“Fear of risk has has ruined the prospect of a real pension” – Pullinger

Terry Pullinger and I are friends, frustrated by the failure of Government after Government to see policies over the line, content to make asset managers and insurers rich while millions of savers are left with pots and no pensions.

Andy Haldane’s article which you should be able to read here, says the same thing in economist’s language.

People hope that their pensions are managed, expect their money is managed sensibly (like new cars they should not pollute). People expect their money should make British industry (from data centres to steelworks) flourish.

But that is not why they let there be another tax on their payslip called “workplace pension”. The point of letting money get spent tomorrow is they want a “wage in retirement” – to quote Terry again.

It has taken the DWP years to get another version of the secondary documentation allowing CDCs to go ahead and no doubt the next version (for companies not called Royal Mail) will be risk averse , like the “failing fiscal framework of the Exchequer.

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Hope in the gloom Pullinger describes

I was speaking yesterday with a young man who has set up a company “Collegia”, it does one thing – manage the auto-enrolment of small companies who operate payroll through the auto-enrolment process to a very simple GPP. It has attracted 8,000 employers  with 45,000 employers paying basic mandated contributions (a few companies more but not many).

This company is profitable because it was set up from the start to be driven by the latest technology and to focus entirely on helping savers understand the pensions they could expect (using what the FCA have laid down). People are happy, no complaints and reasonable charges which do not bother to compete in the master trust price war.

We discussed what he would do faced with the “scale” requirements of the Pension Scheme Bill (he isn’t managing £10bn or anywhere near- nor does he a plan to get to £25bn by 2035). We agreed that what his clients wanted was a pension for staff and themselves  (the clients are small businesses using HMRC payroll software).

I have been here before in 2017-18 when the first challenge of staging auto-enrolment was upon the clients of HMRC payroll, they are the SMEs of Britain who have no seat on any pension boards and now find a sensible answer in Collegia. If Collegia had been part of the solution back then, they’d be bigger but heh – Eduardo and Riccardo were at college then, learning how to deploy technology to solve problems like this.

We discussed the options and Eduardo and his friend do not want to sell up to an insurer in what is nicely called “consolidation” but less nicely called “failure”. Failure is not in the vocabulary of these people. Instead we discussed ways of paying these people pensions using technology and collective pensions (CDC if you like). They could be dong this now if all the 45,000 staff and their employers were happy that Collegia became a CDC scheme, stayed trading and attracted to it employers who wanted to work with the simple solution Collegia have in mind – paying a “wage in retirement”.

We will know if this kind of sensible way forward will be allowed by the DWP in a few weeks, I have been invited to a meeting with the Pension Minister later in the month to hear him tell a group of enthusiasts, including employers , what the rules for CDC will look like. The idea is that employers will be signing up to that kind of solution and that kind of solution will be able to grow from acorns to oaks and not fall under the scale rules. I will represent the spirit of Collegia which is the spirit of Pullinger and of the Pension Plowman.

You could say that we want to break the failing fiscal framework which has held back pensions and promoted pots, that has broken Defined Benefit Pensions and stopped CDC pensions from developing. I went to a policy conference last week about the Pension schemes bill where CDC wasn’t mentioned, it was run by a brilliant firm who forgot to include it! Decumulation for them was drawdown and annuities, like that was what Defined Contributions led to.

I am not prepared to see CDC  confined to discussions between lawyers and actuaries  in City Conferences. I want CDC to work for everyone and be known as “wage in retirement pension schemes”