I was not at the Corporate Adviser Summit this week which is probably just as well as I might have lost my temper!
Instead of that, you are getting a blog which looks at the reactions of senior consultants to the challenge facing the pension industry from not providing pensions from workplace pensions.
You can read or listen to the entire article from Corporate Adviser here
Rav, Fearn and Waters
My immediate question to pension consultants presenting us with problems is to ask “what are you doing about it?”
Here is their problem, a solution that is not understood or trusted to deliver.
CDC is about risk-sharing; the pension scheme organises the risk-sharing intra and inter cohorts of members. So far , no party has been prepared to test a model other than Royal Mail. The consultants have failed to organise a model, the master trusts have failed, the employers and their trade bodies have failed. Everyone has sat on their hands and waited for someone else. We should remember that Royal Mail did not create their plan in a fully organised legislative and regulatory space, they created that space by collaborating with Government, consultants and with their staff.
This is all very well, but is it pension savers who should be organising themselves into pools? The CWU acted for their members in helping Royal Mail get their CDC underway but it was not a worker collective, people find the nastiest hardest problem in finance beyond them. They need help- that’s what advisers bring to the party.
Having pointed to the weaknesses of the CDC model and the failure or pension savers to find ways to organise themselves into pools, Waters now turns to Pension (Super) Haven.
I would point out that Pension SuperHaven is infact an approved DB pension scheme with members accruing a DB benefit, it does not need approval to continue doing this. It is looking for guidance from the Pensions Regulator over taking on new liabilities through the transfer of DC pots to DB pensions. The Regulatory ink is hardly dry from the publication of guidance this summer, we are told more guidance is to come. The Pensions Regulator is making it clear it wants to see capital backed DB plans take on risk for members who might otherwise suffer harm, it now has to work out how a CBJP can be employed to help DC rather than DB members. In this, the help of consultants is devoutly to be hoped for!
Having moved from blaming pension savers and regulators, the panel moves on to occupational schemes – their sponsors, funders and trustees. Who is to blame for the failure to act? I would have thought that this is a failure of advice. Cannot the consultants recognise that they are part of the problem?
Just what is in mind it is hard to guess. I know of other organisations than Pension SuperFund looking to innovate in this area and I hope that a variety of choices are available to occupational schemes. The “end of the year” is a good target, but why the secrecy?
I think it fair to say that this is a rather underwhelming conclusion. If the extent of our ambition is to stop people buying Lamborghinis with their pensions, we have progressed very little since 2014.
My conclusion
It is not enough for consultants to sit on the sidelines, they need to be actively involved in promoting innovation, encouraging regulators, advising members and creating conditions for scaled change to be achieved.
From the account of the consultant’s scepticism about “decumulation solutions”, I suspect that this is yet to happen.
I challenge consultants to come and talk with us at Pension SuperHaven, share your thoughts , your concerns and your recommendations. We can’t create pensions from pots without your help.