The irrational exuberance that characterised the FT’s pension transfer seminar in the spring may have marked a high-water mark in the rush to liberate. Martin Woolf and Merryn Somerset-Webb urged us to take our pension in our own hands (or swap it for a pile of cash). Clear hosted an event that included Ros Altmann recommending we negotiated with scheme actuaries to get ourselves a deal and some fund managers sponsoring proceedings suggested that 8% pa was an achievable return on a sustainable basis.

It is small wonder that money has haemorrhaged from some of our largest pension schemes, especially those in the bank and insurance sectors. I know of two schemes where exiting money exceeds £250m a month. These flows are materially effecting established investment strategies and are troubling trustees in more ways than one.

This morning I’m reading a more circumspect tone in FT publications. This may be because Jo Cumbo has reasserted her control of the pensions agenda (she was off for the spring extravaganza) or it may be because CETVs have come off their November 2016 highs (some prospect of an interest rate rise on the distant horizon). But the primary driver for sobriety has been the belated attention of the FCA in the risks attaching to taking £50bn out of gold-plated DB schemes and punting the proceeds on the red (well that may be a little unfair on the markets but..).

This morning’s article by Jo is indeed entitled “Rush to cash in pensions spurs FCA’s scrutiny” and is a run through the various events of the past few weeks that suggest that today is “after the goldrush”.

Some advisers have opted to slow down and some to close down. Organisations offering out-sourced transfer advisory services (where the outsourcer takes no responsibility for where the money goes) have been told to shut up shop- at least for the moment.

I’m quoted by Justin Cash in Money Marketing offering the rationale

“The critical thing people seem to be missing out on is the FCA is very keen to hold advisers to account for the outcomes of the advice that’s given. It is saying it’s not enough just to give the transfer value analysis calculation. You have got to be clear the recommendation leads to a positive outcome.

“The FCA knows there’s a crisis going on. But the danger is the market is already travelling at 80 miles an hour, and the regulator is seeing if it’s possible to pull on the handbrake.”

If only I could be that eloquent!

The Tide turns

Personally I look back to the Great British Transfer Debate as an inflection point. To have the best part of 300 interested parties assembled in an aircraft hanger out of Peterborough on a hot day in June was testament to an industry that knew. We knew that something big is going on and that there was far too little debate on what this £50bn dam-buster meant.

The meeting has seen conflicting positions find common ground (I have made my peace with Tideway Investments) and it’s seen a greater appreciation among advisers of actuaries and vice-versa. There is sufficient memory of the late 80s and early 90s mis-selling epidemic for all parties to be wary.

This month is scams awareness month. The scammers are hard at it – probably promoting scams awareness month to the people they are scamming. Angie Brooks and a few other souls are outing the networks of the villains , preventing fraud by promoting vigilance. But they acknowledge they are lone voices , (we could not even ban cold-calling with the legislation awaiting the button to be pressed).

We need to be aware not just of scams but of the risks inherent in swapping the protections of collective pensions for the uncertain rewards of pension freedom. The FCA’s recent paper on the subject questions a market which has seen little innovation since the freedoms (unfortunately reminding us that the attempts to create innovation in Steve Webb’s “garden of many flowers” suffered a savage dose of DDT from his successor.

Risk-sharing is the obvious way to construct a default and this does not necessarily mean sharing risk with Government or employer. Risk-pooling in this country has a long and noble tradition in our acceptance of mutuality, social insurance and wider risk pooling. It is quite possible that the new mutual – NEST, Peoples, NOW and their many smaller counterparts , can find ways to allow us to share risk between ourselves. This is the origin of all insurance.

Why the mood music is changing

For the mood music to properly change we need more than the prohibition that is the outward sign of the FCA’s current concern. We need recognition that for a very large number of us, the concept of the self-managed pension is simply too ambitious. The reason that we leave pensions to experts is that they are complex things which require a skill-set beyond most of us.