It’s good to see a financial adviser focussing efforts on converting pots to pensions

I’m not altogether what the chart is of but I assume it’s an example of what most people ar getting – mystery. I think this pot is what people see when presented with charts of the value of what they have!

pot

I am interested when I look at the Chancery Lane business. Isn’t “income planner” a fine phrase for an independent financial adviser?

It strikes me that you might want to opt-out of such a default retirement income provided you  were comfortable that your adviser was on top of your affairs but this is where I get confused.  Mightn’t you be better off having scale on your side.

His firm is , according to this post, competing with a firm taking on  880 new customer each week. How can income planning to be delivered in such bulk if it is to

1. Ensure that the plan is peculiar to the pensioner
2. That the efficiency captures  the capacity of a master trust with billions of pounds invested.

I don’t know the answer and wonder if there is one. I think that is what Doug Brodie is brooding about and so is a friend who writes to me

Why should mastertrusts hold back the money and only give people access on the assumption it should pay for an indexed linked stream for ever?

No one says that about the ISAs or shares we have.

Ah yes, people can opt out. But will they?

I am not suggesting everyone should get it as I would want. But we need to be clear HOW much all the providers can keep. And why and when.

What we seem to have going on in my friend’s head is a struggle with the concept of “drawdown for thousands” (the worry of 880 new customers a week from Doug).

Because they are not really being treated collectively are they? They are all being given the idea that they are being given a product that is right for them but actually treated in exactly the same way as everyone else. This is the nonsense of not having collective decumulation. Even worse is that we have been in default funds as we grow our pots but are led to believe we have our own personal opportunity.

I am very disturbed by the opportunity we have lost with DC by not doing the accumulation collectively and we are going to do it all over again by doing the decumulation individually (not collectively) but doing it the same for everyone who hasn’t opted out.

And somehow we are going to have to devise a drawdown rate that makes sure that people don’t run out of money ( all – together) so that everyone has to have a reserve in their pot. This is what my friend calls “how much the providers can keep”. What happens with Nest if people don’t have the right amount when they get to 85, what happens if Nest has held back too much or drawn down too much that people are short?

It all seems nice and easy at outset but I fear that an awful lot is going to have to be held back if Nest and others doing “fix and flex” with annuitisation only at 85 is done prudently.

It could have been so much easier if the pig had been a pig and not a duck, so much easier for a pension to be a pension and not all things to all men and women.

This is where I find there has been so little real development of thinking. Flex and fix is nothing new, CDC is not new it is not here – nor is a superfund model where people transfer into a commercial DB plan. The only (funded) DB plan generally open is LGPS and there’s some “pension to pot” stuff in unfunded public pension.

But in all honesty, are we really there with this “pig and duck” stuff and my friend so dislike. I was individually impressed by Nest when Paul Todd explained things to me – when I thought we had a collective DC solution, but I’m falling out of that, because we have not turned a pot to a pension. But we’re selling the pig as a duck – which is already looking impossibly difficult for Doug Brodie, my friend and me.

Doug will be encouraging people to opt-out and plan their income with him and his friends. I can see a lot of opposition to this from providers who will be selling pigs as ducks.