Interchangeable for insurance brokers
Barnett Waddingham , one of the few independent pension consultants is independent no longer, it is owned by Howden, an American insurance broker,
In recent months, Gallagher has swallowed up Redington having swallowed Buck before.
Alexander Forbes had been bought by Lockton and JLT and JLT has been bought by Marsh Mac, all the purchasers are American insurance brokers.
Willis Towers Watson and Aon are general insurance brokers with pension consultancy arms, their weight is in the USA.
The number of remaining UK pension consultancies is very small. LCP and Hymans are the big ones, First Actuarial the new kids . There is not a lot of advice to UK firms that does not come from an insurance broker and consequently not a lot of “noise” coming from these consultancies that isn’t “promoting” insurance solutions (aka risk driven advice).
The result is that independent thinking within the pensions is fast withering and an addiction to de-risked ideas has taken hold. The money is in DB and so long as there is money in Defined Benefit pensions, the advice will be to get it out of growth and into de-risked insurance policies. Now Barnett Waddingham will find it harder to speak openly of the advantages of non-insured pensions – you know, the ones that carry on.
Here’s First Actuarial explains what happens when a collective scheme continues to march on, stay open, go for growth – choose the positive phrases so long as you don’t work for an insurance broker and promote insured solutions.
Or look at like with a less optimistic view and ask just how we are going to see a DB scheme taking a long-term horizon if the advisory world is set against it.
You may say that DC pensions represent the future, but is there really support for a DC future that runs on collectively as First Actuarial’s chart shows?
Not really, Hymans and First Actuarial and LCP are really the only consultancies I hear shouting for DC to run on either through turning into DB (the PSH solution) or CDC where capital is not put up and members take investment risks between themselves (losses and gains). They are the only firms making a noise about non-insured collective solutions, all the others are staying quiet and expecting annuities and retail planning to manage their DC market.
I think that there is a problem here and it’s one that we are not hearing very loudly, perhaps because employers and member organisations (unions but also charities) are not getting a voice. Those who are neither very rich (and in wealth planning) or very poor (relying on state pensions and benefits) have no voice. There is no voice for those in retail, in transport or in charity where people are not getting “pensions” but DC saving and are getting fed up with having no pension when they retire.
I may be a sole voice for collective pensions for the mass of us but I met a lot of people (mainly employers but some union and charity folk) who are seriously opposed to the takeover of insurance not just in DB but in DC pensions. If we have an advisory as well as a delivery mechanism owned by insurance, then the independent views of collective investment and mutual insurance through pension management will be lost.
I have no immediate answer to the conundrum that we are facing. I hope that Government will recognise that insurance, if taken beyond an option so that it becomes an option, is not good for the country as it looks to come out of economic torpor.
Gallagher, Marsh Mac, Watson Wyatt, Howden and Lockton compete with each other for the remains of our DB system and lockdown of our DC savings system. They are all overseas, mainly American though some “global” (a little impacted by the rest of the world).
The temptation for LCP, Hymans and First Actuarial to sell out and land the equity partners with substantial pay-offs is huge and who would not be tempted.
I hope it doesn’t happen and that the encroachment of American broking does not continue. I can understand why those who work for American companies currently think it is good, but I can assure you that working in pensions and having an independent thinking allows for a different mentality. Listening to the new Pension Minister, Torsten Bell at the PLSA made me feel that a home-grown solution to our pension opportunity is more suitable to Government and Britain, than a sellout to insurers and insurance brokers, from across the pond