Spot the newcomer!

I was talking last night to a senior financial journalist about NOW pensions. In the catalogue of actions that the Pensions Regulator can call upon, insisting on the inclusion of Dalriada Trustees, is perhaps the most alarming.

Dalriada is a private entity but is used by the FCA as an enforcer. Victims of the ARK pension scandal will know Dalriada well as one of its professional trustees is busy enforcing tax -claims against members who have received unauthorised payments.

Dalriada are the fiduciary equivalent of Rentokil.

So when we heard that Dalriada is being invited to join the NOW board, alarm bells started ringing. According to my friend, the invitation was at the behest of other trustees but so was NOW’s withdrawal from the favoured master trusts list on tPR’s website. It appears that the Trustee’s are coming quietly.

You will note from the infographic above, that Dalriada are there in corporate rather personal guise and do not have a “NOW pensions” soubriquet.

As my friend said “very odd”.

Close, but no Segar (yet)

In December, Joanne Segars, former pensions boss at the TUC,  ABI and PLSA will become a trustee. She joins a string of marquee signings, replacing John Monks (ex TUC ). supremo). Chris Daykin is a former Government Actuary, Nigel Waterson a former Shadow Pensions Minister while Jocelyn and Win are respectively admin. and investment gurus with “portfolio careers”.

Once again NOW will have gone for the sage institutional option. Segars managed to sell NOW a “PQM ready” sticker back in 2013, something they are still very proud of. NOW went on to be the first to purchase the MAF sticker, which pleased the ICAEW and PLSA. They have given the investment audit on their mono-fund to Redington, which will please the mallowstreet community.

“The team think deeply about portfolio construction and risk factor correlations. Particular attention is paid to volatility and stress scenarios where they use expected shortfall to measure risk. The strategy extensively utilises the ATP risk infrastructure.” – Redington 2017

NOW tick all the boxes.

The trouble is that they are not doing a very good job of running a pension scheme, which is what the Trustees should be very concerned about.

No space to list the train crashes at NOW

NOW’s problems are with their participating employers who- over a period of five years have had consistent problems with the collection and allocation of contributions from payroll to fully invested member pots. There are so many horror stories, I cannot list them for space- even were I able to mention the clients (which I should not).

Over this five year period, we have seen NOW’s rating for payroll interface plummet on the Pension PlayPen. Contrary to Redington’s view, First Actuarial’s rating of NOW as an investment organisation is a dim view. http://www.pensionplaypen.com , which has been a staunch supporter of NOW’s noble ambitions, has bowed to the weight of evidence.

For all its promise, NOW has failed to deliver. It is Paris St Germain ,relegated to the Championship..

You cannot outsource the member experience – it is what you do

The problem is not just with marquee trustees. There is a real issue about the Commercial Board of NOW. Its Chair is a Danish banker (with a regulatory hat), its CEO was CFO of NOW’s chief administrative supplier and its sole non-exec is a former fund manager. None of these people has first hand experience of managing the funds of ordinary people.

Like the marquee trustees (Blackwell excluded), these are people who see matters from the abstract cloud of policy or strategy , not with the eagle eye of the practitioner. The people who are getting their hands dirty are not in NOW;  NOW outsourced its operations to Xafinity, to Staffcare and latterly to JLT. NOW has listened to conventional wisdom that suggested “best in breed” third parties beat doing it yourself.

But this has meant NOW are two steps away from resolving any crisis. Whether it be the problems that forced it to swap administrators, or the outage when they did, or the disastrous relationship with a middleware supplier or the failure to get their administrator to operate relief at source or even the problems they’re having transferring members out, NOW seem to have no control of their suppliers.

It might be argued that NEST have a similar issue with TATA but NEST are different, they seem to have limitless money to throw at TATA and a payback period as flexible as the gusset on a tart’s knickers.

NOW the price goes up.

NOW has told us that they have embraced Origo and that in future , members wishing to transfer out to other Origo members, will be on the 10 day pathway to completion. I hope this is the case, as Pension Bee’s Robin Hood Index has NOW taking 5 times that standard to rid themselves of members who quit.

Deferred members of NOW with small pots should consider this. From April 2018 they will be paying £1.50 pm however small their funds. This is on top of the investment charge on their fund.

This is a substantial hike from the current member charge

And this comes on top of the charges to the employer for having them in their part of the NOW master trust.

If you are the fifth active member of your employer’s fund and you leave that employer, you are costing your Ex- employer, £7.50 pm + VAT.

It is not just in the interests of members to get out of the £1.50pm member charge, but in the interests of their employers. This is why Romi Savova, CEO of Pension Bee wrote me

If only it was possible to transfer out…

She was writing of the member’s experience getting NOW’s administrator’s to process transfers to third parties (including Pension Bee).

NOW argue that this (further) price hike, is to protect the richer members from cross-subsidies, but there is no corresponding price reduction for richer members. NOW is simply showing it has got its pricing wrong.

Taken with everything else that has gone wrong this year, this suggests worse may yet be to come.

Intentions good – implementation terrible

It is the inevitable conclusion. Marquee trustees, a non-executive commercial board and operations outsourced ineptly.

NOW is not a bad organisation, it is an incompetent one, one that consistently hides behind accreditations and the commendations of institutional partners. It is operating in a space where payroll is king and accountants the king-makers, but NOW is not able to build the APIs to the software through which their employers pay their staff.

They simply don’t have the confidence of the organisations who feed them – Sage especially.

NOW has lost the changing room.

NOW is a massive operator of workplace pensions, more than a million of us depend on NOW for future benefits. It is time it recognised that it simply isn’t in charge of itself. The appointment of Dalriada tells me that the Pensions Regulator has lost all patience.

Without a proper CEO, without trustees who have hands on experience of running a large pension scheme and with a commercial board about whom we know nothing, NOW should be putting itself into pre-pack mode. It should be talking now to its major competitors about handing over responsibility for the management of these pots to another trust.

There are several master trusts who would relish the challenge of turning NOW round and I hope that they are talking right now.

Employers should start considering their participation in this master trust, deferred members should seriously consider transferring out asap.

The Pensions Regulator is making it clear it has lost patience, NOW so do I.