The “pensions industry” must speak for pensions – not the people who profit from them.

pensions industry

There is an assumption that for innovation to happen in the pensions industry, it needs to have the sanction of the “pensions industry”.

Take this comment from Sam.

CDC will be a disaster unless you can convince the pensions industry it’s a good idea. So far the arguments presented for CDC have been entirely unconvincing.

— Sam Pickford (@pickfos) September 14, 2018


Which begs the question “what is the pensions industry”.

CDC is the case in point, yesterday I strongly criticised sections of the pensions industry for their extreme negativity to what Royal Mail , DWP and the Communication Workers Industry are doing for the 140,000 postal workers who voted 90/10 not to strike for DB or to accept a conventional DC scheme for their retirement.

I understand that the Pensions Minister has a draft of the CDC consultation paper to review and that this is likely to be issued in October in time for the consultation to be concluded by Christmas and (subject to the consultation response) CDC to be included in a pensions bill to be announced in next summer’s Queen’s Speech. All being well we will have the legislation in place in 2019 so that the strain on the Royal Mail of the interim arrangement will be relieved and so postmen can look forward again to accumulating towards a wage in retirement.

Since unions, government, advisers (WTW, Aon and First Actuarial) are as one with Royal Mail, it is only the “Pensions Industry” that can throw a spanner in the works.

As part of the consultation process, Royal Mail has committed to publishing the nuts and bolts of the proposed scheme. This act of transparency will allow sceptics and opponents to test for themselves the scheme – as actuaries WTW, Aon and First Actuarial already have. If they find flaws I will be surprised but not upset. It is better to understand flaws and put them right – or – if they cannot be put right – abandon the project.

Innovation happens because of the success of the hypothesis. But there has to be a hypothesis to be tested. What Michael Johnson and others are saying is that we should not even consult on CDC – we should instead continue with the current system of disappearing DB and expanding DC.

Were this system succeeding – I could see the wrecker’s point. It is not just Royal Mail CWU members who threw out DC, the same has happened at USS and I suspect that when this consultation is done, other progressive unions and employers will start thinking of upgrading their DC arrangements to CDC. I can see more people – like me – getting to later life – wanting to transfer DC pots into a CDC – to get ourselves a CDC-style wage for life.

Which begs the question, just who do the pensions industry speak for?

I suspect the pensions industry speaks for itself and for its various trade bodies, the Investment Association, the ABI, the PLSA -even the PMI and IfOA – of which – through my employer – I am a member. And it now includes all those on the retail side of the fence including the various IFA trade bodies, those representing wealth management and the platforms, SIPPs and all the other paraphernalia that is needed to help us spend our pension savings.

The truth is simple, CDC disintermediates almost all of the financial services eco-system designed to support DC and DB. In doing so , it gives ordinary people the chance to get out of pensions what goes in – plus the returns on money invested. It provides protection for people living too long – from people living too short. It eliminates, almost totally , the need for individual advice.

This last point is most important of all. For as the Financial Advice Market Review has found – 94% aren’t taking advice and aren’t planning to. Since RDR , advice has become a minority sport – like fox-hunting – indeed it is of great interest to fox-hunters who have the wealth to support the financial advisers.

For us 94%, there are a small number like me – who genuinely know what they are doing. We are a tiny fraction of ordinary people, I hardly knows anyone who professes to understand pensions. They call me a pension expert because I can back myself. My being called a pension expert does not make me one – I do not own the truth.

But nor does anyone else. We live in a democracy where we agree to uphold the rule of law. Democracies make laws which suit the majority of the population – the 94% for instance. But in this country, most of the law is having to be made for the 6%.

Now we are seeing some law being written for the 94% and some genuine innovation being delivered to those who don’t have the means or the will to employ a financial adviser and there is such a tra-lah-lah!

The industry speaks for itself – but not for the 94% – the 94% are fed up with not getting what they are promised – they are demanding pensions from their pension schemes!

Having the ability to say things is a privilege.

My employer, First Actuarial – does not stop me saying things. I am choosing at the moment not to comment on the JEP proposal on USS – at the request of USS. There are times when I will choose to be quiet.

But it is my choice and not my employer’s- for which I am grateful to First A tuarial.

Many of my readers do not have the choice to publish what they are thinking but contact me via email or Direct Messages.

But the real proof to me that I should carry on saying what I think, is not the abuse I get on twitter (which spurs me on) but the reader numbers. This blog will be read over a quarter a million times this year – there will be over 1m articles read.

Many of the people who read these articles have no prior interest in the subject I talk about, but some return again and again – because I have touched them.

This is a great privilege. It also brings responsibilities. The blog I wrote yesterday was hard hitting and I meant every word. This blog is a little more reflective.

But both I hope show my passion for finding a way forward – CDC is part of that way forward for pensions, a properly functioning dashboard is also part – as are better member disclosures and more responsible investment. Technology is helping – accelerating the pace of change and bringing us more for less. There is much to be optimistic about.

I hope that blogs like yesterday’s , which was read by thousands of people – will help to speed up the process of change – in the right direction.

pension industry 2

Pensions are for people

About henry tapper

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

3 Responses to The “pensions industry” must speak for pensions – not the people who profit from them.

  1. Robert says:

    “Many of the people who read these articles have no prior interest in the subject I talk about, but some return again and again – because I have touched them.”

    These words are very true Henry…….keep up the good work!

  2. Ryan says:

    Henry. So what you are saying is that the actuaries who are seeing a diminishing role in DB, little opportunity in DC, but a big potential to be involved in CDC are supporting it, whilst those that are relatively agnostic are not? Or am I over simplifying things?

    • henry tapper says:

      I’m not saying that at all Ryan. I work for a firm of actuaries (but am not an actuary). I strongly support actuaries as a profession. The vast bulk of actuarial work is on anything but CDC – the amount of work that CDC will generate for actuaries is trifling. The point of supporting CDC is that people like me (56 with a DC pot) and people like postal workers, can get a wage for life – rather than a pot of money we will have trouble spending.

      If an actuary can help me and all the other people like me then good, but please don’t mistake my intentions or believe that CDC is an actuarial free-for-all!

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