain is entering its final week of financial constipation following over  a year of holding in the urge to splash the pension cash.

Speculation in the financial press is reaching fever pitch with the announcement of the Pension Wise telephone number being greeted with an on-line drumroll.

Will insurers open for business on Monday 6th or will the bank holiday trump the pension freedom?

All of this speculation is, of course, totally facile , whipped up by me in the hope that you might read the rest of the blog.

But you get my point. The sensationalism that surrounds the change will give way to the cold reality that , save for a few changes in price points, the product choices facing those with DC pension pots remains stark;- an annuity or self managed drawdown.

Faced with two options, both of which seem perilous, most people will- as suggested to them by Steve Webb- stay in bed and not turn down the covers for a couple of months.

Some will blow their pots and someone somewhere is going to be in the currant bun driving a yellow Lamborghini past the Treasury at 9am on Tuesday 7th April.

That will be the only visible evidence of our new found freedoms.

In the meantime, two things have to happen

  1. The financial services industry has got to wake up to the new reality- that if people have money in an account- they want and expect instant access.
  2. Most people want a replacement income in retirement so they can pay the monthly bills and organise their finances as if they were still working.

Whatever the conjecture about working longer and smarter, the simple truth is that most people expect their savings to be paid to a schedule of their creation, but a schedule

To meet the expectations of the millions the financial services industry is

  1. Going to have to get better at paying people on demand (have a look at First Direct someone)
  2. Going to have to organise a scheduling system so people can feel comfortable about how they get paid with a reasonable degree of security.

I am about to go down the DWP – not for my Giro- but to discuss “where to now for CDC’. Frankly I am sick of the sound of those three letters which spark controversy whenever they are mentioned.

CDC says nothing to people – (nor do DB, DA or DC for that matter.

What I’m really going down to the DWP for – is to see if by this time in 2016, we can create rules to allow people to get paid their pension pot as they want it to be paid in a reasonably secure manner.

Though our meeting is billed as Friends of CDC meet DWP, it is for me an opportunity to remind people that paying people in retirement is about putting the right amounts in the right hands at the right time. It is not about de-risking employer’s balance sheets or reducing the fiscal stress of the pensions taxation system and least of all is it about lining the pockets of actuaries, investment consultants and financial advisers.

If we can put aside all the local interests for a morning and just concentrate on the main event, we will make progress. But anything less than a full on focus on the need of the UK post 55 population to spend their pennies will be a lost opportunity.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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5 Responses to Help us spend a penny

  1. CDCis innovative and different from DB or DC. Whether you are a pensions ‘expert’ who is pro or anti CDC you should support the development of CDC as an option to meet client needs. At the end of the day the market will decide the success. My big concern is the OFT report indicating the UK pensions market has serious structural issues which need fixed. They might prove the biggest stumbling block to CDC development. So go in there Henry and get the DWP enthused about it as ‘they have the power’!

  2. Duncan S says:

    I totally agree with the sentiment Henry just not the solution! The market will decide if they are given the choice, I fear they might not be for quite some time! What i think the public wants most is clarity, and I struggle with CDC as I don’t think it can ever deliver this. Fixed term income solutions, with a small and known degree of risk will be much more appealing. I think structured products and temporary annuities have a big part to play in the evolution of the middle ground between freedom and crucifixion!

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  4. henry tapper says:

    Can’t agree Duncan- giving pensions to the bankers is not a solution!

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