Yesterday saw two issues re-emerge from Government announcements that were inaccurate and confusing. Both show that even with their army of lawyers, the Treasury and DWP still make fundamental errors that were they to be made from the private sector would be censured by their respective regulators, the FCA and the Pensions Regulator.
Screw up pt 1; HMT continue to advertise guidance as advice
Can you spot the Treasury’s howler in this message?
#PensionWise provides free, impartial guidance on your pension optionshttps://t.co/YgBoa3F4Wv #pensionfreedoms pic.twitter.com/71NwTOvoTm
— HM Treasury (@hmtreasury) December 10, 2015
Neither can I – but the version of the ad that went out earlier in the day mentioned used the word “advice” in the strap- not “guidance”.
@hmtreasury Advice? Oh yes you do! (oh no you don't) #pensionfreedoms Confused? – we are!
— Henry Tapper (@henryhtapper) December 10, 2015
.@JosephineCumbo Looks as if @hmtreasury read your & my tweets and changed "advice" to "guidance" – Am I correct? https://t.co/LnKxxKGPiN
— Bruce Dalton (@SHB1893) December 10, 2015
Well there’s no need to drag it out – after 18 months – we still can’t be clear about what can be said as guidance and what is classed as advice, which is one for Harriet Baldwin and her Financial Advice Market Review
Screw up 2; DWP advertise non-existent “Government Help”
The second blooper from Government occurred in an advert from the DWP, where Workie was telling punters that they’d be getting a contribution to their workplace pensions from the Government. Most of us people who pay tax- will be. But some of us, who are auto-enrolled but pay little of no tax won’t be. That’s because of the net pay rule that says “you no pay no tac, you no get no help from Government”. So the ad is misleading, as was acknowledged by the Pension Minister later in the day.
@JosephineCumbo @henryhtapper Hopefully, we helped get it taken down, but worrying that it ever slipped through first! Surely @DWP aware?
— Karen Wake (@pensionmonkey) December 10, 2015
@henryhtapper @DWP tweet removed. Shouldn't have gone out! If in NetPay scheme low earners can't get their tax relief. Need Relief at Source
— Ros Altmann (@rosaltmann) December 10, 2015
Part of the problem is that pensions are too complicated, but this is compounded by the knowledge about pensions being held by a few to the exclusion of the many (including those who do the Treasury and FCA’s advertising.
There is a massive industry within pensions called compliance, which spends most of its time monitoring the financial promotions like wot “DWP and Treasury av dun”. In this world it can take 2 weeks to approve a tweet which leads to the sterile lack of innovation that stops advice or guidance being given or solutions to issues such as “net pay” being created.
In short, the DWP and Treasury are the authors of the very rules that trip them up and their rules are the reason why much of the confusion that exists, exists!
How to solve the problem – common sense!
The answer to this problem is not to rewrite the rules, or write more rules or even to scrap the rules. The answer is to do what Ros Altmann did , which is simply ride straight through the rules and show the kind of leadership that is needed.
I know that may sound like a charter to Government Ministers to do what they like, but if we don’t have people speaking from Westminster with common sense, rather than from the COB rulebook, we are not going to get anything moving.
How a Government Minister intervenes in a positive fashion
Wo well done Ros Altmann for getting things moving and for spelling it out as it is- as she spent most of the rest of the day doing- albeit on twitter- where the majority of people who work in financial services – do not go!
@pensionmonkey those earning over £10K have to be enrolled and can ask to be enrolled if earning less than that.
— Ros Altmann (@rosaltmann) December 10, 2015
@pensionmonkey @paullewismoney I understand that but 1.8million employers about to set up pensions for staff. They need to know beforehand
— Ros Altmann (@rosaltmann) December 10, 2015
@IFALeicester @paullewismoney indeed. And many trustees have no idea either!
— Ros Altmann (@rosaltmann) December 10, 2015
@paullewismoney I want employers with low earners to check their pension scheme so their low earners don't pay 20% more for their pension
— Ros Altmann (@rosaltmann) December 10, 2015
@paullewismoney I'm concerned abt low earners who shdn't have to pay 20% extra for their pension. Thanks to @moneybox for highlighting too
— Ros Altmann (@rosaltmann) December 10, 2015
@paullewismoney This is an injustice that I only discovered a few weeks ago, it needs to be addressed and tPR must guide employers
— Ros Altmann (@rosaltmann) December 10, 2015
@paullewismoney Using NetPay isn't illegal, but employers shd be told by tPR that NetPay means low earners pay 20% more for their pension
— Ros Altmann (@rosaltmann) December 10, 2015
@paullewismoney Agree, but vital that employers know implications of using Net Pay, currently many don't – &need to tell their staff too!
— Ros Altmann (@rosaltmann) December 10, 2015
