I really like Robert Cochran.  Despite working for a large financial institution he is his own man, draws his own conclusions and speaks from the heart. You can hear him talking to Nico and Darren on their podcast here. I’d recommend minutes 38 on especially.

Robert talks about the conversations he has with his pension peers on linked in and in the workplace in the same way (which suggests that there is a standard way of talking about hard things like value for money).

How does engagement happen?

Towards the end of the conversation he tells of a recent meeting at a works where everyone who came up afterwards wanted to know how to increase contributions. Thinking he was in engagement heaven, Robert started asking why. The answer was that most of these people found themselves paying higher rate tax for the first time due to the freezing of tax thresholds. Their unions were telling them to pay money they’d be taxed at 40% on , into their pensions.

Darren asked how this could be transmitted to a wider audience. Robert was on the money, it takes a Martin Lewis , a Money Saving Expert pensions special and the attention of millions of TV viewers to move the dial on engagement. But – equally important – it takes something we all know about – tax – to be a story. IFAs are finding their surgeries packed out by people convinced they are due a windfall from LTA and AA changes, most aren’t but the surge in interest has led to many new clients and potentially a lot of more engaged and savvy savers.

The lesson that Robert seems to have learned is that though things like Pension Awareness Day and the great work of the Pension Geeks were good at teaching him what mattered to people, they don’t actually move the dial with the general public. Tax does, benefit changes do, people riot on the streets of Paris over pensions, but only when they register loss. The best way to get people to a pensions show is to say you’ll be talking about why things are going wrong.

Robert’s experiment on linked in was to ask people what they saw as value for money and people actually told them what they valued. The running club that cost £1 a week, a travel bag that lasted, wine so good that it made you remember the taste not the getting drunk.

Durability and well-being are valued and while we can translate these into pensions conceptually, getting people interested in the value of their money is a stretch.

“Work is boring, pensions are boring – let your boss sort out your pension”

This is one of the big lessons the DWP has learned. The VFM framework is about letting bosses and their agents – the trustees – make good decisions on our behalf. Since most of us can understand a traffic light, the Framework is giving us simple nudges “stop, wait or carry on”.

That doesn’t mean we don’t have to take decisions and a lot of the podcast is spent agonizing on why people buy high cost pension products for what experts reckon the wrong reasons, brand- advertising – ease. I know who they are talking about and I can understand why it must annoy to see money moving away from what you see as high-value propositions.

For this reason, the pensions industry seems to have mounted a concerted attempt to get the Government to put a moat around “institutional” and chuck even more red flags at transfers to retail. XPS are currently red or amber flagging over 90% of transfers out, presumably on the basis that a non-workplace pension cannot be as good value as a workplace pension.

There will come a time when the FCA will address this issue but this is not the time.

The main reason “engagement” is valued is because it is seen to increase contributions. It may do, but this is surely not why we have a VFM framework. A framework that is designed to increase engagement is a marketing not a VFM construct.

The best that financial services companies can do is to market themselves well, for which Robert is one of the very few who gets that.

Robert and friends with a thumbs up for the Widow.