Pension savers and their “information black hole”

Mind the information gap

The words below were written in September 2014 by financial journalist Jeff Prestridge , following a meeting with Steve Groves, then CEO of Partnership (thanks to Steve for reminding me of them). You can still read Jeff’s article here.

Mr Groves’ concerns stem primarily from the information black hole he believes most people will end up staring into come April. Even though ‘guidance’ should be available to all, courtesy of George Osborne (and paid for in a large part by financial advisers), he contends that most people will shun it. This could, he fears, result in many people unwittingly making poor decisions.

Maybe he is not scaremongering. MGM Advantage has already conducted research indicating that many people will not take advantage of this help (either by choice or ignorance of its availability) offered by independent organisations, such as the much maligned Money Advice Service and the more respected Pensions Advisory Service.

Steve Groves has been proved right. People have shunned financial guidance through MaPS (the successor to MAS and TPAS).

People have been denied simple information on what has happened to their savings and simple choices as to what to do with their savings.

Writing in a blog on the Corporate Adviser website, Phil Brown of B&CE (People’s Pension) has this to say

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.

I am happy to say , we have created value for money scores for a wide variety of workplace pensions and SIPPs as Phil has requested

Here is an example showing Aegon’s score against “my scheme” which is a single employer sponsored occupational scheme. I have similar charts showing the returns of all the green dots – representing providers aiming to consolidate pensions.

But many of these dots have red crosses on them, meaning that we do not have reliable data for them. This is because we are not being supplied with the data we need to make proper comparisons.

This is not the fault of the regulators or the DWP , it is a problem stemming from provider’s reluctance to share with us the data that we need to provide the value for money scores Philip is asking for.


The information black hole

What the public needs is independently sourced and verified information about their pension pots, that they can trust.

It does not get this information because a large part of the community of workplace and personal pension providers are unwilling to see the value for money they are offering displayed against others in the way we display it.

I am getting tired of rejection letters for legitimate requests such as this one

I’m sorry to say that we can’t prioritise this right now and won’t be able to progress this at the moment. That’s not to say we won’t at some stage, but we’re running pretty fast on a number of significant projects currently.

So we move forward with imperfect information both on investment pathways and on the VFM of our savings. The public are being asked to take information without information of the value they have got for their money or the amount of risk they are taking going forward.

They have nothing to compare their future options with and are therefore required to speak to a financial adviser to get a “definitive course of action” (be told what to do).

They are given no information when speaking with Pension Wise about the value of their savings and only the Money Helper Price Comparison Service  with which to compare future drawdown options.

The issues here can be distilled into a simple statement

“We have no common definition of value for our money”

We will continue to have an information gap until we do. The sooner FCA and TPR accept a simple metric and require providers to report to it the better. The sooner we have a means to use value for money comparisons to compare, combine and drawdown our pension pots, the better.

 

About henry tapper

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