While there is a lot of beach trekking going on, stories of exciting developments in pension are clearly a little meagre. This morning the FT are running a tale of Phoenix (Standard +) lending some £75 Mn to Australian engineer Worley.
I really don’t buy debt issuance as kicking anything off, surely this is what happens in the markets and trading between Australia and Britain is nothing new. £75 million is small beer for insurers with £200 billion under management
Actually, Australia is interesting to UK workplace pensions because they are undergoing the same transition as we are from a savings to a spending culture and are seen as a little better than we are because they have a means tested state pension and a compulsory workplace pension funded to a level which is the envy of our DC providers.
My experience of dealing with Australians is that they have a strong sense of individual choice and a low estimation of collective solutions known in UK as pensions. Infact they have ditched the word “pension” from their vocabulary.
But firms like Phoenix and L&G regularly take this approach as an example for the UK. Here is my friend reported in today’s FT
Mike Ambery, retirement and savings director at Phoenix, told the Financial Times that “Australia is viewed as a benchmark in the UK — the golden child of the industry” and that the two countries need to foster stronger two-way capital flows. “We will further strengthen those ties and look for assets to invest in,” he said.
Here is an actuary from Brighton commenting on the FT article
No one – I do think no one – pays any attention to the OECD figures. Fortunately they will be updating them this year if they continue with their two yearly cycle. It will be interesting to see if Standard Life (with my friend David Harris) continues to promote the OECD work. Last time it showed that the average Australian Earner was projected to have a replacement retirement income of just over 30% with a U.K. equivalent over 50%.
The Australian model has a bitter reality for those retiring on Super and a Means Tested State Pension.
The choice of comparators is much wider than Australia. Canada has progressed collective pensions in a way that Australia hasn’t and invests considerably more into the UK economy.
Right down the north western coast of Europe from Sweden to the Netherlands, collective approaches to the payment of pensions are in stark contrast to the Australian model.
In my opinion, the balance in the UK with a strengthening State Pension , a relatively underfunded second pension as baseline AE and the capacity for ambitious employers to take hold of pensions through the use of surplus funds in DB and mutual endeavour through CDC makes for a fabulous opportunity.
By comparison, following Australia religiously is frankly embarrassing. It’s got a lot to do with marketing but not much to do with what is going on with the Pension Schemes legislation.
Australia is one example to compare ourselves to and I wrote over the weekend on picking up on work they are doing on comparison through Bec Wilson’s “An Epic Retirement”.
The marketed view of retirement from Bec Wilson down under.
I am always up for the British being in engagement with the Australian brigades brought to these shores to show us where we go wrong. Bev is a prime example of a positive attitude to financing old age, but she is not a “benchmark for the UK”.
But I’m keener to hear from north western Europe and Canada, who seem to be crowded out by the latest craze from down under.
Let’s not get carried away. The FT tells us that we have more Australian wonder to come later in the year
The UK is exploring hosting an Australian superannuation summit later this year to explore co-investment opportunities between the two countries’ biggest pension funds, according to multiple people familiar with the plans.
Perhaps we will find out who represents “the UK” in this. It is interesting stuff but it looks like another opportunity for Phoenix and L&G to promote the insurance view of the UK savings market as happens in this morning’s article.
There are other ways to a good retirement than via Australia; but they could be squeezed out by the weight of marketing of the big insurers.