“Bloody” and “Furious”, the two adjectives that describe me this morning after reading this.
ICYMI: Just Group develops new business to disrupt the individual defined benefit transfer market https://t.co/tXnGIiP6ld @WeareJust_PR @SpencePartners #fintech #innovation #trustees pic.twitter.com/HIjZgeNs2g
— Stephen Lowe (@slowe1968) May 25, 2018
Opening the link I discovered this absolute cock.
Just Group develops new business to disrupt the individual defined benefit transfer market
The individual defined benefit transfer market is depending on which Government agency you trust, anything between £14.3bn and £34.2bn strong – with the FCA splitting the difference at £20.8bn.
Just are using “disruptive” in the Fintechy senses, to suggest that they are using technology to disintermediate and create value for consumers. To support this claim, the blurb is studded with Fintechisms, the new business is a “Hub” and explained thus
Digital technology powers the HUB Pension Solutions platform and has enabled us to create the services to better engage members at the beginning of the journey and to radically disrupt the way personalised information is stored, processed and communicated into formats that are readily usable by financial advisers undertaking structured scheme option exercises
This is mega-cock. Just annoying. What this HUB does is allow advisers to make even more money out of DB schemes by doing all their work for them and subsiding the cost of advice. Will this subsidy be passed on in lower fees to employers (the customers of these exercises) – perhaps. But that will be as far as it goes.
To pass this off as “disruptive” is pathetic, this is simply a marketing “exercise”, cynically promoting further rape and pillage of DB schemes for the benefit of employers and advisers and to the general detriment of members – scheme beneficiaries.
What transfers disrupt.
Steve Lowe and his mate Tom McPhail should read yesterday’s blog by Sue Flood to understand the disruptive power of transfers. Lowe’s puff piece for the HUB, includes a reference to scams
The value of the 92,000 pensions transferred works out at more than £225,000 for each member.
That sounds a lot and for many it is a lifetime of savings needed to provide regular income through what could be a long retirement. Yet amid evidence of some members being unsuitably advised and others falling for scams, the regulator has been increasingly exercising its consumer protection muscles.
While defined benefit transfers can be initiated by the member, it is becoming more common for schemes to undertake member options exercises, in some cases “enhancing” the value of the offer to make it more attractive for deferred members to explore alternatives to the scheme benefits. Typically schemes will take direction from Pension Liability Management specialists about how to run these exercises and pay the fees for individual scheme members to receive regulated advice which is mandatory where pension benefits are valued at more than £30,000.
Look here, the amount transferred out with the help of “Pension Liability Management Specialists” is a tiny fraction of the £34.25bn , estimated to have been pulled by advisers from DB plans. It is dwarfed by the amounts “initiated by members”. Without so much as consulting a Pension Liability Management specialist, Barclays saw $4.2 bn of their £25bn scheme walk out the door – just in 2017.
Who are the architect’s of DB’s “disruption”?
Let’s ask how nearly £3bn transferred out of BSPS in 2017.
- The head of DB at tPR left the Pensions Regulator and joined PWC
- PWC are appointed to advise TATA
- PWC work with TATA to create an RAA which
- Bumps up transfer values (single lower discount rate, reduction of insufficiency deduction
- Offers a time-limited choice between PPF and BSPS2
- Massively denudes TATA of capital
- Sees members totally confused – opting into all kinds of nonsense as a result of CETVs
For which awards and champagne all round
Professional Pensions Awards Actuarial/Pensions Consultancy of the Year – well done Team #PwC great result
— Stephen Soper (@sasoper) May 24, 2018
Except it isn’t quite that simple. Far away from the Grosvenor House Hotel, down in Port Talbot, Al Rush is clearing up the mess left by the RAA exercise. Here are some of the stories of the real people for whom the RAA wasn’t an “exercise” at all.
Listen to the podcast and hear the voices of real people who – like Sue Flood, are transferring those telephone number transfers into the wrong type of scheme through the wrong kind of advisers leaving the wrong type of retirement.
Less triumphalism, more contrition and redress.
Firms like PWC and Just, have grown fat from the de-risking of DB schemes. The FCA are indeed about to act and I hope that they act decisively.
I hope that in time , people will come to look at the RAA for BSPS with more balance, that the £34.25bn will be considered in the light of the FCA’s casework, that suggested that 53% of 2017 transfers were “questionable”.
It is not good enough for PWC, Just and Tom McPhail’s Hargreaves Lansdown, to benefit from this bonanza without taking responsibility for the consequences.
Instead we have all this obscene cock. I am indeed “bloody furious”.