A good day for pensions, a good day for the DC upgrade.

Royal Mail FT

We will know we have a solution when we don’t need guns.

Overnight I heard the President of the United States deliver his solution to the gun crisis in American schools. To prevent more mass shootings, Donald Trump suggested that American teachers carried (and were trained to use) a gun.

I am sure I am in the majority of British people when I call this an appalling solution that demonstrates a societal breakdown in America. We in Britain aspire to a society where no-one needs to carry a gun, where arguments are settled by words and where we de-escalate violence. Extending the problems of the street into the classroom, simply desensitises beautiful young people.

Guns are not the solution, we will know we have the solution when we don’t need guns.

What planet are these guys on?

In making the following statement, I risk alienating some people who might say I should not be making capital out of the heart breaking loss that parents and friends of those who died in that Florida school.

I think that Trump’s remark was born out of a fundamentally mistaken position , just as I think this statement is made out of a fundamentally mistaken position.

This is in fact excellent journalism, Alex is articulating the very thing that most of his readers (the Pension Experts)  will be thinking. Most people regard “CDC” as an unnecessary complication which would best be left in the alphabet soup.

Alex has now published an article in Pensions Expert, which quotes at length the views of Simon Harrington, senior public policy adviser at the Personal Investment Management & Financial Advice Association.

Unlike Hargreaves Lansdown’s Nathan Long, who made some excellent points about people for whom CDC would not be suitable (most of HL’s clients), Harrington was not at the hearing. This is very clear as the meeting articulated a clear vision of CDC as a CD upgrade – initially for the Royal Mail but in time for others. Here he is moaning to Alex as if we were back in 2015.

There is an absence of clarity about what CDC is as legislated for, for the UK, and how it compares with other international examples, and then specifically what the benefits of CDC are as compared with the current system that we have”

I’m pleased that Alex is articulating the “industry position”. It allows me to take a step back, as I did with Trump’s remark and ask “what planet are these guys on?”.

CDC needs international comparators like teachers need guns.

Misreading the mood of the country

My reply to Alex, wasn’t considered but looking at it now, I think it properly explains why most people, including Alex are misreading the situation.

But just as Trump’s comments were logical in the context of a belief that everyone should be allowed to carry a gun, so Alex’s comments are logical in the context of the pension freedoms. It is only one step from saying “no one should ever have to buy an annuity again” to saying “no one should ever have a pension again”.

What was happening to the Royal Mail postal workers, was that they were being offered a pot not a pension. The same thing is happening to teachers. Teachers are striking today for the right to continue to accrue pensions within the USS. As the FT’s excellent opinion piece today puts it.

The changes the UUK is proposing are similar to those that have been carried out by businesses across the UK. These would see the scrapping of defined-benefit pensions which offer certainty of income in retirement. In their place UUK would introduce defined-contribution pensions

Except the “striking dons” won’t get pensions, they will just get pots of money.

Just as Trump is blind-sided by his fundamental belief in American gun laws, so we are blindsided to the obvious fact that people so don’t want pots and so do want pensions, that they are prepared to go on strike about it.

We will know we have a solution when we don’t need “pension experts” to manage our pots!

No news is not fake news.

What was so wondrous about yesterday’s meeting of the Work and Pensions Select Committee, was that it was so un-newsworthy. No reporters sat with me in the gallery, not even Alex (though he had tweeted he would be!). There is nothing so unreportable as consensus.

With Trumpian recklessness , Alex called the proceedings a “jolly”. They were anything but.

Jon Milledge of Royal Mail and Ray Ellis of CWU spoke movingly about how they had found an agreement which met the needs of the 142,000 postal workers. Frank Field and a team of cross-party MPs, wished them well in “selling” their solution to the DWP. Field described the consensus between unions and employers over pensions as “huge”. We are witnessing something huge, and everyone in the room knew it.

I will put this to anyone reading this piece

  • Can there be anything more pressing than finding a way of paying people what we have promised them ( a pension) from their defined contribution pots?
  • Can we really suppose that the rag tail and bobtail of advisory solutions proposed by the Retirement Outcomes review represents a lasting solution to the hardest, nastiest problem in finance?
  • Can any reader point me to an equivalent “good news story” to the Royal Mail pension settlement?

Yesterday, FTadviser reported the DWP as saying

“We are engaging with Royal Mail to better understand their pension proposals. However any changes to legislation would be in the interests of savers and the wider pensions industry.”

To my mind, that is one of the best statements I could read. If the Royal Mail can provide a wage for life for the postal workers, then the DWP can help millions of us, trapped in the current bind of annuities and drawdown, a default pension solution for our pots.

Myopia can be cured

I was prompted to write this blog by the blindness of Donald Trump to the implications of his solution. I realised that I had a similar feeling about Alex’s blindness to the importance of the Royal Mail solution. Both are cases of  myopia resulting from fundamental misunderstandings.

Fortunately, children are marching on Washington to put the case for less rather than more guns in schools. And (on a much less violent matter) , we are marching on with our polite but determined request to have a wage for life from our DC savings.

Alex, you should have been in the room, if you had been – you’d have seen it was no jolly. There is an earnest endeavour among all working towards this DC upgrade.

save our pensions 2

Striking for pensions – not pots

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in CDC, pensions and tagged , , , , , , . Bookmark the permalink.

2 Responses to A good day for pensions, a good day for the DC upgrade.

  1. John Mather says:

    The financial literacy in the UK is in decline from a low base In the USA this is measured http://www.finra.org/investors/assess-your-own-financial-literacy-three-questions
    If you reallly wish to restore faith in savings you might contemplate how this fundamental skill might be improved

    • bobchampion says:

      Is your link a true education piece or to lead people into fund investments? I find Q3 misleading in the UK as it leads people away from SAYE share option schemes offered by their employer. To me it starts at wrong point.
      Take a look at recent Daily Mirror articles on educating your kids about finance for some insight at how this can be done well. Educating parents to educate their children.

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