This blog is a reminder to me of the lack of understanding people had and have of pension value for their money.

This is not a criticism of people, it is a comment on the failure of the organisations that run, sponsor and act as fiduciaries to funded pensions, in properly explaining how they work. Where there is no choice but to get the pension , there is no problem, I’m thinking not just of the state pension but of the large unfunded occupational DB schemes.

I have got in the habit of reading some of my blogs and read this one yesterday morning; after which I posted it. Colin Haines, a former LCP partner and someone who I work with quite a lot, had this to say…

Andy Young was clearly pleased to read that

Here is a comment from someone who knows CETVs from the inside but can make no sense of how they relate to the VFM of pensions!

The real question is what causes long-term gilt yields to be so volatile. I have often seen long-term gilt yields react nearly as much as short-term gilt yields to current events – which makes little sense to me.

For example a 0.2% change in an inflation print compared to what the market expected can sometimes cause a long-term bond price to change by 3% or more.

The blog was posted nearly two years ago but nothing much has changed. Most people who transferred out there pensions to SIPPs now have a lifetime to live off the capital, or have no need for the capital and want to pass it on (albeit with a tax bill from 2027).

Those who take advice , pay for it, typically in higher charges on their investments, occasionally by fees (as they would other professionals). There has been a rise in the purchase of annuities which now make more sense as they benefit from the factors that depress DB transfer values.

The number of people transferring from a DB plan to a DC plan has fallen, to a small part due to the greater transparency of adviser fees – at the point of transfer it must be clear that the fee is charged whatever happens and is not “contingent” on the sale. It is more likely it isn’t going ahead because advisers point out that the likelihood is that potential clients will be paying to stay where they are.

While an actuary will tell you that the CETV always represents fair value, for most people it is the capital sum that the CETV represents that is proving less attractive, what good if that sum can now still back most of what is lost when a CETV is taken (with an annuity)

I wonder if Trustees and Advisers and Employers could have spoken to members of thinking of taking their CETVs for cash to fill SIPPs with the freedom that the FCA is planning to offer them, whether there would have been more plain speaking.

I remember plain speaking from Al Rush and others in Port Talbot to steelworkers who were busy signing away their pensions. I remember Jo Cumbo’s articles and I remember a session with the Work and Pension Committee in parliament while the transfer craze was at its height.

Now we are trying to get people in workplace DC pensions to swap pots to pensions unless they have conviction that by opting out they can do better. There seems very little complaint about the plan for default decumulation funds (aka pensions) for those who want to be told what to do.

Life could not be more different from 2017 when freedom from pensions was what advice was all about. Today seems a lot less silly. Pensions were meant to be a retirement income for as long as you’re around and that’s what we’re heading back to after more than 10 years of silliness!