This new year – let’s know what pensions cost.


It’s a new financial year – let’s make sure it’s a good and honest one!

Last week saw every man (and his dog) involved in discussions over what we should see and how we should see about pension charges.

The Pensions Minister and the Treasury Minister John Glen were called in front of the Work and Pensions Committee to explain what Government were doing. It was a pretty unedifying spectacle likened by one who was there to an FA cup qualifying round played on a muddy pitch to a goalless drawer.

You can watch proceedings via this link but too many questions were half-formed and answered by the wrong people. BREXIT was playing out in the back-ground and this session seemed a sideshow.

Charges and the dashboard (mudslide pt 1)

The following day , said Pensions Minister – Guy Opperman announced the consultation response on Pensions Dashboard, to a flat reaction from a weary “industry”.  Those who campaign for full transparency groaned

The DWP and others have done research  which suggested that members had no idea they were paying anything for their pensions. To now mandate that costs are a dial on  the dashboard – rather than on a link say to a provider website- carries a little too much risk.

To get where we are today took a series of consultations in 2017-18 and the resulting disclosures  have not yet been fully rolled out. The last schemes report charges and costs in November of this year. So I’d expect the Government prefer to let the market settle for a couple of years before  mandating inclusion of costs in in the dashboard.

The pitch is not so much waterlogged but buried by a mudslide of timidity.

The new 2 page simpler pensions statement (mudslide pt 2)

I also gather  that talks between those developing a simplified pensions statement (Ruston Smith/Quietroom with the support of the Transparency Task Force) are in ongoing discussions with the DWP about including the cost of what we buy on the shopping till (well Ruston does run Tesco’s pension scheme)

On the face of it, this idea is likely to be buried by the same mudslide , at least if the demand is for compulsory cost disclosure on the statement

That said, were insurers and trusts  to voluntarily choose to  include their costs on pensions statements, I doubt the DWP would  have a problem.

I suspect that  we’ll en up with  two versions of the Smith/Quietroom statement, one with and one without charges information.  It will be interesting to see whether the ABI and PLSA endorse one or other or both.

2019 IGC chair statements

I said last week was a busy week for cost disclosure, so far I’ve analysed  chair statements (with promises of several more which have yet to reach me)

Phoenix kicked off the reporting season with an accomplished statement on what we pay; report here

Scottish Widows have done a great job of disclosing what they can get from fund managers; report  here

Aviva have also reported well; report here

Standard Life has reported expertly (if a little dismally); report here

L&G has thrown the kitchen sink at policyholders; report here

Aegon has given some shocking numbers without naming names ; report here

While Old Mutual has decided to kick the can down the road another year; report here

There are  three themes coming out of the report.

  1.  Despite our being a year and a quarter since the launch of MIFID II, providers are still having problem getting complete information to their IGCs
  2. The MIFID methodology for capturing hidden costs is biting. “Slippage” is working- though occasionally throwing up anomalies like “positive slippage”
  3. There are some outliers in terms of undiscovered costs that make cost disclosure very important,

Help is at hand

In response to industry demand (or possibly a kick up the jacksee from the CMA, Aon has helped Chris Sier set up ClearGlass ( a sister company to AgeWage) which is helping fiduciaries needing to meet DWP or FCA requirements to disclose costs as part of VFM reporting. ClearGlass are – as you’d expect from Dr Sier, using the approach developed by the FCA’s Institutional Disclosure Working Group (IDWG)

Novarca continues to offer this help , together with consultancy services designed to dig deeper and to help fiduciaries reduce costs (where mandates allow).

There are other players in the market, including custodian KAS bank, offering expertise.

How things look in the first week of a new financial year.

It’s been 7 years that Alan and Gina Miller launched their True and Fair campaign, my first exposure to the concept of “hidden charges”

It’s been 6 years since I first started working with Novarca on charges. Novarca provided an important report to the FCA which led to the FCA consultations that led to the setting up of the IDWG.

And it’s been 4 years since Chris Sier and Con Keating encouraged Andy Agethangelou to set up the Transparency Task Force

In 2014  we had an OFT report demanding better disclosure and leading to the formation of IGCs. In 2017-18, the CMA demanded more from investment consultants, Over the period we’ve had various FCA consultations and working groups demanding better disclosure.  And we’ve had an ongoing legislative program from the DWP legislating for cost transparency.

Progress is painfully slow – but progress there is.

In parallel we have had MIFID and PRIIPS legislation from Europe telling us what should be disclosed  and how.

In 7 years, we haven’t moved a long way. We are still in fear of giving people too much reality and financial till receipts still don’t tell us what we’ve paid for our goods. Our pensions dashboard won’t tell us how much fuel we’re burning and  some IGCs are still not disclosing to the few people who read them, what is really going on.

Progress is painfully slow, but progress there is. This blog will continue to push for a True and Fair , transparent cost disclosure . AgeWage is committed to delivering better information to people on which to make their minds up. We will support dashboards and statements that tell people how it is, not how the marketing departments want us to see things. We’ll keep pushing Government to keep mud off the road.

new tax year

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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