This blog is a sharp rap across the knuckles to the providers of workplace pensions whose “member propositions” are woeful. Coward that I am, I have to ride shotgun on the coach and horses driven by Merryn Somerset-Webb in the FT. For those who don’t subscribe, here is a flavour of Merryn’s complaint.
They offer products you can’t criticise too much. They charge headline prices that most don’t recognise as particularly high. And they provide all the information they are legally required to provide — even though much of this is in a place that I doubt the majority of people will bother to reach
It seems odd to criticise the operators of work place pensions for mediocrity; but when you consider these guys have been dished up the tastiest steak sandwich of a business proposition since pension saving began, maybe not.
Back in the day, I remember operators being fearful, they sat in rooms with civil servants and wondered whether auto-enrolment was for them. A few said no it wasn’t (the Prudential among them), most spent a little money on compliance systems and hoped their personal pensions could stand the strain. The new kids on the block used second hand technology for the land-grab. NEST got itself an unlimited loan and bought solutions from the market that work, NOW didn’t – and didn’t. Peoples Pension got it more right than any and continues to do so.
The market was waiting for an innovator, the closest it has got has been Smart Pensions, which is now swimming around like an adolescent shark, taking a bite at any fish in the ocean. It is as close as the market has come to being a Fintech operating in the workplace pension space.
Close but no cigar!
Last night, I returned a miscall from Nudge to NEST, the guy from NEST had given the guy from Nudge, my number by mistake! It seemed an appropriate end to a week in which I’d been told that NEST could not get the business justification to use Origo for transferring out members. Impact – members wanting to transfer out of NEST are waiting close to 50 days , rather than the 10 – if they adopted the Origo standard!
We all know what good looks like, we have good apps on our phone which allow us to do our banking. This week I upgraded my Virgin Trains ticket using Seatfrog which allowed me to bid against other passengers for the big seats at the front, it took a minute using my handset.
But not one workplace pension, not even Smart, offers punters an app to see our funds. Most of the insurers will give us little calculators , but none will allow us to see what is going on. It’s not impossible, most of the SIPP providers give their wealthy customers the right. L&G offer an app if you’re in a SIPP but a clunky log-on to a website – if you’re in economy class (the workplace pension).
Workplace pensions talk a good game , they look close to getting it right, but – as Merryn points out- they opt every time for mediocrity.
Lipstick on a pig
I think it easy to see why. The business of pensions administration has yet to embrace the 21st century. The distributive ledger technology which is pervading insurance and banking, has not been adopted by pension administrators.
Instead, they re-use last year’s chassis and fob us off with snazzy interiors.
Until the chassis of our workplace pensions, by which I mean the databases that keep our records, are upgraded to the requisite technology to meet today’s best practice, workplace pensions will continue to be expensive for operators to manage and unhelpful for us to use.
A root and branch upgrade in the back offices of the operators is overdue. I have spoken to one or two and they know who they are. I will single out Smart since they have new management. Smart- if you are reading this, it is time you stopped being clever and started being brilliant. If you want to beat the big boys, now is the time to show leadership.
For now – your proposition – like those of your competitors – is no more than lipstick on a pig!
We should expect more!
The level of expectation is so low because we have no consumer champions. The IGCs and the Trustees of these master trusts are busy talking among themselves about whether they are offering value for money. If you want to see what a good member experience is, look at your phone, look at Pension Bee, look at Money Hub, look at Seatfrog (where you get train upgrades).
We don’t want fancy apps, we want real time information – easily accessible and easy to use. We want to be able to pay money in with a touch of a screen, we want to draw money out with a touch of a screen. We want to transfer our money as easily as we can switch with U-switch.
We don’t know we want these things because the level of expectation set by the IGCs and Trustees , is benchmarked against each other and not against what is a brilliant member experience.
We are now only a few months away from the next round of IGC chair statements, which will once again say that “in our opinion, xyz is offering value for money”. This statement will beg the overwhelming question “against what?” and once again the answer will not be forthcoming.
We should expect more and we will demand more. What we want is investment in new technology to make these lipstick on a pig, admin systems into world-class databases offering members world class service. Until we get that service, we are right to agree with Merryn.