Thinking the unthinkable – Frank’s at it again!

Frank Field

Frank Field

For a third inquiry in a row, Frank Field and the Work and Pensions Committee (WPC) – are asking difficult questions that need proper answers.

Firstly they asked if the pension freedoms were working – a question that led to the shameful revelations from Port Talbot.

Then they asked if CDC had a place in our pensions system, and up popped Royal Mail.

Now Field and his team are asking eight new questions on the transparency of pensions, every one of which has been subject to intense discussion on this blog.

For this new inquiry they are seeking our views on whether the pensions industry provides sufficient transparency around charges, investment strategy and performance to consumers

I’d like to think I was the dog wagging WPC’s tail, but the best I can claim is that I’m a fan of this inquiry! Dr Chris Sier’s work on funds transparency, Andy Agethangelou’ s tireless campaigning and the work of Al Rush in improving advisory VFM need to be recognised and I hope this inquiry will do just that.

There are many other voices that need to be heard, I hope that individuals will respond and that this inquiry is not dominated by the lobbies of the ABI, IA, PLSA and the various IFA groups.


Here are the WPC’s eight big questions (my  highlights)

  1. Do higher-cost providers deliver higher performance, or simply eat into clients’ savings?
  2. Is the government doing enough to ensure that workplace pension savers get value for money?
  3. What is the relative importance of empowering consumers or regulating providers?
  4. How can savers be encouraged to engage with their savings?
  5. How important is investment transparency to savers?
  6. If customers are unhappy with their providers’ costs and investment performance/strategy, are there barriers to them going elsewhere?
  7. Are independent governance committees effective in driving value for money?
  8. Do pension customers get value for money from financial advisers?

There are of course no easy answers to what are difficult questions. A friend of mine pointed out that where there’s contention , the best outcome will leave both sides uneasy.

Almost all of these questions lead into various Government reviews, I hope that the WPC will liaise not just with tPR and the FCA, but with the Treasury and Department of Work and Pensions.

I intend to address each question with my thoughts and publish them over the next few days. I will submit my blogs, together with their comments to the inquiry. Please feel free, as I’m sure you will, to make your feelings known. If you have your own submissions and want them to be added to my blog, please cut and paste to mine!

To kick us off, here’s some bloke with a beard on twitter

https://platform.twitter.com/widgets.js

This is a constructive way to pull wisdom from the crowd, and as this blog operates outside the wall garden of corporate comment and allows for anonymity, I hope that those who are elsewhere constrained, will find freedom to express themselves without fear of reprisal!

We have until September 3rd so let’s get on with it!


wpc1

Do these inquiries matter?

There is an understandable tendency – from those who don’t agree with the findings of Select Committees, to either ignore them or to rubbish them as being the product of amateurs.

The members of the WPC are – relative to those who give evidence – inexpert. They are people voted into parliament to do a job, and in as much as they volunteer to sit on Select Committees, they are exercising their duty to govern.

Rubbishing or ignoring the findings of Select Committees is a dangerous business, as it denigrates parliamentary democracy.

The Treasury Select Committee’s recent recommendation to scrap the Lifetime ISA has been met with howls of protest from those who sell the Lifetime ISA.

But the comments themselves form only a small part in a much wider review of savings, much of which is directly relevant to the WPC’s work. Sadly, the bulk of the TSC’s report has gone un-noticed, yet it represents the considered opinion of the people we have elected to do our thought leadership.

Having read the TSC report, I am much better informed on Household finances: income, saving and debt. The witnesses oral evidence, the published written evidence and the report itself will inform my thinking when responding to WPC. This is participatory Government – which allows ordinary people to have their say in the affairs of state. We should be very grateful to have such a system and should nurture it.

These inquiries matter – matter a lot – they show the way we feel and shape the way we are governed.

Back in 1997, Frank Field was asked to think the unthinkable, more than 20 years later he is finally getting to do that! Let’s help rather than hinder him and his Committee.


Addendum – response from Con Keating

con-keatingguest

  1. Do higher-cost providers deliver higher performance, or simply eat into clients’ savings?

Eat into savings – I have done work on samples of portfolios which show this clearly. Consistent high performers are as rare as hen’s teeth but their fees are consistent.

  1. Is the government doing enough to ensure that workplace pension savers get value for money?

Wrong question – it should be is government doing enough so that savers can see or calculate value for money

  1. What is the relative importance of empowering consumers or regulating providers?

There is a power imbalance – no individual consumer matters an iota to fund managers – the answer must lie with regulation. Industry self-regulation will not work. As an example of a good initiative going wrong – take the IDWG template, which is voluntary. The group who will revise this template are all (6 of them) from the fund management industry – the fox will have control of the hen=house

  1. How can savers be encouraged to engage with their savings?

I genuinely do not understand what is meant by this question.

  1. How important is investment transparency to savers?

Extremely. Without transparency no sensible individual planning can be undertaken. Without transparency no value for money can be observed and the processes of competition are absent.

  1. If customers are unhappy with their providers’ costs and investment performance/strategy, are there barriers to them going elsewhere?

This varies greatly by product but switching outside of a group is discouraged relative to switching within a group.

  1. Are independent governance committees effective in driving value for money?

There are good and bad IGCs. But in general, IGCs have not been driven by evaluations of value for money.

  1. Do pension customers get value for money from financial advisers?

No.

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in Big Government, Carillion, CDC, Dashboard, dc pensions, pensions and tagged , , , , , . Bookmark the permalink.

One Response to Thinking the unthinkable – Frank’s at it again!

  1. Pingback: Pension costs and transparency inquiry - Young FI Guy

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