This is quite right but…

I read that and thought the nudge in the Dutch toilet worked well. It helped men focus on what they are doing. Saving to spend can’t focus just on the amount saved, it has to have a sensible way to spend.

It is not only wrong to infer that staff will be comfy if they enrol, it is wrong to say they’ll get a pension. Even when the likes of the supermarket chain Morrisons promised a defined benefit, the benefit was a cash sum.

I was at a legal conference yesterday when the options for enrolment “run off” were described as “drawdown and annuity”. Concepts such as insuring against living too long and saving and spending collectively  didn’t get a mention. The concept of pensions for those making defined contributions wasn’t mentioned. That can’t be right.

There is a very simple but expensive way to solve the problem Catherine Foot identifies. We could throw to the pot infinite sums of money, reduce the risk from investment to zero and shift the responsibility to the employer. This would replicate what happened in DB and is it any surprise that employers are asking for money out of surpluses – money paid to the scheme under duress as “deficit contributions”.

That won’t work, we need to have a system which works for saving and for spending.

This is what the Pension Minister has to say about calls for more money into pots (L&G client conference this week)

“..it is our job to build a system that when they don’t engage doesn’t lead to very bad outcomes.

“We have basically built a system of savings pots, but we’ve told people we’ve built a system of pensions, and if we don’t sort that mismatch, people will start asking:

‘What is this system and why are you asking this much of me?'”

People may think that the sums that have been paid are enough. Kingfisher used to run a contracted out money purchase fund with a 1% employer payment on top of a pension instead of SERPS, it was also considered a company pension by staff. Of course you ended up without SERPS but people got to retirement and they got a pension for life. The scheme was “non contribution” for staff and compared with a DB plan paying 6oths that cost 5% of salary, most staff thought it better value.

What we need is a scheme that pays a pension at a decent rate. We get there by making promises clear. When people get their statements they get a SMPI but it isn’t working, it will be the dashboard that – for the first time – shows the Estimated Retirement Income from the pot and probably around the time when decumulation defaults arrive. We are moving towards clarity on what we get with people having to opt-out of the default  or get something close to what they see- clear promises kept.

I like the idea of getting people to pee accurately by giving them fake flies to fire at. I like the idea of paying money into a pot that stops it being sprayed all over the place – same thing.

I don’t think that the answer to the problem we have right now comes from empty bladders (so to speak). We need to get a system that keeps us continent and clean.

The amount you pee depends on the amount you drink. Drink more with no toilet training and you leave a lot of cleaning up and get little satisfaction.

#pensionlessons