the Queen of England

Well done Ma’am!

It’s a good week for the monarchy – and for our revered Queen Elizabeth who today becomes Britain’s longest reigning monarchy.

Enough has been said about Elizabeth Regina for me to trouble these pages with further congratulation. She’s been on the throne ten years longer than I’ve been on the planet and I’m no spring chicken, for the majority of us Brits, we know no other!

Who’s a naughty Baroness!

Our pearly queen of pensions

Not such a good week for our latest pension’s minister who forgot to cancel her membership of the Labour party when taking up her peerage. She’s our newest pension minister but not yet our most accomplished!

Ros Altmann and Elizabeth Windsor are an unlikely couple, one to the castle born, the other from “trade”, but they’ve made it in their careers, brought up families and have survived the odd annus horribilus.

Prospects for Baroness Ros

So putting aside the local embarrassment, how does the pension landscape look for the DWP’s new minister for pensions?  What next?

Having got used to Steve Webb and Gregg McClymont in the Commons, it is all a bit of an anti-climax at the moment with Baroness Altmann and Lord Bradley quiet as door-mice.

How long can you keep a good woman down?

I am sure Ros will surface soon! She’s our North London Pearly Queen and sooner or later she is going to come out of her current purdah and do the ministerial bit.

Rumour has it we are due a policy statement from the Lady, telling us her priorities in Government and defining the political tone in pensions till the next election in 2020.

More change needed (I fear)

The accepted wisdom is that we should put the breaks on change and give everyone a chance to take a deep breath and absorb the shock (of being in the 21st century). However, putting the breaks on the lorry as it careers down the hill is more to cause an accident than to allow the momentum of change to play its way out naturally.

Tax

The big political change in pensions – the change in which our benefits and contributions are taxed, is still under consultation. It is unlikely that we will see any announcements before the budget and sources close to my neighbourhood tax consultants (KPMG) tell me not to see anything implemented this side of 2107.

Contracting out

Meanwhile the spectre of 2016 looms large. For the occupational pensions industry the key date is April 6th when we get a new single state pension and contracting-out comes to an end. If the Government had any intention of reviving the defined benefit sector it would have carved out a reprieve for DB schemes from the increased costs resulting from paying full rate national insurance on the contracting in scales.

DB schemes look like demolition sites with various contractors at work dismantling the tower blocks put up in the past fifty years. We can only speculate as to whether new collective structures emerge to replace them. My guess is, that as with housing, not everyone is going to be able to afford a detached dwelling.

CDC

The FCA review on the delivery of Financial Advice in the Market, on-going consultation on pension transfers, the hideous activities of the pension scammers and questions over what Pension Wise is actually doing, suggest to me that some kind of policy initiative is needed, if only to give people a proper way of having their hard-earned pots paid out efficiently as income.

Auto-enrolment

Auto-enrolment is having a phoney war. The large companies have enrolled – and are starting to re-enroll, the small companies have (save for a trial run in July) yet to get started. We are neither fish nor fowl. The next big push – and the big battles of 2017 and 2018 are yet to be fought and politicians seem to be settling on simplification of compliance process as the best way forward.

Having killed off commission, or its close friend consultancy charging, the only back-door for member borne charging to pay advisors is the vertically integrated master-trust. For many advisers, the “in-house master trust” is a means to pick some value from the chaos, but whether the remaining loop-holes that allow this remain open, is a matter for the DWP’s ongoing work on the charge cap.

Workplace pension governance

Which brings us to DC Governance the muffled chant “it’s all gone quiet over there”. Just what the IGCs are up to is anybody’s guess. Whether they are the insurer’s way of putting the ghost of the OFT report to bed or whether they will serve useful purpose – keeping insurers honest- has yet to be seen.

I haven’t seen one output from an IGC that gives me hope that they will improve governance in contract based plans, but these are early days. We’ll wait to see what the IPP has to say on “legacy”, this may be the IGC’s first real test

And what of master-trusts? At best they are slimline , efficient and progressive. NEST is doing well, despite its £400m debt, Peoples is prospering, NOW has yet to digest its early successes and there’s a long-tail of smaller schemes ranging from the progressive to the desperate. There will be failures (my intelligence is that there already are).

The imbalance between the properly reserved , fully insured personal pension and the unreserved and unaccredited master-trust is a recipe for disaster and more needs to be done to ensure that the barriers to entry for master trusts are set at reasonable levels.

Advice

Without the participation of the traditional pension experts (and even the commission focussed corporate advisers) , 1.8m employers are about to buy into workplace pensions with a blindfold. The major issue of training the new advisers (the accountants and payroll bureaux who are over-seeing this) to understand what makes for good outcomes has only just begun.

Bless em all!

As I congratulate our monarch and commiserate with our Baroness, I’m drawn to one conclusion. Keeping calm and carrying on is the way forward. 5 years is as long in pension minister years as 63 in queenie years. Liz’s reign is mature, Ros’ reign hasn’t really got started.

May we remember Ros in 2020 as we do Elizabeth Regina today!