When I think back to the start of my savings career (a 10 year MIP with Save and Prosper bought in 1979), I took my decision based on Life Assurance Premium Relief using a life insurer few (other than David Butcher) remembers. LAPR is gone, Save and Prosper has gone , thankfully some of those savings are still with me. They helped me buy my first flat and I have not had to pay rent since 1989 (when the policy matured).

I suspect in 45 years time, the workplace pensions offered by Nest, People’s Pension, L&G and Aviva ( a random sample) will be rebranded and re-engineered to a point that the contributions our children and grandchildren are making today, will be paid back to them by radically different organisations.

The idea behind a “pot for life” does not imply a “provider for life”.

In a recent linked in post, WTW’s Stuart Arnold  compares pension providers with high street banks and observes that many people do use a “bank for life”. It’s true,  my whole family (apart from me) bank with the NatWest as they have done since the 1960s. This is not uncommon.

Stuart worries that the “pot for life” could lead to poor outcomes

 If individuals end up sleepwalking into the “path of least resistance”, and remaining with the same pension account for potentially 40 to 50 years, what will the impact be on their overall outcome and will this hamper the competitiveness and innovation needed in our pensions system?

WTW advise pension schemes that have been providing pensions for 40 to 50 years and many people who started their careers at Unilever, BP or British Airways in the 1980s are starting to draw their pension now. It is in the nature of pension schemes to think decades ahead and for actuaries to help them with the numbers.

The deal is a simple one, people are asked to join a pension scheme in return for a promise of a future pension which pays out when people no longer get a wage from their work. This is the basis of the deal. The trustees who pay your pension today may not even be aware of the company you joined 40 years ago, but your pension has followed you.

In this descriptor , the employer is only involved in making the invitation, it need not be the employer who is on the hook for paying the pension. The pension may be the business of the scheme to pay , out of the proceeds of investment (the pot). There may be no pension from the pot at the end of the rainbow, only the option to purchase an annuity (the money purchase). Or it may be that pensions are paid collectively through risk-sharing (CDC) or even through organisations who provide pensions backed with external capital. All of these things are possibilities for  the future.

And the success or failure of the “journey” will be determined by factors that by and large will be entirely beyond the control of the person joining the pension scheme today. They are unlikely to take control of the investment of their money, unlikely to impact the size of their pot – other than by raising or decreasing contributions. They may not have much choice about how they get their money back. As Stuart points out, the nature of the provision changes all the time, but changes which we regard as important because we are in the bubble – pass most people by.

So it is that of the 11 pension providers I have had in my savings career , only two still trade under the name I purchased. Mighty names such as Sun Alliance, The Royal , Prudential and Zurich are no longer actively engaged in pension provision, though no one would have thought this possible at the time I purchased their services via my employer. Other providers “Target Life and Lloyds Life” are forgotten, we need to consult the ABI’s register to find out where the companies are – let alone our money!

This may sound a little “old mannish” but as you get older , the issue is not “how is my money managed?” but “where is my money managed?” and “how do I get my money back?”

I appreciate that there are huge amounts in orphaned assets in banks, there are also huge amounts of stranded accounts with book-makers and what about all the little shareholdings we’ve accumulated as a result of share schemes or from de-mutualisation.

But “pensions” is the big one – the £30bn of orphaned assets that are lost in a system that could not keep up with its owners and leaves money stranded we know not where.

Stuart and his colleague  Gemma Burrows have been discussing all this together and have posted the same thoughts.  We really aren’t interested in “switching” providers, very few of us would think of switching out of a poorly performing workplace pensions but we would expect the Government to make sure our money was not stranded on a barren shore.

Very few of us, have the slightest clue how are money is manged but we do expect it to be managed responsibly

Very few of us have a clue what happens when we retire, but we do expect our workplace pension to pay us a pension.

These “default settings” are getting in place, historic pot consolidation and pot for life are simply an extension of the “done for us” regime that we accept is what most people want.

You may call this “sleepwalking” but that is what most people do when it comes to pensions. Where people sleepwalk, there is danger, the job of governance and Government, is to make sure they don’t walk into trouble.

We need to keep sleepwalkers out of harms way, making sure when they wake up, they are in a good place. The wake up call for pension savers is retirement