“State of the Pension” address


After doing a 30 minute address to to CIPP in 10 minutes, I’ve been called back to do another one – only this time I’m first on – which means I could gab on for ages and make sure no one got a coffee break.

You can see my slides here.

I’ve tried to keep things simple this morning and talk about what I know, which is what people are talking about. I’m dividing my talk into three Technology, Investment and Tax.

The state of the pension idea sadly didn’t make it into my slides. I thought Trump was really good the way he presented rubbish. Other orators have pulled off the same trick, it seldom ends well.

My state of the pension address is aimed at an audience of payroll experts who do the heavy lifting for pensions. I don’t want to paint a picture of pensions in crisis (they aren’t) but of pensions in change.

I wrote down Technology – Investment – Tax as the three things that need to change. If it takes some seaside humour to remember a talk, I’ll stoop that low.

Technology -Supporting the tough decisions at retirement

The big shift which the actuaries are picking up on is actually 40 years old this year. If you count the accession of Margaret Thatcher in 1979 as the start of market liberalism, then we have been dumping risk on ourselves for four decades.

The climax of this process was the announcement by George Osborne that no-one would have to buy a pension (annuity) again. Instead we have the opportunity to do our own AgeWage with the help of Pensions Wise, a diminishing band of IFAs (wealth managers) and some half-baked technology that could come out of the oven a pension dashboard.

When I bought my first wi-fi, I was told that my “system” was only as good as the weakest link. Our pension system’s weakest link is the support given to those with DC pots as they convert them to retirement plans.

One great change that is going to happen if we are to convert saving success (auto-enrolment) into pensions success will be the successful introduction of investment pathways. I do not think there is sufficient support for ordinary people in the “strait of Hormuz” between the calm savings waters of the Persian Gulf and the Indian Ocean of later life.

The only solution I can see to the job of engaging and supporting people through this process is through new technology. We should not consider ourselves suffeciently financially adept to work out what to do by reading up or by talking to Pensions Wise, we need to be able to see what happens to our finances using tools we can download from the cloud onto the founts of all wisdom, our phones , tablets, lap and desktops.

The dashboard can find us our pensions but we need tools to shape our pension pots into retirement plans.

Investment – getting people involved with what our money does.

We cannot become a nation of Warren Buffett, but we can learn from our own sages. Martin Lewis doesn’t do investment but he can show us how it differs from saving

We are  all investors. When we discover this we are like the poet that doesn’t know it, like the fool in the French comedy who delights in discovering he is speaking “prose”.

We invest our pensions but we know not where, or how or why. When we wake up to the fact that our money could be doing good or bad, we are anxious it does good. When we stop to think what the cost of doing good might be , we’re not so sure. When we discover that our investment can do good and help us retire, we start thinking like investors. Hopefully more of us will act like investors, that’s what gets things changed.

Taxation – wrong money – wrong people – wrong time

Another great change that needs to happen is to the pension taxation system. I admire David Robbins’ defence of the purity of EET but he is alone in offering an intellectual apology for the current system. For most of us the current pension taxation system is practically bust, delivering the wrong money to the wrong people at the wrong time

There is  practical reason to leave pension taxation alone; that is that changing it will cause huge transitional problems which the nation will not like. Those paying higher rate tax  will absolutely hate change.

We have one of those windows to make change happen, right now. The alignment of a new strong Government, a new start on Europe and a clean sheet of paper makes radical change to the pension taxation system more likely than at any time in the last decade.

The State of Pension – restoring or creating confidence

Payroll people have every right to be sick of pensions. They have had to do the heavy lifting on auto-enrolment and they’ve had precious little thanks for it. It’s payroll who deliver the key messages to people on their pensions – they make and signal the deductions that keep us saving and investing.

They are becoming – faut de mieux – the “go to” people in organisations  for information on the workplace pensions chosen by employers. They can deliver the messages on investment – if only we let them.

But for now, we are still telling those who manage our pensions that they cannot talk about pensions – that in telling people where to go for information, they are offering advice. While we should be empowering payroll to be our advocates , we are cowering them into compliance with regulatory “project fear”.

The way we restore confidence in pensions is not by droning on about judicial disputes like Mcleod and Sargent, or the case of WASPI, this is just noice. We don’t empower people by going on about GMP equalisation , de-risking . governance diversification and all the other things pension people like to talk about between themselves.

What we need to do is to make pensions relevant to the way we live our lives today.

  1. We need to make technology work for pensions – so that people have ways to get information about their savings and how to spend them
  2. We need to turn savers into investors by helping them understand what happens to their money
  3. We need to find a way to make pension taxation an incentive to save rather than a subsidy to savers.

Payroll can unlock workplace pensions to millions of new savers. Payroll do technology that pension people don’t. Payroll know how workers think and interact with them every day; if given the chance they can explain how investing works. Finally, payroll are the collectors of our taxes, working with HMRC using Real Time Information.

Winning the hearts and minds of payroll to be pension ambassadors is high on my wish-list when I think how to restore or create confidence in pensions.


About henry tapper

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