Five Christmas Crackers from the Pension PlayPen!

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Merry Christmas readers. I bring you news!



Plan B

Here are five Christmas Crackers to discuss round the tree while you’re waiting for Santa 2.0.

CRACKER ONE – Transfer contracts; FCA to bring in rules surrounding the disclosure of costsFCA 78

  1.  Full disclosure of all transfer costs and cost of ongoing advice to include an estimate of exit penalties from fund management and/or advisory contracts.
  2. Independent sign-off from a second IFA where total cost of transfer exceeds 2% or £2,000.
  3. Banning of all marketing expenses paid from funds to third parties for provision of services (e.g. lead generation). Lead generation costs to be explicitly stated where total cost exceeds 2% or £2000
  4. Transfer analysis and advice certificate to be paid for prior to request for funds and not charged conditional on transfer transaction completing.
  5. Advisers engaging in this business to submit fee model to FCA prior to annual authorisation. Re-authorisation subject to inspection of previous year’s business, cost of PTS to be calculated by FCA to include this extra regulatory burden.

Undoubtedly these measures would decrease the numbers of advisers willing to offer DB transfer advice.  It would reduce the numbers of advisers preying on the vulnerable and focus transfer advice on “special cases” (see CRACKER TWO).

CRACKER TWO – those transferring out of DB must have “special needs”

Where advice is given to transfer, Al Cunningham’s “what makes you special?” test needs to apply. The client needs to explain in their own words (not more than 200), why it is that he/she considers transferring is in their interest.


CRACKER THREE – Guided pathways to include CDCcropped-target-pensions.png

That the FCA and DWP work together on guided pathways for the over fifties who do not have access to good advice and have DC pots (of whatever size).

Guided pathways should include deferred annuity schemes (as proposed by NEST and put in practice by several master trusts)

Guided pathways to include the opportunity for a CDC operator to offer access to a scheme pension at the operator’s discretion , for members wishing to exchange cash for “a wage for life”

CRACKER FOUR – Government to shift from providing to facilitating pension dashboards

That the regulatory costs of the above are met from a redirection of monies away from the Pension Dashboard project. The Pension Dashboard project should be rescaled to the original Treasury conception of Government approved data standards available to commercial organisations looking to improve the visibility and transferability of “loose” DC pots.

CRACKER FIVE –   the new institutional disclosure regulations are extended to retail cover workplace pensions and retail SIPPs.

The artificial division between retail and institutional investor be abolished and all funds, including those offered by SIPPs through DFMs , are subject to the same cost disclosure regulations.

The vertical integration of fund managers and investment advisers offering holistic services to those purchasing investments through retail pension wrappers , is being abused.

Where retail investors want to or are advised to “self-invest”, they should be regarded as having “special needs”, one of which is a heightened understanding of investment costs and charges.

We have protection for intuitional investors , through trust boards, protection for those in contract-based workplace pensions from IGCs, but we have no protection for those investing in Self Invested Personal Pensions. Since these contracts use investments which are supposedly “self-directed” , the onus on disclosure must come from those executing the contracts.

My final recommendation is that the responsibility and cost of reporting on the total cost of investment (including adviser costs) within a SIPP contract, should fall to the SIPP manager. The cost of this reporting should be included (and explicitly quoted) in the wrapper fee.

Five Christmas Crackers – implementable in 2018!

My experience over the last three months leads me to believe that where a small group of like-minded people get together for the common good, they can make change happen.

That is what Al Rush and I started and what others (led by Al) have continued.

There is no point in simply pointing to Port Talbot as an isolated instance of abuse, we know that bad advice, poor implementation and rip-off charges are happening elsewhere. There are systemic problems in the provision of advice on freedoms that include;

  1. The practice of conditional pricing
  2. The under promotion of obvious transfer solutions (workplace pensions +)
  3. The over- promotion of complex products using SIPP wrappers
  4. No proper contracts for those contracting into advisory fees.
  5. Chronic under-resourcing of regulators and legislators to make things better

My five Christmas Crackers give those “in charge” some light-hearted Christmas discussion topics.

Santa is clearly in trouble this year, his presence has been delayed and we should use the intervening period to discuss such pleasant and Christmassy suggestions as are contained in my FIVE CHRISTMAS CRACKERS!

five crackers



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Five Christmas Crackers from the Pension PlayPen!

  1. John Mather says:

    The DB promise was clearly a lie there is no gold plated pension what are you going to do to the people who conspired to sell the promise to the workers?

    As always attack is seen as the best defence trying to throw the attention on others who were not involved in the flawed design is diverting attention from the fundamental problem.

    The fundamental flaw is that that the life expectancy of the member exceeds the life expectancy of the sponsoring employer. When this is admitted the DB model falls over. Only the public servant scheme funded by the tax payer has a hope of fulfilling the promises made and clearly those turkeys are not going to vote for Christmas are they.

    Deal with the root and disease of the problem not the symptoms

  2. Peter Beattie says:

    We would all like a Christmas Cracker but those out there like government and the DWP just do not want to know about ‘the destitute and vulnerable’ no matter what fine words a re spouted by their leader who only interest is a personal agenda – ‘profit and jobs’ are their rallying call! Those of us in the PAG/ pensionthft have been hammering on the closed DWP door now for some 17 years – what hope is there now for any sort of ‘changed heart’.

    Peter D Beattie – FAS/PPF pensioner and veteran (RAFA)

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