Contractors can’t have their cake and eat our pensions too


The Association of Independent Professionals and the Self-Employed have condemned Lloyds Banking Group’s decision to either scrap contractors or force them into umbrella companies. I think this unfair on Lloyds and unfair on the tax-payer.

As anyone in reward knows, IR35 contracts have been adopted , sometimes for years, so that individuals can get accelerated daily rates to compensate for benefits foregone for not being on payroll. Contractors have seen the clampdown on this practice coming. IR35 contractors have lost their privileges in the public sector last year and now responsible employers like Lloyds are implementing what HMRC has asked them to.

And it’s unfair on Lloyds to characterise the options for contractors as “like it or lump it”. If contractors are really important to a business, they are invited to join the workforce. Lloyds terms and conditions for employees include excellent benefits including a very good workplace pension scheme – the largest by assets in the country.

By comparison, the workplace pension scheme offered by most umbrella companies will typically be funded at the AE minima. The challenge posed by Lloyds to its contractors is one of reward for loyalty and competence, do these contractors cut the mustard?

The Financial Times and IPSE report that working through an umbrella company may require contractors to take up to a 30% pay cut, which represents the risk that the umbrella companies see as taking these contractors onto their payroll. Instead of moaning at Lloyds, IPSE should be recognising that Lloyds has born this risk voluntarily for many years.

IPSE go on to threaten Lloyds with the prospect of lower workforce flexibility and lower productivity from the former contractors. This too looks specious. The cost of hiring former contractors through umbrella companies will likely be the same for large companies like Lloyds.  Such employers will be asking why should they stand for less in terms of output?

I think it likely that if productivity and labour flexibility drops, employers will stop using the umbrella companies and insource labour so they can have direct control. Umbrella companies will have to justify the cost of their labour and ensure that productivity and flexibility remain high.

As far as pension policy goes, HMRCs policy appears to be working. The IR5 contractors typically stayed outside workplace pensions as sole Directors of their personal service companies. They currently form part of the 9.5m UK workers who “aren’t in” and that is no good thing. Take up of “non-workplace pensions” by the pseudo self-employed is pitifully low. The IR35 in-retirement liability to the Treasury will only emerge when they find themselves under-pensioned in later life, dependent on benefits and other tax-payers in later life. That cannot be right.

Britain is right to value the genuinely self-employed, they create wealth through innovation, entrepreneurship and through independent thinking. The growth of our economy is reliant on them and I don’t deny IPSE’s estimate that they add £275bn to the economy each year. But the ranks of long-term contractors working for large employers like IR are not innovators or entrepreneurs but people arranging their work affairs to maximise their cash-flow.

IPSE fears that the decision of Lloyds not to find work-rounds to the HMRC’s rulings may be a taste of things to come next April, when the changes to IR35 become law for the private sector. They are right, where Lloyds leads, most other employers should follow.

Not to do so, will create more uncertainty for the pseudo self-employed. Better by far that they prepare for next April by having meaningful conversations with the organisations they contract to, with the hope of moving onto their payroll or accept joining the umbrella organisation as the price of failure.

As for auto-enrolment policy, April 2020 will see the elimination of one of the grey-areas of reward policy. It will then become clear just who is responsible for pensioning contractors, taking a big burden off large employers who have carried the risk of a back-dated liability to pension their IRs. Let’s hope that the quid pro quo for responsible employers will be a release from obligations in the past. That should be the reward offered them by HMRC for playing ball.




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“Brexit this year” – odds against

Screenshot 2019-10-08 at 06.57.33.png

Amidst all the noise, the bookies are prepared to make a market in the Brexit date – here are the Betfair Exchange odds.

You can now get nearly 5/2 against Britain leaving the EU this year. It is more likely at 2/1 that it will happen next and only just over 3/1 that it won’t happen before 2022.

The odds against a Brexit this year have been lengthening every day for the past fortnight as details leak out of what the Government is planning for – rather than shouting about.

The cost of No Deal is now estimated to increase UK Borrowing this year to £100 bn this year, according to “fiscal referee” the IFS. The FT report that a no deal would cost UK business £15bn in red tape., – numbers it has from HMRC.


And yet we are still being persuaded by posters, road traffic signs and television adverts to prepare for a Brexit on 31st October.

Undoubtedly I have better things to do than prepare for a no-deal, even if there is a deal – my common sense tells me it will happen next year and not this. If we crash out of the EU without a deal on Halloween night it will be the biggest waste of money since the last transfer window, the greatest stitch up since the Bayeux Tapestry.

I don’t know why I’m writing this, or why you are reading this. We are now into a facrcical world so topsy turvy that the Queen of Hearts and the Mad Hatter would be welcomed as business as usual.

made in westminster


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Extinction , Boredom or Symposium?

Frivolity of fidelity, mindless or mindful – which will it be?

I am faced this morning with stark choice. Do I cycle on the north side of the river to join responsible asset owners and Adrienne Lawlor working out how to do their bit to save the planet.

Or do I stay on the south side and join Holly McKay and the Boring Money team, working out how to extract maximum rents from the wealth of Britain’s middle classes?

My heart is with Adrienne , my head with Holly. Commerce is about wealth transfer and I’m keen to see how the likes of this lot make so much money. There must be value there somewhere.

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I’m pleased that a refund policy is available – but I am reporting on the event so it will only be time spent that I can claim back and I’m sure I will have a good time.

The other side of the river

Those prepared to brave Extinction Rebellion in Westminster can make their way to Church House and listen to the great and the good opine on the great social , environmental and governance challenges we face. They will be sponsored by another bunch of financial worthies

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I haven’t deliberately faded the logos, that’s just the way they appear on Adrienne’s website.

This conference seems to be about a bunch who’ve made it – proving they’ve still got some sense of decency.

Fortunately I have my super-decent COO – Rahul – ready to do some research with the worthies and swap conference with me as we try to make sense of the competing claims for moral and commercial hegemony from these different crowds and sponsors.

Bridging two worlds

I am minded to spend my day whizzing over Lambeth Bridge, waving from my Santander bike at Extinction Rebellion as I try to make up my mind whether money does any good or is just as boring as Holly claims it is.

And somewhere in between these two extremes – I have to speak to my co-workers in WeWork Fore St about the importance to their budding businesses of complying with auto-enrolment and getting value for money from the pension contributions they are making to their staff.

Quite what the average WeWork co-worker would make of either conference, I don’t know. I suspect they would have more in common with the protestors on Lambeth Bridge than either the retail or institutional money men and women.

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Pensions lunch and learn?

Posted in advice gap, age wage, economics, ESG, Guidance, pensions | Tagged , , , , | 2 Comments

Why innovation in financial services is so tough

tough 2


Today I will be discussing with my team at AgeWage innovation. We are submitting an application for an innovation grant to Innovate UK and we have to determine whether we deserve tax-payers money to take our business forward.

To make that determination we have to work out what is innovative about what we do. I’ve spent the weekend puzzling over why we find it tough to provide people with the information they need to work out if they are getting value for money from their savings and do something about getting themselves a financial plan- an AgeWage for their later life.

The answer lies not in what we are doing, but in what we are not doing. We are not taking a charge on other people’s money and that is what is both innovative and tough to achieve.

Charging other people’s money powers financial services.

At whatever level of the financial services value chain, we see “ad valorem” fees. Ad Valorem is Latin for “to the value” and this phrase has been cruelly distorted so that “value” refers not to the value of service offered but to the value of money on offer. So a 1% fee on £1m is valued at 100 times a 1% fee on £10,000 though the value of the service to the owner of the money may be the same.

So businesses in financial services are valued on the assets under management or advice, rather than on the ongoing value being delivered to customers. This cruel inversion of “value and money” means that it is universally accepted that the wealthier the client , the more valuable he or she is. Meanwhile the vulnerable client – vulnerable because every penny counts, is considered unvaluable (I have just looked up “unvaluable”- it is not invaluable – it is a rarely used word most often associated with obsolescence.

Unvaluable is good

In my – and AgeWage’s world, unvaluable is good. You may not be able to make money out the non-existent wealth of the mass of people who do not hold value to the financial services industry, but we had better not ignore them. The 10.5m new savers brought to the party over the past seven years are unvaluable right now but they represent a powerful lobby in the future and will need help. It is hard to see them wanting to pay the fees levied on the wealthy, that would imply charges on their assets of 10% + pa.

To find a way to treat these customers fairly, to find them ways to find their pension pots, bring their pots together and help them spend their pots as a wage for life, we are going to have to get a whole lot smarter. We are going to have to innovate.

How do you innovate to include the unvaluable?

If you follow my logic , you can understand why financial services in this country is focussed on serving the wealthy 20% and ignoring the 80% unvaluable.

Indeed this is how you run a wealth management adviser,  a SIPP, a  funds platform, a discretionary fund – it’s also how you organise the distribution of institutional funds, you focus on wealth and supply to it and you leave the rest to NEST.

NEST ought to be innovative as it services the unvaluable but it does so with the help of Government money by way of a loan till it has sufficient money to be profitable on the assets it takes a charge over. So NEST – despite looking innovative, is actually reinforcing the classic model, taking money from one big pot and being supported in the mean time from the public purse.

There is an argument that says that NEST’s revenue model is presenting a cross subsidy from rich to poor, the big pots generate fees to subsidise the small pots. To some extent I buy this argument, a flat AMC – which is what NEST will move to once it has paid back its debt some time around 2040 will allow it to ditch the contribution charge. But NEST needs the public leg up it is getting till it gets to this happy position and that is why it has to have recourse to over £1bn of public money in the meantime.


Which brings me on to why AgeWage needs such recourse too!

I am not looking for a substantial grant but I do need money to build AgeWage. That money has so far come from my pocket and from the pockets of our 500 investors. We will need to raise more money from the market and if we do not raise money from Innovate UK, we will accelerate slower.

Time is of the essence, the decisions being taken by people retiring today do not fill me with happiness. We know that many people are needlessly cashing out their pensions and drawing down on their bank accounts, others are reinvesting in the wrong kind of funds – many of which will fail. We can see these investments by looking at the numbers published by the ONS and FCA. It is important that we get good quality information to people so they understand value for money, take better decisions and live richer more fulfilled retirements on the back of greater financial securities.

We are five years into pension freedom and we still have not found a way to properly help people – other than the wealthy – with their at retirement decision making.

Data management not money management


AgeWage is a genuinely different financial services company because it works to a different model. It sells information into the financial services eco-system and is rewarded for the use it makes of data – not of other people’s money.

Data processing is what AgeWage does, it is at the heart of its manufacturing capability and it gets paid for the results of that data processing. We are paid for the fruits of our algorithm , our ingenuity and our understanding of what the market wants and needs.

But we are very far from being successful, we are only just taking our first revenues and we will not be profitable for some time to come. We need the financial support of the taxpayer every bit as much as NEST and we need the support of organisations such as NEST as well.

If we are ever to move away from the traditional “ad valorem” model that takes a charge on wealth, we are going to have consider data as a commodity as valuable as money. This is accepted in other parts of the fintech world but not yet in the part I serve. I will need to go through the tough task of getting data processing valued, a process that I know my friend Will Lovegrove has trod.

Will’s PensionSync has done much to make auto-enrolment work and he should be applauded. He is currently enjoying some respite from his work as an entrepreneur , thought leader and data scientist.  I willingly sit at his feet and learn.

Tough on our customers too

Just how hard it is to run a data processing business in a world dominated by money managers is evidenced by the time it takes AgeWage to get the data from the insurers, SIPP managers and occupational pension schemes which hold both our data and our money.

This is the challenge for the pensions dashboard too.

But people demand to know who has their money, how it has done and they want to know how they can have their money back under their control so ultimately they can spend it on themselves and their families.

It it really tough on savers reaching retirement today that they find it so hard to get the data they want processed, into our hands so we can convert it into AgeWage scores.

Showing how hard it is , is part of the proof of our concept. Things will only change when we find ways to move information around the pensions eco system using the dashboard functionality to kick this off but developing a world of open pension data standards subsequently. These standards should start with a simple data request that is universally accepted under an e-signature.

We apologise to our customers for the time it is taking to assemble their AgeWage dashboards – but it should be the providers who should really be apologising!

With one or two notable exceptions the financial services industry, the pensions savings industry especially, is not ready to move to a data rather than an asset management model. Data is static, unavailable and still considered the property of pension administration teams.

Changing that will be the start of breaking down the hegemony of wealth and democratising financial services for the masses who have little or no control of their savings and little or no access to the guidance and advice they need to manage their finances in later life.

tough 3

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My penny’s worth and a Quids-worth from Ros Altmann on #WASPI


  • 1950s women disappointed as High Court says Government did not discriminate against them.  
  • Equalising pension AGE does not mean pension equality – women still get much lower pensions than men.
  •  Many women have been pushed into poverty and did not know about the changes.
  • Government should help those in hardship – perhaps allowing early access to State Pension or Pension Credit for those hardest hit. 

Some observations from an ageing male

These bullets begin Ros Altmann’s blog on the Judge’s ruling against WASPI’s appeal against changes in the state pension age for women.

I agree with these bullets, women do expect the pensions that men get but many will share in their husband’s or former husband’s retirement wealth – whether pension or capital.

I should add that women now have a better though not a perfect claim on their husband’s pension – the not perfect bit’s that women of my age don’t typically pick up the state pension they should do – as a result of paying the reduced rate of national insurance for the family (not their) sake.

Most women will still have a longer claim on the state pension than men – a function of them living longer and the equalisation of genders for annuities have resulted in an underwriting distortion in favour of women. So let’s not get overly excited about the institutional discrimination against women in these things.

What we really need to do is to address the gender pay gap, which is at the root of pensions inequality. It means that many women get lower pension contributions into DC workplace schemes, lower accrual for DB plans and it also means many women falling into the net-pay woman-trap where they don’t pick up pension savings incentives as they fall into the nil rate income tax band.

Occasionally I find myself trying to read the arguments of WASPI women , to find they’ve blocked me. I find this sad as I am a “trying man” as Joe Strummer sang – trying in both senses of the word but well-meaning for all that.

I’ll conclude by pointing out that I live with a women who earns three times as much as me – which suggests that either I’m not paying myself enough – or I’m doing my bit to address this gender pay gap.

Here’s the substance of Ros’ article

In a landmark ruling , the High Court has dismissed the claim brought on behalf of 3.6million women whose state pension age has been increased sharply, often without their knowledge. The judges ruled that the Government was correcting a past inequality against men, rather than discriminating against women, and was entitled to change pension ages at short notice and without due warnings.

This may not be discrimination, but it has caused real hardship: It was always going to be difficult to prove that a policy intended to equalise men and women’s pension age was discriminatory. But many of those affected are suffering real hardship because successive Governments failed to properly inform women of the original 1995 Act changes, so they were expecting their State Pension at age 60 and had inadequate chances to prepare. That is perhaps more like maladministration than discrimination.

Equalising pension age, does not deliver equal pensions: They may start their State Pension at the same age, but this is far from pension equality as women generally have much worse pensions than men. Not only do older women have lower State Pensions, those in their early 60s are estimated to have just one third of the private pension wealth of men too.

Women lose out in pensions due to social norms and past disadvantage: Social norms caused women to lose out in pensions throughout their lives. When they were younger, they were often excluded from occupational schemes, were paid less than men and had to take time out for childcare. That meant their lifetime incomes are lower than men’s and the increase in divorce rates also means women have lost the husband’s pension they might previously have relied on.

State pensions are a state benefit, not a property right: The High Court concluded that Government can change State Pension rules, with Parliamentary approval, just as it can change other National Insurance benefits. Adjustments to social policy and controlling benefit expenditure are valid policy decisions. Of course, with an aging population, rising longevity and pay-as-you-go pensions, the Government needs to control state pension costs, to protect younger generations of taxpayers.

Increasing State Pension age saved huge sums to Exchequer: Estimates suggest the rise in women’s State Pension age between 2010 and 2016 saved over £5billion in public spending. There is a three-fold benefit for the Treasury. Firstly, not paying their pensions. Secondly, higher tax and national insurance receipts as women keep working while waiting for their State Pension. Thirdly, the additional should boost the economy.

But rising State Pension Ages have increased poverty: Many of the women waiting longer for their state pension have been pushed into poverty. Research from the Institute for Fiscal Studies found one in five women aged 60-62 were in income poverty when their state pension age was increased to 63 by 2016. The study showed that men have been affected by rising poverty too, as the starting age for receipt of means-tested Pension Credit has increased in line with rising women’s state pension ages.

 Governments failed to properly inform people about their state pension age rising: Obviously, policy changes of such magnitude need to be communicated well in advance, so the women are given time to prepare for delays in starting pension receipt. Unfortunately, as the BackTo60 and WASPI campaigns highlight, the failure to communicate clearly and effectively has caused real problems for many of the women affected.

Continued rise in pension ages makes no allowance for those who cannot work:  If older women can stay in work, they can probably manage without their state pension, but many are caring for loved ones, or in poor health, or facing ageism in the workplace so they are unable to do so. There is a stark cliff-edge between the benefits available to people below state pension age and those above it. Although this is designed to encourage more people to keep working, it makes no allowances for the significant minority of older people who genuinely cannot work. If they have no private pension or other savings, due to being disadvantaged throughout their lives by lower earnings and pension rights, then will be struggling.

I believe Government should help – perhaps with early access to state pension and pension credit if needed: Although it is not realistic to give all the 1950s-born women their State Pension back to age 60 – the cost would be over £150billion – I do believe Government has responsibility to help. As Pensions Minister, I proposed allowing early access to State Pension for those in poor health. This would finally recognise the significant differences in healthy life expectancy across the country, which mean some people genuinely cannot work. Also, those who are caring for others may need to retire. Yet, under current rules, even if they have paid decades of National Insurance, they cannot get a penny of their State Pension early. Another potential reform would see Government allowing people to claim Pension Credit before State Pension age, to help the poorest who would otherwise be in poverty. In light of the cost savings from increasing the State Pension Age, it should surely be possible to offer some mitigation for those worst affected. This could help both men and women.

I do hope the Government considers these proposals seriously.


Taken from Ros Altman’s blog

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A pensions dashboard really would help



With a Queens Speech and a pensions bill only a week away, it’s timely of the Times to publish research from Ipsos Mori on the plight of UK retirement savers trying to keep track of their savings.

This piece is by Kate Palmer, one of a number of young female journalists explaining pension problems properly.  Her point is that it’s not just those in their 50s and 60s who lose track of their savings, it’s all of us.

A quarter of workers say they have lost the paperwork for private pensions they have saved into at previous jobs, and 13% say they have forgotten how to log in to old workplace schemes online, according to a survey of British adults by Ipsos Mori.

The number of lost private pensions surged to 13.6m last year, according to the Office for National Statistics — a 17% annual increase. These so-called “preserved pensions” are usually held with former employers.

A quarter of the 1,102 workers surveyed by Ipsos Mori said they found it difficult to keep track of their various pensions because they had changed jobs so many times, while 21% said that they encountered problems in keeping up to date after moving house.

Some 8% of savers said they had no interest in their pensions.

A government project in development, the pensions dashboard, is intended to help savers keep track of all their pensions in one place online. However, it has been delayed by technical issues and the all-consuming preparations for Brexit.

Pension providers have complained about delays to the dashboard’s launch, which was originally planned for this year, saying that they do not know what information they might need to share and who will be responsible for keeping people’s data safe.

The Department for Work and Pensions (DWP), which is in charge of the project, has already warned firms that it will have to ask them to share data voluntarily, because it has not yet created rules that will mandate providers to share it in time for the launch. The DWP is still setting out a timetable for the project. It said it intends to introduce the dashboard at the “earliest possible opportunity”.

Younger savers are most likely to support the long-awaited scheme, according to Ipsos Mori’s research. Nearly nine in 10 workers aged 18-34 said a single online system where they could see all of their work pensions in one place would be useful, compared with two-thirds of savers overall.

In general, younger workers are more likely than older generations to shun the idea of a “job for life” and may have many different pension pots — and more accounts to lose track of — by the time they retire.

“The number of people with multiple pensions is only going to grow,” said Joanna Crossfield of Ipsos Mori. “A dashboard is clearly seen as a way to make keeping track of these easier.”

She added: “People already find pensions complicated and overwhelming. A dashboard must help to address this rather than add to it.”

Talking on Friday with the dashboard/s new principal, Chris Curry,  I sense a new pragmatism about dashboard delivery. There is no doubt the public don’t just want- they expect – a dashboard soon, but – as Kate and Ipsos point out, it is the capacity of the pensions dashboard to help us track down lost pensions that is what we most want and anticipate.

While I can understand why many pension providers are nervous about publicly displaying  personal  data – I can see no argument for any provider not to subscribe to a national pension finding service that links us to our pensions history.

I for one, are fervently hoping that we have a Queens Speech , with a pensions dashboard in it, that makes the nation’s hope a reality.

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Autumn on the river with the evergreen Langs

Family Lang.jpg

Family Lang celebrating Douglas’ 55th birthday yesterday


We have had a wonderful boating season, but I sense it may be drawing to a close. This Sunday morning the rain is pouring down and we will not be going out – my crew- rightly I suspect- have put a duvet day before a day in the rain!

Yesterday was our 62nd this summer, over 500 people have travelled on the boat between Windsor and Abingdon and the many highlights are shared on our Facebook page.

We’ve still got some trips to come and I look forward to sharing the glories of the Cliveden Reach, the Bounty, Boulters , Bray and Boveney with many more friends and – as importantly people who will stay friends into 2020 and beyond.

And I hope many of my pension friends will feel inclined to share time with me on the boat after watching this great video – thanks Professional Pensions/


If you want to join me in October or early November – please do.

The boat is for you, it is free and though I am happy with contributions towards the wine, PIMMs store or small contributions for fuel, none is expected. That means that anyone can come on Lady Lucy as long as you respect the boat and the river rules


Here is the link to book for the remainder of 2019


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Are the nuts and bolts of our workplace pensions coming loose?

nuts and bolts 2


In September 2018, the Financial Times reported on PensionSync research

Millions of pounds of tax relief has been overpaid to workplace pension savers in the UK following errors made by tens of thousands of employers. Regulators conceded this week that workers had wrongly benefited from double doses of pensions tax relief due to employers making mistakes. The revelation came as new analysis suggested half of pension data sent to providers by employers was riddled with errors, including contributions being too low.

The regulator in question was Neil Esslemont who was quoted in the article as saying only a “small percentage” of the 1m employers now offering workplace pension schemes “might be making mistakes” on tax relief, and were typically smaller employers without the help of a payroll team or pension advisers. He said errors could also mean some workers were not receiving tax relief they were entitled to.
Neil thought he knew that 95% of contributions had been compliant , but Ros Altmann and Pensionsync pointed out that we may never know if we got too little or too much money in our pot and whether we paid the right tax for the amount we contributed.
Neil and Ros have moved on from the positions they held at the time of the article, but the unknown unknowns remain.

Pensions data is like that and those who hunt the holy grail of 100% accuracy are likely to be ambushed by the knights who go "nig" – they are on a fools errand.

A system of deterrence seems to be working but we must accept we will never know most of the winners and losers. The cost of audit and rectification may be greater than the cost of the original contributions.
As payrolls find better ways to integrate with HMRC through the provision of real time
information, providers find better ways to integrate their record keeping systems with the payment systems of the employers who participate in their workplace pensions. This process of continuous improvement will undoubtedly spit out some examples of bad practice and some of deliberate fraud.
However relations between providers and payroll have settled down, the miscreants of the early years of staging are in recuperation and we have not seen any major casualties either in the worlds of pension provision or payroll.
So some will say that Baroness Altmann’s dire prognosis in September 2018 was alarmist. I will side with Ros in refocussing on the “nuts and bolts”. Without confidence in the fundamental mechanics, we cannot enjoy the journey, the engine of the car may be investment, but the chassis is data management.
If proof is needed of the importance of getting things right first time, look at the issues surrounding contracting out of the state earning related pension scheme. Employers could elect that they and their staff paid reduced rate national insurance for taking on the payment of guaranteed minimum pensions that would otherwise be paid by the state.

But the management of the data needed to record what was due was often woefully inadequate. Many pension schemes have had to go through what “nerds” call GMP reconciliation before they can make sure that they comply with the rules for GMP equalisation.

Actuaries will tell you that by the time these processes are completed, any commercial of personal advantage of contracting out will long since have disappeared.
This has led to some pension experts questioning whether compliance with this arcane area of pension benefits might not be consigned to the unknown unknowns bin. That in search of data integrity , we may be searching for a holy grail that is a phantom of spurious accuracy.
And skulking in the deep recesses of data management is another of pension's dirty beasts, the money purchase contracting out regime where companies and individuals elected to contract out not to guarantee a pension , but to float their pension rights on the investment markets as “protected rights”.

Whether the amounts paid as national insurance rebates by the Newcastle offices of the then DSS are surely unknown unknowns. The only certainty we have is that we have no resource to reconcile these payments with people's entitlements as identified by historic payroll records.

Ros Altmann was right in September 2018, to point out that we are taking much for granted with auto-enrolment. She had commercial reason to do so, she was chair of a company that managed the compliance of contribution and data management for small employers participating in auto- enrolment. The hope is that with most payrolls and providers moving to straight through processing using APIs rather than spreadsheets, with HMRC working with TPR , supplying real time information and with open banking standards improving the timing of contributions, the scope for errors is reducing.
But there remain “unknown unknowns”, areas where payroll, providers and regulators trust rather than know. I suspect that – as with protected rights – the pragmatic approach will prevail and we will not seek to upturn every stone in the pursuit of 100% data integrity.

But equally, I hope that there will be more Ros Altmanns reminding regulators and employers that the money we are discussing belongs to people who will rely on its investable value in later life. It is their data and it needs to be treated with respect.
These may be nuts and boults issues, but they secure the chassis of the car. If those nuts and boults come loose, the journey could be most unpleasant. We need to know the scope of our unknowns and seek to eliminate uncertainty rather than wallow in data complacency.

Posted in advice gap, age wage, pensions | Tagged , , , | 1 Comment

A Tale of Two Pension Plans : Randy Bauslaugh



This blog is based on remarks to the National Coordinating Committee for Multi-employer Plans, Miami, Florida, September 21, 2019.(Edited for Length.)  I have the original transcript , supplied by Dr Con Keating and published by C.D. Howe Institute’s Pension Policy Council. Randy Bauslaugh is a Partner at McCarthy Tétrault LLP,



My Experience with a Contingent Pension Plan
and the Lessons Learned

For many years, I have had the privilege of being legal counsel to the board of trustees of a multi-employer pension plan (MEPP) established in 1972. The employers are Canadian members of an association of schools in the US and Canada. The Canadian plan is modelled on the defined-benefit (DB) MEPP established in 1948 by the school association for US schools and their employees.

Both plans are administered by joint boards of trustees, one in Canada, and one in the US. The boards include representatives of participating employers and employees.
The obvious difference between the US plan and the Canadian plan is that the defined benefits promised under the Canadian plan are contingent on the funded status of the plan. If plan liabilities get too far ahead of the assets and the agreed fixed rate of contributions, the trustees of the Canadian plan have a fiduciary obligation to consider reducing accrued benefits to bring the assets and liabilities back into balance.
In Canada, this type of plan has many names, including “negotiated cost,” “shared risk” or “target benefit.” In other countries it might be called a “defined ambition,” “collective defined-contribution,” or in the US, a “composite” plan. Whatever the label, these plans all share the same characteristics. They all are a hybrid of DB and defined-contribution (DC) design. In my view, they bring together the best of both DB and DC plans, namely, the benefit predictability and cost efficiency of DB plans and the cost certainty of DC plans.

The actual operation of both school plans is carried out in the US. The plans are substantially similar, but increases in life expectancy, an aging workforce, the fall-out from the 2008-2013 recession and sustained low interest rates have resulted in two very different consequences for the Canadian and US plans.

In the period following 2013, both plans struggled to meet minimum legislated funding

Unfortunately, funding pressures forced the US plan to convert to a DC arrangement in 2019. But trustees of the Canadian plan had another option. In 2015, they voted to reduce accrued early retirement rights by increasing the age at which an unreduced early retirement benefit would be available.

Changing the age from age 61 to age 63 was enough to relieve the immediate funding pressure. By 2017, they were able to partially restore those rights by moving the age
of unreduced early retirement to age 62.

Because legislation in Canada accommodates a shared-risk model, the Canadian plan was able to bend, not break when faced with economic and demographic adversity. TheUS plan had no such option, so it broke.
Today, the Canadian plan continues to improve its funding position. Based on a 20-year actuarial projection study completed this year, it is highly probable that the Canadian plan will continue to deliver predictable and cost-efficient lifetime retirement income on its current cost basis for the foreseeable future.

But getting back to our tale, how did stakeholders (in the Canadian plan) react to the reductions?

Surprisingly, only a very small number of employers and plan participants expressed any concerns at all; fewer than 10 percent. But that minority included one
of the largest employers in the plan. Pressured by local financial advisors in their communities to move to DC retirement savings arrangements, some members
threatened to leave the Canadian plan and adopt DC arrangements.
The trustees responded by organizing a cross-country road trip with a couple of trustees, the plan’s Executive Director, the plan actuary and me to deal directly with the employers and participants who had expressed concern. We explained the nature of the
plan. We pointed to other plans that had to break in recent years because they couldn’t bend – plans like those of Nortel, steel companies and airlines. The messaging made much of the fact that the winds of economic and demographic change wouldn’t break
this plan because of the strength to be found in its pooling and sharing of risk. That pooling and risk sharing made the plan cost-efficient and sustainable.
The messaging highlighted the cost efficiencies of DB-style plans over DC arrangements. We pointed to expert studies in both the US and Canada thatshowed that contributions to a DC plan would have to be twice as much to provide the same retirement
income as the Canadian plan already provided. We shamelessly borrowed the phrase used in a National Institute on Retirement Security paper to argue that the Canadian plan is able to deliver a much “better bang for the buck” than the average DC arrangement.
The math the actuaries did for these meetings also showed very clearly that if the employer had the proposed DC arrangement in place over the relevant period with the same rate of contribution, the accrued benefits would be much smaller than those under the plan, even with its cuts.
We occasionally got help from some of the meeting participants. At least a couple of the participants observed that the factors affecting the plan’s conditional DB liabilities would also affect their own savings arrangements and expectations. Another pointed to a scholarly article indicating that less than 4 percent of Canadians can meet or beat the average rate of return of the average DB plan. And another commented that the change was “just” an unreduced early retirement benefit, something most plan participants never took advantage of anyway.
The good news was that participating employers and participants accepted the change. No one left the plan. But the news gets even better.

The really surprising part of this story is the number of Canadian plan stakeholders – employers and participants – who actually wrote in to compliment the trustees on their decision to “protect the plan.” In fact, based on surveys conducted by thetrustees after the benefit reduction, the vast majority of plan participants and participating employers were more satisfied with the plan than they had been priorto the cuts!

What? How could that be?

I think a lot of the positive reaction was simply the by-product of effective communication by the trustees and plan staff around the conditional nature
of the benefit promise over a period of more than two decades.
I started providing advice to the trustees of the Canadian plan sometime in the late 1990s. Initially, they hadn’t fully realized that accrued benefits could be reduced while the plan remained ongoing. Evidently, their prior lawyer had never said anythingabout that, or maybe they didn’t want to hear it. They also didn’t realize they didn’t have to make payments to Ontario’s Pension Benefit Guaranty Fund (PBGF.)

That’s because the benefits can be reduced, so the PBGF would never apply. Eventually they came around. They got a PBGF refund and started to modify the tone of their communications.

In my early days as their counsel, the trustees were understandably apprehensive about referencing the conditional nature of the DB promise.

“If we tell people that benefits can be cut, it will ruin trust in the plan by
employers and employees. Maybe we have that right, but we can’t be so explicit or employers will leave. Thanks for your legal advice, Randy. We agree. But we
can’t be naïve. We can’t just stick this in their faces.”

They were also concerned that the parent organization in the US would have grave concerns if the Canadians were suddenly communicating anything that stepped back from the rock-solid promise to provide accrued benefits, such as existed
in the US. They did get some pushback, but they persevered with a transitional communication plan over a period of years that subtly and gently
acknowledged the contingent nature of the benefit.

I think this escalating approach helped to alleviate suspicion that a sudden change of communication might have prompted, and helped tremendously when
the cuts had to be made in 2015.
And then, late in 2018, Canadian plan employers and participants heard through the association grapevine (not from the trustees) the shocking news that the US would convert to a DC arrangement in 2019. Suddenly, the target-benefit nature of the plan was
not a defect to be apologized for; it was a strength to be celebrated.

I wanted to relay this tale not just because it is a good news story. Not just because it actually happened. And not because it refutes the fears often expressed by those concerned about the conditional nature of a contingent DB promise; it also delivers
some useful lessons.

Lessons in Legislation

There is legislation in several western countries that accommodates shared-risk plan designs. Some of that legislation has been in existence for decades, as it has in the Canadian province of Ontario, in the Netherlands and in Iceland. A little known statistic
is that in Ontario contingent plans are the dominant form of DB pension provision measured by number of participants.
But Iceland must surely be the poster child for contingent plans. There are only 25 workplace pension plans in all of Iceland but they cover 95 percent of
the workforce. All are industry-wide MEPPs. All are target-benefit plans. All are jointly trusteed. Iceland’s 2008-11 economic meltdown resulted in 50 percent cuts to accrued pensions, including pensions already being paid. Almost all of the cuts have since been
restored; proof that the contingent design works when supported by a legislative framework that accommodates it.
A key to appropriate legislation does not seem to be prescriptive rules, but a focus on fiduciary duty. Fiduciary duty is after all the highest duty known to the common law, and the one that comes closest to resembling a moral code of conduct as well as a legal
duty. It is also a really good sort of legal polyfilla that can effectively fill in legislative gaps, so the legislation doesn’t have to be so prescriptive, which in turn
enables fiduciary discretion to respond appropriately to a broad variety of circumstances and challenges.
Legislation that leaves considerable latitude to fiduciary governance seems to be a key to successful outcomes.
But fiduciaries like safe harbours, and governments like control. I understand the desire  for prescriptive rules. If there are to be prescriptions, my advice would be to go light on tick boxes and heavy on fiduciary responsibility. I would also advise that legislators
rein in any urge to enact overly prescriptive rules relating to governance structures and disclosure obligations; that they allow wide funding corridors before triggering mandatory benefit reductions and improvements; and that they never dictate the type or
ordering of benefit adjustments.

Let me explain the last point.

For almost 50 years, the rules in the Province of Ontario simply required trustees to ensure that a contingent DB plan was provisionally funded ona going concern actuarial basis (with an ability to amortize emerging deficits over 15 years). But in the 1980s “solvency funding” rules were introduced. Those rules required plans to ensure that the plan would be fully funded if the plan were wound up immediately, and emerging solvency funding deficits had to be amortized over 5 years. Thankfully, contingent plans
were, until the mid-2000s, exempted from solvency funding, except that they had to do “solvency testing” and then take the recommendation of an actuary on how best to address any solvency deficit as fiduciaries.
The theory was that in a MEPP environment they were less likely to fail, so making sure assets equaled liabilities in the event of an immediate wind up was useful as a gauge, but not a strict funding requirement.
In my experience, that was a good approach, except that in many cases it often resulted in failures on the part of representative fiduciaries to make hard and timely decisions about cutting accrued benefits. It also resulted in what in hindsight were clearly improvident decisions about benefit improvements. The practical reality is that well-intentioned fiduciaries in a representative governance model are subject to the
influence of their appointing constituencies. Union trustees are under enormous pressure to avoid any benefit reductions. Management trustees are often under considerable pressure to promote benefit improvements as a means of enabling employers to avoid current wage increases.

In my experience, appropriate legislative thresholds that expand representation to other beneficial interests, and that promote or require independent and expert trustees as part of the mix can help. But funding-related rules that trigger benefit cuts or prohibit improvements may be a better solution to enable representative trustees to act  more independently of their union or management constituents.
When the Canadian province of New Brunswick introduced its shared-risk plan legislation in 2013 it provided some prescribed thresholds. First, it included a requirement that an actuary certify, based on stochastic and deterministic modelling, that the plan assets and rate of contribution would support a 95 percent probability of paying the base benefit and a 75 percent probability of paying the ancillaries.
Anything below those probabilities would trigger mandatory accrued benefit reductions (unless contributions could be increased).

The New Brunswick legislation also imposed an ordering of benefit cuts and benefit restorations. New Brunswick’s probabilistic approach received some criticism; mainly, that it was too prescriptive or too sophisticated. The objection to sophistication seemed to be from smaller consultancies that were not equipped to do the necessary scenario testing. I can also tell you from my experience that many such plans elsewhere in the country were already doing such probabilistic modelling as a sort of fiduciary reality
check. The trustees of the Canadian schools plan ha been doing it for many years.

Probabilistic testing is at the very least a good fiduciary idea. New Brunswick’s probabilistic approach is not a bad idea, but its decision to regulate the order of
benefit cuts and benefit restorations is. That ordering limits fiduciary discretion in a manner that can result in more harm than good because it doesn’t take into
account the specific facts and circumstances.

Not all plans and not all industries are the same. The tick box approach to cutting and restoring benefits ignores circumstances, ignores plan design (or assumes theyare all the same) and alleviates fiduciaries from exercising discretion in a manner that is in the best
interest of the specific plan stakeholders.

In contrast, the trustees of the Canadian plan at the centre of this tale considered several different forms of adjustment. In the end they took away unreduced early retirement
at age 61 knowing with a high degree of certainty it would not likely affect many participants and would improve the funded status of the plan.
It should be noted that the pure fiduciary approach in Ontario has over the past decade been replaced by evolving legislative developments that impose mandatory thresholds for benefit reductions and mandatory restrictions on benefit improvements.

There is some good and bad to this. Like the proposals for contingent plans in the US, Ontario is now requiring that benefit improvements not supported by contribution increases cannot be made unless going concern funding is at 100 percent, plus a cushion. The cushion is not a flat rate of 20 percent as seems to have been proposed in the
US. Instead, it is a stipulated percentage (depending on whether the plan is ongoing or closed to newmembers); plus an additional percentage based on the plan’s asset mix(fixed income assets to non-fixed income assets); and another percentage reflecting the plan’s going concern valuation interest rate over the plan’s benchmark rate.

Benefit reductions do not have to be made if the cushion is not there; but it seems
to me that fiduciary duty suggests that the trustees should at least consider benefit reductions whenever a going concern valuation discloses a funding ratio
of assets to liabilities that falls below the legislated minimum for permitting improvements.

Under proposed legislation, benefit cuts are not absolutely required unless the funding ratio falls below 85 percent. The Canadian school plan is presently in the 90s and improving.There have been some objections to imposition on such thresholds as intruding on labour-management relations – which may be proof that they were needed.
Fiduciary concerns should not be dependent on, or guided by, collateral bargaining interests. They should be done in the best interests of the plan stakeholders– employers, employees and others with rights to benefits. The imposition of these kinds of thresholds
certainly helps representative trustees in certain industries manage the practical pressures imposed by their management and labour appointers. But any legislation ought to provide wide corridors, so the result is more likely to be independent fiduciary
decision-making that can be responsive to the particular needs of the particular plan and its current membership.
In my view, the fact that there is a lot of “wiggle room” between 85 percent and the funded ratio plus the cushion is a good thing. It means plan benefits
are not constantly in a state of adjustment. It seems to me that the US proposals for contingent plan legislation could result in annual adjustments – putting a plan in a continuous unsteady state and its participating employers and beneficiaries in a state
of high anxiety.

Stability is something the trustees of the Canadian schools plan strive to achieve because they feel it promotes confidence in the plan to its stakeholders. It is also consistent with the long-term nature of the arrangement. But this wiggle room also reflects the reality that economic and demographic factors are in a constant state of flux and that
actuarial science cannot predict the future wit certainty. It is not an exact science. It is not a crystal ball. It is a sophisticated estimate.

Governance Lessons

Governance is the key to a successful contingent plan. I have been attending part of the Canadian schools plan trustee meetings every quarter for about 20 years. Even today, I cannot say for sure who is a management and who is a labour trustee. They work
together seamlessly and collaboratively.

Frankly, that is my personal litmus test for excellence in governance.

Going beyond minimum standards and embracing a willingness to consider innovations in governance is also an attribute of excellence in governance. More than a decade ago, the trustees of the Canadian school plan reshaped their eight-member board of trustees from a purely representative board of four employer and four employee trustees.

One of the legislatively required employee seats is often allocated to a retiree or deferred vested participant. One of the employer seats is filled by an independent trustee with expertise in finance.
The Canadian schools plan trustees have also modified their trustee selection process over the years to try to weed out the labour-management and sponsor organization politics and pressures.

Even though the legislation dictates a representative governance approach – one more appropriate to resolution of labour disputes, than governance of financial institutions – the trustees have embraced governance concepts more common in the boards of
directors of financial institutions.

What do I mean?

First, trustees are not appointed because of key positions they hold within a union, or
any other employee or employer association. Some years ago, the trustees developed a skills matrix for new trustees that identifies critical competencies, like relevant professional experience in finance, governance, law, public relations and human resources.

They also look for personal effectiveness skills and specialized pensions or benefits knowledge as well as representation. The trustees use the skills matrix
as a guide to trustee recruitment, selection and replenishment. The trustees also promote and support ongoing trustee education.
In Canada, legislators are also reviewing the basic rule that contingent plans be administered by a joint board of trustees, at least one-half of whom represent
employees. They are considering rules requiring participation of other plan beneficiaries such as retirees and persons with deferred vested entitlements.
They are also considering whether to require independent or expert trustees to be appointed. Other jurisdictions, like the Netherlands, already have such requirements, and they continue to tinker to achieve continuous improvement in governance.

Plan Design

Design is a critical aspect of composite plan success.
The design of a DB plan will almost naturally have certain “levers” that can be pulled without changing the core benefit promise, such as early retirement subsidies, indexing, bridge benefits, even the “normal form” of benefit. Consciously designing a plan with
“levers” will enable fiduciaries to adjust “ancillaries” rather than the core or basic defined-benefit promise.
It is important to take into account “levers” that respond to the particular characteristics of the industry the plan covers.
Some “levers” like indexing not only provide trustees with a collateral benefit they can take away before touching the core benefit, they are also “levers” that can be inserted in a conditional or ad hoc way to improve core benefits from time to time. The trustees
of the Canadian schools plan use updates to career average earnings to improve benefits periodically; they also employ ad hoc indexing of benefits. These types of “levers” are really useful because in any year the career average earnings base is not updated or indexing is not granted, it doesn’t feel like a take away. It just wasn’t granted.

I think governments should resist the urge to legislate in this area. Dictating the types of
adjustments that can be made, and when, is counterproductive. Trustees need discretionary space to operate effectively. Dictating the order of benefit reductions and restorations poses other problems, as can be seen by what happened under certain aspects of New Brunswick’s shared risk plan legislation.

In my respectful view, it is better to leave the reduction decisions to fiduciary responsibility so fiduciaries can appropriately respond to particular facts and
circumstances, even if most fiduciaries might prefer the safe harbour that a prescription or tick box approach might provide.

Legislation should also leave some fiduciary scope for making ad hoc adjustments
to other ancillaries.

Carefully Consider Critical Plan Impacts

Trustees should identify mission-critical impacts, and devote meeting time to deal with them as they come up. These impacts might relate to experience that differs from assumed rates of return, interest rates, or mortality; or to state-of-the-industry developments or trends relating to the nature, health, innovation and outlook for the industry that the participants work in; or to specific material incidents, like employer
withdrawal. In connection with some of these, they may even want to develop written policies to guide and memorialize decision-making.
Just take the example of employer withdrawal. Every employer withdrawal or proposed withdrawal is brought to the attention of the board of trustees of the Canadian schools plan for consideration. If an employer withdraws while the Canadian schools plan is in deficit, the employer is asked to remit or make provision to pay for the shortfall. If it will not, or if it demonstrates it cannot, the trustees make a fiduciary decision based on all relevant facts and circumstances to either cut benefits associated with that employer’s
participation or not.
The trustees identified this as a critical issue and devoted meeting time to develop a list of factors to ensure thoughtful consideration of employer withdrawals. They did this without a live case in front of them so they wouldn’t need to make one-minute to-midnight, gun-to-the-head decisions when a withdrawal did happen.

Some of those factors include the size of the employer and its materiality to the plan
as a whole; whether terminated participants intend to transfer commuted values out of the plan or not; how many new employers have joined the plan and other legal, economic and demographic factors. The trustees also use experience with specific employer withdrawals as a learning opportunity that sometimes results in new factors being added to the list.
In the case of any employer withdrawal during a period when the plan is in a deficit funding position, the trustees of the Canadian plan have a policy bias to provide the accrued benefit, but they also have full fiduciary discretion – from doing nothing, to
partially or fully reducing benefits associated with the
terminating employer.

There have been three employer withdrawals during periods of deficit in the recent past in the Canadian schools plan in circumstances in which each of the withdrawing employers provided evidence they were unable to make additional contributions. After careful deliberation, the trustees recommended no adjustments, generally on the basis that the plan could sustain the termination without harm to other stakeholders – i.e., plan participants and participating employers. No such option is available to trustees of the US schools plan.

Effective Plan Communications

Plan communications are another key that cannot
be underestimated.

Almost everything from Summary Plan Descriptions (SPDs), newsletters, internet portals to benefit statements.

The trustees of the Canadian schools plan make use of respected communication experts, lawyers and actuarial consultants to help them make legal and practical disclosures that promote the plan’s flexibility and responsiveness to circumstance. The communications
focus on the goal – predictable lifetime income and the positive benefits of the conditional nature of the promise.

One thing I have learned from experience is that communicating the true nature of a contingent plan with a positive attitude, rather than an apologetic one, does not solve all problems or fears, but it does seem to have a measurable and positive impact on plan engagement, understanding and appreciation.

Based on survey results, in the case of the Canadian schools plan, positive, repetitive and simple messages that avoid pension jargon and emphasize the value proposition seem to have worked very well amongst a broad range of participants, including those who are
years away from retirement.

The Tale of Two Plans

The biggest surprise for me in this tale of two plans was the positive reaction that arose out of what was effectively a benefit reduction. I would never have expected increased engagement and satisfaction withthe plan to be a result. It has really been remarkable
how “tuned-in” and pleased plan participants seem to be with the Canadian plan.

Prior to the reductions, it seemed like quiet indifference prevailed.

Following the reductions, there were measurable increases in plan engagement, not to mention unsolicited compliments. I attribute that mainly to the governance factors set out above – and the thoughtful way in which the trustees communicate on an ongoing basis. Comparisons with the sad fate of the US plan cannot be ignored, but at the same
time, much of the increases in plan engagement and satisfaction had surfaced prior to news of the US plan converting to a DC model.
I should also mention that the 2015 cut is the only cut made to the Canadian plan that I am aware of. The trustees routinely implement improvements, every three
years or so. But these generally relate to upgrading the career average base for the core benefit or indexing pensions already being paid, as described above.
I know that for each trustee of the Canadian plan, the decision to reduce accrued benefits was an extremely personal and difficult decision. They exercised extreme caution; but they had the force of character to take decisive and timely action. I feel certain that for every one of them that period in 2015

“was the best of times, it was the worst of times, it was
the age of wisdom … the spring of hope … the winter
of despair.”

Ultimately, it turned out to be faith in the logic of the sustainability of the contingent plan
design that prevailed. A sustainable way to deliver lifetime retirement income security that is predictable, cost efficient and cost certain.


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The matron and the gormandizer

As nouns the difference between egomania and megalomania

is that egomania is excessive vanity, pride or arrogance; self-importance while megalomania is a psychopathological condition characterized by delusional fantasies of wealth, power, or omnipotence.

I don’t want to fall out with Paul Lewis over this, but I have been wondering overnight whether his tweet shows traits of egomania or megalomania and am concluding that Paul is driven by  narcism – common to the “West London Liberal Elite” – that demonstrates each trait in equal quantity.


Jo’s excellent article, which I featured yesterday, is a model of journalistic humility, Paul’s tweet – an example of hubris.

That said, Paul’s hubris is more Falstaff than Hamlet – and we love him for it.

The problem with being Sir John Falstaff are well documented by William Shakespeare. His former spar- is now the King who turns on Falstaff with the following jibes

I know thee not, old man. Fall to thy prayers.
How ill white hairs become a fool and jester.
I have long dreamt of such a kind of man,
So surfeit-swelled, so old, and so profane;
But being awaked, I do despise my dream.
Make less thy body hence, and more thy grace;
Leave gormandizing. Know the grave doth gape
For thee thrice wider than for other men.
It’s not pretty stuff and the words could well be aimed at the corpulent Pension Plowman, but I am not holding out to be above a retirement plan and absolve myself from Paul’s hubris. Paul gormandises on social media, he eats at our table without restraint but he should heed Hal’s warning – “the gave doth gape”.

The matronly Cumbo

My admiration for Jo Cumbo stems from her being a working Mum who takes motherhood in her stride and produces some of the best financial  journalism of her generation.

She is a mother not just to her children but to her readers, and her opinion piece has moved several of my friends. To boot – this message addressed to me that I’ve passed on to Jo

Just wanted to say Thanks for alerting me to this opportunity.  I’ve contacted an adviser already.  My kids seemed to be getting tired of hearing me say I’m looking forward to early retirement with them looking after me!

The matronly Cumbo stands in loco parentis to many of us.

Who advises the advisers?

Paul Lewis is a financial adviser, one of the best we’ve got in this country. His twitter feed is a fount of knowledge, his opinions are seldom wrong, he is the scourge of the weak-minded.

He has a financial adviser – I know him – one of the best financial advisers in the country. So I know the answer to my question.

But I have a suggestion for Paul. That he also listens to the matronly Cumbo and considers Henry’s words.

Leave gormandizing. Know the grave doth gape
For thee thrice wider than for other men.
Reply not to me with a fool-born jest.
Presume not that I am the thing I was,
For God doth know—so shall the world perceive—
That I have turned away my former self.
So will I those that kept me company.
When thou dost hear I am as I have been,
Approach me, and thou shalt be as thou wast,
The tutor and the feeder of my riots.
Till then I banish thee, on pain of death,
As I have done the rest of my misleaders,


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