This article is best read to the sound of Muddy Waters 1966 version of “I got my mojo working”, if you aren’t in the quiet carriage, click on the video at the bottom and enjoy your next three minutes.
Many blooming flowers in this garden
On the 11th/12th May I’ll be on the myPAYE/Pension PlayPen stand at Accountex 16, convincing reluctant accountants, book-keepers and payroll experts of the merits of paying attention to a pension. At the same time Hymans Robertson and Aberdeen will be demonstrating the value of Hymans’ Go engagement software as a way of getting employees of large companies to pay attention to their pension.
People have the same needs whether they work for a large employer with a history of properly funding pensions as for an employer with no history with pensions at all. People need to engage, educate and empower themselves to take crucial financial decisions for later life.
Yesterday I met with Jamie Sexton of True Potential and discussed engagement. There is a famous TP client who is contributing £4.65 per day into his pension using his phone to make the payments. Each time he sends money, he is reminded that this is money he is not spending on cigarettes. By giving up smoking, he saved £4.65 and also gave himself a much greater chance of having a long and happy retirement!
Whether it is in the rarefied world of Hymans/Aberdeen or the bustling halls of Excel (Accountex) or through True Potential’s financial advice, we are all moving in one direction.
Working towards a common goal
At a meeting organised by TPAS and TrueSpirit on Tuesday, I heard Ros Altmann explain very explicitly what I had long suspected.
Since April 5th we have had no earnings related element to state pension accrual. instead we have auto-enrolment.
These private pensions we are in, whether the posh ones run by Hymans/Aberdeen or the workplace schemes established by small employers with the help of those at Accountex or the SIPP arrangements established by financial advisers are all about creating the right conditions for people to make up the slack left by an inadequate state pension.
Ros Altmann’s message to those at the round-table I attended yesterday, and at the TPAS event the day before and the PMI conference in between was the same.
That though we may feel we have lived auto-enrolment for ever (well since 2012) the real work is only beginning now.
That we must restore people’s confidence in saving into pensions and that means all private pensions (from large occupational to SIPP with 50 shades between).
That we must use the engagement created by auto-enrolment to educate people about the need to use these pensions in a sensible way.
That we must empower people to use the tools they have, especially these workplace pensions we are setting up, to save appropriately for their future.
Ros Altmann has her mojo back.
So many people have written Altmann off; people have called her personal statement following IDS’ resignation a suicide note. Ministers in her own department stood against her. There were many in pensions that hoped that they had seen the last of Baroness Altmann.
How wrong to write her off! Altmann is back and so is that lost mojo, and she’s kicking butt.
This is leadership of the highest order, bringing people together behind a common purpose with the passion and good grace that is our Pension Minister’s Forte.
Necessarily this involves some kind of vision and that vision of workplace pensions complimenting the new state pension as part of what Altmann calls a Pension Revolution is not hers. Critically she inherited it from its architects Steve Webb and those before Steve Webb.
But crucially , Altmann is not trying to recreate the vision for pensions but encouraging us to engage in what we have already started. This is a considerable step forward and a mark of a mature leader who is ensuring good ideas get enacted.
This has been very missing in the past year since the election. Ros Altmann is back, revived- very tanned -very blue and with a mojo about her which has so far – in her time as Minister- been lacking.
So auto enrollment, as the cynical amongst us had already guessed, is nothing to do with getting more people to save for a pension. It is all about replacing what people used to get from the government but at less cost to the government so that the government can give tax cuts to the rich, and at more cost to the saver which, wow, will also go to the rich. And all this from a government elected by 38% of those voting and 26% of the population. If Altmann truly has got her mojo back, let’s see her do something for pensioners and prospective pensioners instead of for the pensions industry (sorry Henry) and the rich. Regards, Robin Rowles
Like you Henry I am a big Ros fan and have been worried by her lack of visibility. I’m glad to hear her exhorting us all to work together and I’m glad she is not trying to author a new plan for pensions into the future which would confuse things further. This “rugby captain” style of leadership is useful. However real ministerial leadership will require much more than this. She needs to ensure that the government leads on key infrastructure like the pension dashboard, on ensuring employers have the right legal duties and on opening up the post retirement market to competition ( the open market ). She also needs to keep the Treasury off her turf so that we break the annual cycle of ill conceived tinkering with pensions. When we see her scoring in these areas we will know she is truly realising her potential.
I agree – Ros’ success will be measured as you say. I have hope!
Robin, the pensions industry is working a lot more efficiently in delivering workplace pensions than I’ve seen it work since I started (1983). We’ve stripped out much of the inefficiency and delivering pensions pound for pound much more cheaply that we ever had.
But we aren’t getting this message accross and we aren’t getting the message accross that ultimately the only person who pays you a pension is yourself.
“………we aren’t getting the message accross that ultimately the only person who pays you a pension is yourself”. That is a key message. The state pension is funded by ourselves – it’s just a hopelessly inefficient & inadequate way of doing it that has lasted so long because it requires zero engagement from individuals.
We won’t know if auto-enrolment is a success for 20 to 30 years.
I wasn’t impressed by Ros Altmann’s performance at the PMI annual conference although I did wonder when she had time to get that tan!
I don’t agree with you on the AE point, I think we’ll know for sure by the end of the decade. So far the signs are good but we need a big push between now and 2018 with more pushing after that
Have you seen the projections by the PPI? Is that ‘success’?
No – that is not success. For auto-enrolment to be successful we are going to have to engage the hearts and minds of first employers and then members in the value of saving into a workplace pension. That is proving tough, but it is what we are trying to do!
But, but the point of the song is that his mojo wasn’t working, albeit on an unspecified “you”.
I really just want to put in a word for zero-engagement pensions. I think it’s exactly what we need.
Well we’ve got one of those Bryn, the trouble- as Waspi shows us is that zero engagement leads to charges of chicanery whenever anyone finds themselves with less than the next woman/man.
But you’ll be pleased to know that 90% of the new workplace pensions are being bought on a zero engagement basis, perhaps why Ros Altmann refers to them as the replacement to SERPS.
She has her mojo working (but that just don’t work on me)
And for the avoidance of doubt, I gave Barbara Castle her famous line “all funded pensions aspire to the effeciency of SERPS”.