Martin Freeman (the pension one) has – for as long as I’ve known him , been able to speak his mind. But -until now- he has worked for companies where he has had to keep those conversations to himself. I’ve had a few chats with him in dimly-lit bars where we’ve asked the question, “why is nothing getting done”.
Now he’s written an article to that effect;- published in Professional Pensions – , presumably because he is working for himself and has had enough of dimly lit bars. Or perhaps , stung by his club’s loss at Wembley, he feels he has nothing left to lose!
The current government’s preference is for a default consolidator, but it is teasing us with a lifetime provider model. Others have chipped in with calls for “magnetic pensions” or other intriguingly named solutions.
These solutions are basically the same thing. Arguing over the consolidation model is like the Lilliputians arguing over which end of the egg you should break open. Because we need to build pretty much the same technology regardless.
The article continues on at length and includes the obligatory flow-charts, but the point is made with the Lilliputian eggs
It is in the interests of the handful of remaining master trusts actively auto-enrolling members to work together to solve their mutual problem with small pots. If they can , not only they deliver greater profitability to their shareholders but they can deliver better incomes to their staff and even better value for money to their members.
The only losers will be the regulators who will get less in levies.
You really do have to ask why the firms with the principal problem with small pots- namely Nest, People’s Partnership, NOW, Smart and Cushon, cannot work out a way to create – if not a national grid – at least a transfer club that would allow bulk consolidation.
This has been on the cards now for more than five years. It is a first stage towards a national grid and while it would only solve a bit of the problem, it would be of great benefit to those who find themselves with pots with more than one of these big five.
The problem is partly with our obsession with inclusivity (an issue which besets the dashboard). We are determined to launch initiatives with universal sign-up which means we will always fail to launch. People’s will argue against their members transferring away a protected age, Smart and Cushon will argue that they are superior in terms of investment and service, NOW will remind everyone they are “different” while Nest will plead that they haven’t built a bulk transfer facility. And they will point to the large insurers and the consultancy funded master trusts who are lagging because they don’t have a small pots problem.
And so it goes!
Perhaps we should now appoint Freeman as small pots czar, just as we should point Richard Smith dashboards czar. What I have always liked about czars is their unlimited power to implement necessary policies. I can’t see Freeman as “Martin the Terrible” but he might be a little more effective than what we’ve had till now.
