The pension transfer debate can’t be left to experts!

social media

I’m a big fan of outright hostility on social media, especially if it is directed at me. I don’t rate myself as anywhere near as good as Paul Lewis – who is the master at absorbing and developing such hostility into constructive debate, but I’m learning from him!

I was damned pleased- during the tea interval at yesterday’s ODI v the hapless Saffers, to read this reaction to my blog on the Pension Protection Fund.

It’s not anonymous, it’s from John Reynolds – dubbed by friends and colleagues “The Pensions Professor”, John runs ExpertPensions – so he’s not to be messed with.

Nothing like hearing half the story? We all know about commutation factors – what about revaluation and escalation post-PPF? Come on, Henry Tapper if you are going to write about the PPF or anything DB – let’s critically evaluate it in full and properly. Let’s do it with full sight of all the facts and with a critical eye on both sides. That was a disappointing biased view – no adviser in their right mind is going to even suggest to a client that they are going to be better off in the PPF. Come on, Henry, I expect better from you.

I responded promptly;

Well what of it John? Of course there are differences in revaluation and escalation of pensions in retirement and my example did not go into all the nuances. My example took a scheme with a fairly poor cash commutation (12;1) some DB schemes offer at least twice that. But commutation and early retirement factors are generally ignored (while the obvious cuts in benefit are always promoted!). There needs to be a redressing of the balance. A blog cannot be definitive but it can influence the argument! I hope I have influenced the argument – or maybe started one!

I don’t want to be an Expert in pensions, or a Professor – or even an Actuary! I do want a good debate on whether ordinary people should be frightened of the PPF! I suspect that most would be frightened of the Pensions Professor!

Indeed, Henry. If I thought that was true I’d believe you. If you were a practicing, regulated and competent Pension Transfer Specialist , you understand how much of a nonsense your article reads. ONLY in EXCEPTIONAL circumstances (and space doesn’t allow me to details them) would any PTS consider the possibility of the PPF a credible reason-why from the client.

Most of the time it’s a smoke-screen (from the client) and most competent advisers understand that going into the PPF is not the end of the world, so most of the time (and space doesn’t allow me to go into the detail), the PPF is NOT ignored – it’s used as a good reason to stay! My point is – when your career as a PTS is on the line within every piece of advice – we do look at it in the round, holistically, critically and with some care. Not half-cocked

Looking for “a reason why” – or a fight?

I’m not sure what a “credible reason why” refers to, but if it is a “reason why” the client insists on taking his/her cash equivalent rather than a pension then I’m with John, the PPF is not a zombie fund, it’s a way of getting a lifetime income with strict rules attached. That is what many people want and despite 80,000 people taking CETVs last year (TPR’s estimate), the vast majority of people lucky enough to have the choice, chose to take a scheme pension from a DB scheme. I was one of them.

I am not going into the moral rights and wrongs of taking a cash equivalent transfer pension, I am talking about the  substantial number of people in various schemes who have or have had the choice of remaining in an occupational scheme – or choosing to go into the Pension Protection Fund. This is – I understand it – the choice that will be presented to members of the British Steel Pension Fund (BSPS) in the near future.

I cannot comment on this choice as I am not privy to the deal members will get from what the BSPS becomes (A Regulated Apportionment Arrangement or RAA). In my article, I put forward an example where the apportioned benefits of a DB plan were (in most cases) worse than those benefits if the member chose to go into the PPF.

The point of the blog was not to beat off rabid-IFAs , foaming at the mouth to get their hands on their client’s wealth, but to explain that the decision to “stay or go” is a complicated one and one that needs some explaining!

Barking up different trees!

So John and I are barking up different trees! But what is instructive about John’s comments is that they are so confrontational. Not only is he at war with me, but he seems to be at war with his clients (or maybe the clients of the IFAs he teaches). If the clients are really making smoke-screens, then what are the IFAs doing?

The extreme paranoia that pervades John’s comments , is focussed on an adviser’s

“career (being) on the line with every piece of advice”.

Well it is right that it is. If advisers are to be held out as (and paid as) professionals, they have to take their advice that seriously, if they don’t – who will? IFAs are not alone in this, they are joining a club of serious advisers who have lived with these responsibilities for decades if not centuries!

We may be barking up different trees, but the trees are in the same neck of the woods!

John should come to  the Great Pension Transfer Debate on June 19th!

CETVs are the hottest topic in private pensions right now. That is why the Great Pension Transfer Debate, being organised by Al Rush at the East of England Showground on June 19th (note change of venue) has already attracted 300 + IFA like John and his clients.

The debate won’t look at whether it is better to “cash-out”, it will look at options if you stay in a DB plan (as discussed in my blog). I know this with certainty as I am chairing the event and – though this is a small part of the whole, it is an important part.

I suspect that you are reading this article out of professional interest (rather than idle curiosity). If so you are welcome to join the Great Pension Transfer Debate by registering here! 

The debate is not about actuaries and IFAs willy-waggling at each other. It is about learning. Learning about transfer scams, about decent post transfer investment strategies, about how CETVs are calculated and yes – about choices some people have about the type of scheme pension they can choose.

There will be “experts” from a number of fields who will be presenting to and debating with each other. There will also be non-experts – such as me!

Too important to be left to experts.

Although it would be great that most ordinary people got the kind of advice that John and those he teaches obviously give, the truth is most of us don’t. We stay with scheme pensions and the best we can hope for is some satisfaction from knowing that in doing so , we have made an informed choice.

Leaving expert advice behind, we simply want to know the facts behind a decision -such as the one I discussed in the blog.

The experts have to get down off their pedestals and find ways to present the facts in a style and language and format that people can use. We do a lot of this at First Actuarial and I use this blog to understand how to do it better.

This often requires the strenuous debate that John’s comments have thrown up. That debate is not a bad thing, so long as it remains pleasant. I hope that John will see my responses as robust but not antagonistic. Actuaries and IFAs can work together and do.

The Great  Pension Transfer Debate will – I hope – show that it is by understanding each other, that we can work together. John it seems misunderstood me, I hope that this blog shows that these differences can be worked out – through debate!

In the end, the debate is too important to be left to experts, the debate needs to be with those struggling to understand pensions, who need the help of experts, but maybe not their price-tag!

Further reading

If you want to read the correspondence on this on social media, go to the linked-in debate here!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , , , , , , . Bookmark the permalink.

1 Response to The pension transfer debate can’t be left to experts!

  1. Con Keating says:

    Henry – There is an issue here as yet undiscussed As I recall the introduction of CETV was motivated by concerns for preservation of members’ rights, but now most requests are motivated by the desire to exploit freedoms and liberate their pensions – quite the opposite of preservation.
    I still subscribe to Goode’s view that DB scheme members have an interest in the trust not its assets – a topic for another day.
    As for the PPF – there really is no reason for it to haircut members’ benefits at all. Members are the victims of accidents not their instigators. And if they paid in full, then we would immediately end the whole consolidation discussion.

Leave a Reply