There are three good reasons for personal pension providers offering unadvised drawdown to participate in MaPS/ MoneyHelper’s “Investment pathway comparison tool”.
- It helps consumers make informed choices
- It is commercially advantageous
- Non-participation risks public censure.
In a damning statement, Pension Bee has quit the service after only a year. The tool is failing in all respects.
- It is not helping consumers make informed choices
- It is not giving commercial advantage to those participating as providers.
- The providers who don’t use the service risk no censure.
This blog endorses Pension Bee’s resignation and asks why MaPS won’t engage with a positive alternative, that puts value rather than price as the key metric for its guidance.
Like PensionBee, AgeWage takes this tool very seriously. It is currently an enormous opportunity lost. We would rather see the site work.
The story from Pension Bee
Pension Bee was one of nine providers who volunteered to be on MaPS comparison tool. A year later, it has asked to be taken off the tool and for the tool to be taken down as not fit for purpose.
Less than 6,000 unique referrals were made to pension providers through the MoneyHelper tool since launch
A Freedom of Information request from PensionBee, reveals that only 5,989 unique referrals took place from the MoneyHelper investment pathways price comparison tool from its launch in February 2021 to January 2022, despite significant efforts dedicated to building and maintaining this tool.
PensionBee wrote to MaPS in March 2021 raising its concerns that the tool was highly misleading and not fit for purpose. It challenged the decision to display ‘a hodgepodge of incomparable products’ side by side in a way that suggests they should be compared.
It warned that solely focusing on charges without sufficient consideration given to other important features such as target returns, past performance, ability to make small withdrawals, and availability of planning tools was to the detriment of transparency and consumer outcomes.
Additional concerns were also shared around the approach to the tool’s design, which left it subject to provider manipulation, where inappropriate products could be placed under the hood of each pathway simply to rank better.
PensionBee called for urgent changes to be made to ensure the tool offered consumers a representative market comparison of their available options.
In its correspondence, PensionBee questioned why so many major pension providers, who were eligible to appear on the tool, were conspicuously missing.
Despite assurances from MaPS that it was in the process of onboarding additional providers, on a voluntary basis, and that the tool would be kept under review in line with FCA guidance, we have not seen any changes that would enable meaningful product comparisons, and efforts to onboard other major providers appear to have been unsuccessful.
Disappointed by a lack of progress, and exceptionally low levels of consumer engagement, PensionBee again wrote to MaPS on 15 February 2022 requesting its immediate removal from the tool.
Romi Savova, CEO of PensionBee, commented:
“Last year we asked MaPS how it measured consumer outcomes from the tool, and what success looks like. Today it is clear from the number of unique referrals that the tool is pointless and not fit for purpose.
The low level of consumer engagement is extremely disappointing given the huge financial investment that has gone into the tool. As a result, we have lost confidence in it and requested our immediate removal.
Only if sufficient progress is made to ensure that the tool enables meaningful product comparisons and helps consumers make better decisions about what to do with their pensions at retirement, would we consider rejoining in future.”
AgeWage view – the site is failing to assess Value or engage Savers.
Our experience is similar. AgeWage has written to MaPS three times over the year offering to upgrade the comparison site so it compared outcomes from investment pathways rather than price.
Other price comparison sites , such as Martin Lewis’ SIPP service, focus on products that provide administration and can be compared on a commoditised basis, through price and quality of service. But the main value of an investment pathway is – as the name suggests – in the investment of money. Investment is not a commoditised service, it is a service that can achieve a large range of results ranging from financial ruin to stellar success.
The way to judge investment products is through their outcomes. Though the pathways were made available in February 2021, the investment solutions have typically been in existence for five – often ten years. It is quite possible to assess outcomes using real-life drawdowns, charges , returns and volatility. These returns can be compared using Value For Money Scores
A white elephant?
The site is not being used and is failing both its customers and the providers who supply information to it.
MaPS is not bringing onboard the providers who refused to join at launch, nor will it until it can show a better means of comparison both to providers and to consumers.
We have received no response from MaPS to our offer. We have continued to call out the comparison tool as a bad example of guidance, focussing members purely on price, ignoring what was going on with the investment of the money and delivering messages which were likely to lead to bad decision making.
That the site has been constructively used by less than 6,000 people over the year, suggests that is has been failing in its purpose of providing guidance.
To re-quote Philip Brown, writing in Corporate Adviser,
To this end, it’s vital to make it a requirement that all workplace and retail pension schemes publish their value for money scores. Value for money should not just be a description but an order: if you do not show the value, you should not be able to accept a member’s money.
A work in progress?
The site is said to still be in “beta” but , the tool was required by the FCA as part of its flagship initiative to get people to follow investment pathways. According to the FCA’s Retirement Income Survey, over 600,000 personal pensions get accessed for the first time by savers every year. This suggests that less than 1% of those plans accessed, used MoneyHelper’s tool. This is simply not good enough for a service that is uniquely positioned and funded by a levy on the financial service industry.
The site should not be abandoned but improved so it is no longer in “beta”. But, as PensionBee point out, there has been no work done on the site over the last 12 months.
As I have been saying a lot recently, MoneyHelper and its tools are not free, their costs are passed on to advisers and providers who in turn pass them on to people buying advice and pension products. So the public should expect value for money.
It is sad but not surprising to see Pension Bee buzzing off. The good news for MaPS is that there is a way of sorting this, we have a remedial plan – let’s hope that MaPS will listen.
I agree with you about the MaPS comparison tool and also any investment pathways, this is not what the public need – they need individual help to understand their own decisions. Just comparing fees or ‘risk’ ratings of products or ESG will not necessarily help with the most important issues that individuals face regarding their pensions.
However, please don’t tar the rest of MaPS – which shows worrying signs of inadequacy – with the brilliant people working at PEnsionWise and the TPAS staff. The rigourous training with PensionWise insists upon is something the industry could be proud of, the attention to detail and care with which the public are treated by guiders is very different from the ‘one-size-fits-all’ approach taken by MaPS and other public information services. If you were to see the diligence, performance standards, ongoing measurement and quality checks, I don’t think you would have the same opinions as would be perhaps more readily relevant to other parts of MaPS. TPAS helplines and PensionWise do actually help people on a one to one basis. People have a chance of individual guidance and someone who is properly trained to understand the complexities and other issues that pensions involve. I am sorry to say this again, but a pension provider’s helpline does not do this. The training for call operatives is not of a consistent standard that would ensure they could tell customers, for example, about types of product which their own firm does not offer. Or the advantages of not withdrawing money too soon. Many pension customers have taken money out of their pension just because they reach age 55 and then gone into drawdown, meaning they pay higher fees on money that is just reinvested for them at higher cost than it would have paid in their pension fund. A big issue is the lifestyle arrangements which may even mean customers having paid to switch out of higher return assets, lost money for the past year or so in supposedly safe fixed income and then go back into higher return assets at higher levels then they were sold and with higher ongoing fees. These are matters which individuals need individual and independent help with – either from an impartial guidance source or from an independent financial adviser. I am not trying to have any kind of ‘battle’ with you Henry, I just want to help people understand that the customer is in serious danger if they are left only with paid-for ‘guidance’ that has no advice attached, no responsibility for errors and well-meaning products that are meant to fit ‘most’ people, but may not fit them at all. Having the whole industry pay for the impartial PensionWise guidance is, in my view, (and it seems you disagree) the fairest and most efficient way to offer such help because it spreads the costs among those providers and advisers who cover every type of product and who do not have a vested interest in their own business, which must necessarily mean that those who do not offer all options will not be impartial.
I hope that we can respectfully disagree, without you turning this into some kind of dispute. I am sure you also mean well Henry, but the world is not full of actuaries and poeple who do not understand pensions can still do so with appropriate explanations, which would be very much in their better interest, than continuing to be told that they can’t understand it all and should leave it to the industry to put them into a product that will be ‘ok’, regardless of their other needs. They need, in my view, to understand pensions, not be told this is all too hard and they just shouldn’t bother to try – just phone their provider helpline and trust this will work for them for the rest of their life.
do please look into the training and standards that PensionWise operate and also the TPAS people, this is a quality service within the limits and bounds of possibility which more people could really benefit from. Hope you can help find ways to encourage more take-up and constructive engagement. I have no vested interest in any of this Henry, I just want to help people with their pensions, because they are such a brilliant product. Wish you all the best