Let’s put the past behind us
I’ve just published a blog where I criticise Pension Age, CACEIS and DC fiduciaries for not telling it straight on what we are paying for pensions and whether we’re getting value for this money.
I don’t want to leave things on a negative note. I do believe there is a better way of helping ordinary savers work out if they are getting value for money and in helping them take decisions on who runs their pension money going forward.
But this system cannot rely, as so much reporting does, solely on made up measures that are meaningless and confusing to consumers. You’ll have to read my blog to understand how confusing this headline is.
No more meaningless made up mumbo-jumbo
Instead of relying on phrases such as Total Cost of Ownership , “Costs and Charges” and even “Value for Money” to make grandiose claims on behalf of hundreds of thousands of savers, we should be encouraging members to investigate what value they got for their money.
To date we have not given them those tools. We cannot even give a saver a simple statement of how their savings have done since they started saving. We certainly can’t tell them how the average person would have done , had they saved like them and we can’t give people any way of comparing how their various pension pots have done , so that they can make informed choices going forwards.
Let me be clear about this, in the absence of any better information, people are entitled to make decisions on who manages their money on who has done well and who has done badly. This is the basis of all accountability.
This is why I want to give everyone who has a DC pension (workplace or non-workplace) the right to a score which tells them how their saving has done relative to everyone else’s.
That score takes into account all the costs and charges you’ve paid and all the value you’ve got. It is a score that tells you if the pension provider has given you value for money (or not).
It does not rely on people understanding percentages or the mumbo-jumbo of the VFM lexicon. It goes straight to the point , engaging people with what matters to them, the outcome of their saving. It answers the question “how did I do” and allows people to question “what should I do next”.
Let’s have clear data driven analytics that we understand?
Over the bank holiday weekend I wrote around 2000 personal invitations to people I am connected with on linked in , asking them to test an app which gives them their AgeWage score and nudges them to get more pots scored so they have a dashboard of scores and a platform for decision making.
I’m pleased to say that we have had 350 people apply to be testers when we go into test mode under the auspices of the FCA’s Sandbox very shortly.
This is a phenomenal response from a wide range of people, most of who don’t appear to have much to do with the pension industry. I’m pleased to see we have testers from 23 to 68 and there’s great diversity in the test group. If you would like to join the test group , mail me at email@example.com and I’ll send you some details.
To me, this response suggests the latent desire to get good quality information about our pensions and I hope that the IGCs and Trustees who work with us, will be encouraged too!
Does it have to be so hard?
We have made pensions so hard for people that many simply don’t engage with the opportunity of turning these pension pots into a retirement plan.
Research from the FCA and DWP concurs that only a minority of us are ready to use our pension freedoms to buy a pension (an annuity) or pay ourselves an income from our pot (drawdown). Instead people rely on carving out their tax-free lump sums for immediate use and furlough the rest of their money.
Many people retain multiple pension pots even as they draw down the money and a lot of people simply roll up their pensions in the hope that something will come along to sort them out (perhaps a national pensions dashboard, perhaps a new way of being paid the money back.
And while people think about what to do, those who have no morals or scruples are waiting for them with their scams. We describe the period between 55 and 65 when we take retirement decisions as like being in the Strait of Hormuz – our tanks full with the prospect of the open sea beyond , we are at our most vulnerable to pirates.
It doesn’t have to be this hard, but for things to get better, we need to have people working together to a common goal. Over the summer, the 350 testers will be working together with us and the FCA to see if we can sort some of these problems out,
AgeWage’s positive call to action!
Right now, millions of people in this country are facing an uncertain future with limited personal resources. Many of us will not return to work after furlough and if we do, it may not be as lucrative a work. We will have to pay high taxes to repay the debts we are wracking up and we will need to call on our pension savings to manage.
It is absolutely vital that those of us in the pensions industry who are able to take a lead in this, do so. That means taking action.
As well as going into the Sandbox, AgeWage is launching a funding round using its EIS status to develop the product through the autumn so that we can crack on and do great things next year. If you would like to know more about our fund raising activities, please contact me at firstname.lastname@example.org.