The world of the member and the adviser
Another world
On Thursday 13th December the Workplace and Pensions Select Committee took evidence from a variety of people with an interest in the choices members have to take as part of Time to Choose, but in the context of the pension freedoms.
This blog contains my personal thoughts about the meeting.
On the witnesses
Everyone who is a witness at a Select Committee, is nervous for their own reputation. The first feeling you have after you’ve provided oral evidence relates to how you have done. Stefan, David , Rich and I were as nervous as you can be before, during and after appearing at the W & P Select Committee yesterday. I could see our hands shaking, knees tapping and listening back, I can hear my nerves in my voice, especially at outset.
That we were properly prepped and had delivered written evidence , made it a lot easier.
My heart is with Megan Butler this morning, who was outflanked by Frank Field’s questions and embarrassed by not having information to hand that Field and the Committee thought essential. On a personal note, I thought she managed the crisis professionally (as did her team).
If you have interest in how Government gathers evidence then you might want to watch those parts of the meeting that most interest you. You are able to do so using Parliament TV and you can see excerpts on this blog
This excerpt deals with the evidence of the steel workers with my supporting statements .
This excerpt contains the evidence given by Megan Butler.
Matters arising for the Chair.
The meeting was not important for performances but for the conclusions from its chair Frank Field;
It is clear that Field does not see this as the end of this. He told the meeting he intended to write to the DWP Secretary of State (David Gauke) to help the estimated 30,000 steelworkers and/or their dependents choose an option (PPF or BSPS2).
He has clearly no intention of letting Darren Reynolds and Clive Howells of Active and Celtic Wealth Management off the hook. They chose not to give evidence much to Field’s displeasure.
The FCA have work to do , filling in the imperfect information they could give as evidence and Megan Butler , along with TPAS and The Pensions Regulator will be meeting members tonight in Port Talbot. It is a public meeting and should be well worth attending. It is at 2pm Thursday 14th December at the Twelve Knights Hotel Margam (Port Talbot).
There are more general matters that need clarifying. I found the conversation about the data from BSPS misleading. The Trustees cannot put out data that they know to be incomplete or formatted in a way that might mislead. The gaps that have appeared in data given to members do not mean that the data that has been released is wrong or that the operations of British Steel’s Pension Scheme lack controls. Every pension scheme in the land struggles to present its data in the right way.
BSPS members should be aware that their scheme managers have regularly been applauded for the quality of their work and the efficiency with which they do it.
Clarification on my comments on redress
Rory Percival has rightly pointed out that you cannot provide compensation for those who have wrongly invested in a fund from those who remain in a fund.
@henryhtapper @RAF_IFA Just to be clear, a fund should not waive an exit fee in this situation as this effectively means the remaining investors are paying rather than the fund manager. If the fund manager were to cover the 5% however … https://t.co/KnXV40MpqL
— Rory Percival (@rorypercival) December 13, 2017
What I said at the meeting was that the redress should come from those who advised on the investment and – should it be decided the fund was not properly disclosed, from those who managed the contractual arrangements of the fund – it’s managers.
Bringing the two worlds together.
As I write, Time to Choose still has over a week to run, there follows a period of just over three months when decisions will work out. Many of the 14,000 CETVs issued will be taken up and the numbers given by the Trustees for those transferring and monies transferred will increase. The Trustees expect the total amount to leave the fund by CETV to be around £1.2bn, I suspect it will be higher.
At one point in the session , Frank Field remarked that the Trustees and Members seemed to be in different worlds and this is the learning not just for trustees in general, but for people like me who advise them.
That the BSPS Facebook page has been so successful suggests that social media is assuming the function of member representation that might previously have been managed by Unions. The work done by Rich Caddy and Stefan Zait in managing the BSPS pages over the past 18 months shows that members can organise themselves effectively to fill the gaps left by their scheme.
As I understood Field’s comment, it was that the worlds of the members and of the trustees did not have sufficient overlap. I think this is fair criticism. Going forward, any member support strategy must include the views of members and a proper understanding of their needs.
The Trustees of BSPS under-estimated the demand for CETVs and their take up, under provisioned for advisory support and didn’t make sufficient use of TPAS. Through the pages, the Chive support service has emerged, information has been passed to the FCA, public meetings have been advertised and members have been alerted to changes on the Time to Choose website (through the page managers monitoring system).
The Trustees and their advisers need to work more closely with the member’s and their advisers. We cannot allow these “two worlds” to work apart, they must work better together in future.
A tribute to Al Rush
There was one person who should have been at yesterday’s meeting who should have been – Al Rush.
Al is organising the public meeting in Margam today and has spent every working hour this week meeting members and organising his team to meet more.
Al couldn’t be at the meeting for expressing a view about those who failed to attend which seemed to be endorsed yesterday by the Committee. Al is of the member’s world and I hope that the Committee can acknowledge that Al has done as much as anyone outside the scheme to stop the problems we heard about yesterday and put people right.
Al – you were greatly missed yesterday – in Westminster. Your world is every bit as real.
Al Rush, helping a member in Margam
I can’t help but think that if partial DB transfers od the whole PCLS and a small element of taxable fund were made mandatory, many more would opt to leave the lions share (if all taxable guaranteed inflation proffed income) of their pensions in a DB scheme and simply transfer out the PCLS and a small element of taxable income to sit in drawdown. It would then be very hard for ANY adviser to advise a full transfer of all the DB benefits unless the individual was terminally ill or a confirmed batchelor with no dependants.
I’m not it would make much difference… After all, you can achieve similar result as a partial transfer by taking full TV, taking PCLS, buying an annuity for secure income and managing the rest via some investment vehicle. That doesn’t seem to be attractive to enough people for anyone have wrapped it up into a single product for advisers to recommend.
“I’m not convinced…” – convinced got lost between brain and keyboard.
Great piece of work by all involved.