The chart shows how “pensions” fit into a retail structure alongside protection and investments. This blog explains why workplace pensions do not fit on this organigram and why banks are so bad at doing pensions.
Yesterday, I wrote a piece on NatWest’s sale of Cushon. It is the latest episode of a bank pulling out of pensions. This is an excerpt.
Nat West have just turned in some excellent results and seems to have stayed clear of the Car Finance problems of Lloyds (the other player in workplace pensions with Scottish Widows). With HSBC pulling its hopeless master trust and Barclays not getting involved, we can fairly say that banking is not setting the pace.
This article is some early morning thoughts on why banks do saving not pension. It is not a criticism of banks, just an observation, they should stay away from buying pension companies like Cushon, things are going to get a lot more to do with pensions not pots, with institutional/collective funds – not apps and retail choice.
My declaration of interest – I have a Zurich pension and want a CDC one from my DC pot(s).
Perhaps I should declare my further interest in Scottish Widows flagship “workplace master trust”. It is a takeover of an insurance master trust (Zurich’s) and I am a Zurich pensioner and former head of sales there, alongside Jonathan Poll.
The culture of Lloyds has not suited the (now) Scottish Widows pension and it will have to resort to taking over the Lloyds Staff scheme to get to scale, alongside eating its workplace pension GPP books to get the Master Trust to “Scale”.
This is a resort that Barclays, NatWest and HSBC did not try – indeed they do not have the workplace GPPs that could get their Master Trust to Scale in 2035 terms.
I did meet a lady from Lloyds at last week’s event but she mumbled something about CDC perhaps being a home for legacy GPPs from the many pension providers taken over by Lloyds over the years; she mentioned Hill Samuel, Target, Insight, maybe bits of Equitable.
It reminds me that Lloyds, like Barclays and NatWest have had great plans which have never come to anything. Even their ownership of Zurich’s workplace business (which I was the sales guy for) has hit the rocks there. Right now they are famous for an app that likens your pension to all the other accounts you have with Lloyds, perhaps that is their problem and the banking sectors.
The difficulty that UK retail banks have, is that they are singularly ill-suited to providing pensions or even annuities. Emma Watkins was touted as making Lloyds (Scottish Widows) a major annuity player, within a couple of years she has moved to Canada Life. The golden generation of women , including Alison Hatcher is no more. Jackie Leiper is a very good retail managing director for Lloyds but since Watkins departure departed to be CEO of Canada Life’s CEO it is hard to point to anyone at Lloyds who has an institutional vision for pensions. This is also the case for Barclays and HSBC who have shed heavy weight players like Mark Thompson.
What we are now seeing is workplace pension going institutional and leaving retail behind. Cobbling together a wholesale proposition out of the wreckage of the past is simply not going to work. The core master trust Scottish Widows promote is still less than £4bn and taking on the staff scheme may take it to £10bn but not encourage staff in that scheme that they are getting much in the way of VFM when merged with a failing trust.
My conclusion is that banks and pensions are best left to trustees with a success story. The only pension trustees I know working for bank pensions work for staff pensions , they know who I mean. When banks cross retail and what is essentially an institutional product , things go wrong.
Let’s hope that Cushon’s progressive proprietor , will find space to operate pensions and not fall into the retail mess that British Banks are obsessed with. Proprietor is a term from the “CDC” proposals, the DWP and HMT are looking for ways to put workplace pensions on an institutional basis , one that savers can opt out of, but one that provides “pensions” by default.
Workplace pensions are not retail product. The Bank’s obsession with retail solutions for pensions is dragging them down. Banks can’t compete in the workplace with a retail strategy.