How do women get a fair deal out of pensions?


The gender equality gap has become a cause celebre for the marketing departments of pension companies. We’ve had it from the ABI in their blueprint for auto-enrolment 2.0, from Hargreaves Lansdown who reckon that women are under pensioned from the womb and from L&G who want to jack up AE contributions to even things up for working women.

I’ve got a big file on my laptop full of similar reports from Scottish Widows and other insurers earnestly entreating us to reform the pension system so that women’s pots are as big as men’s pots. But as L&G bemoan, progress towards pot equality has been “glacially slow”. The trouble with that cliché is that glaciers are disappearing very fast, as is my patience with the idea that women are all of a sudden going to have earnings careers like men.

We can get women a fair deal on pensions, but it won’t be through defined contribution pensions. It will be through thinking of pensions as belonging to households – rather than individuals.

There are areas where pensions are thought of as households, pension credits are calculated based on household needs. Most state benefits are assessed on household rather than personal income and this is why the majority of assistance is channelled towards households where there is a dependence on a single income.

This is a good model to start thinking about how pensions can work for women. Women in relationships with husbands and partners (of either sex need to be able to consider the joint household income a joint asset. This is particularly the case when relationships that led to two people living under one roof – end. This happens more and more when couple are in retirement, divorce and separation are not the exclusive misery of youngsters.

But settlements when households split (especially when there is no formal marriage), often leave pensions out, which means that women are almost always the losers. Too often, men walk away with the big liquid asset – the pension, while women often find themselves reliant on scraps earned from careers of caring – but not earning.

This is where financial education really can be useful. I’m not talking about the Janet and John stuff advocated by pension providers (which focusses on saving more and not much else). I’m talking about a man taking responsibility for the retirement of both himself but his other half (this goes for married and common law husband and for a lot of gay relationships too.

The kind of things that men should be thinking of start with life assurance – in trust for the partner and continues with pension planning for two, that means thinking about what the household income needs are and it means thinking about what will be left over if the principal earner dies first.

It also means women being surer of their ground so they can demand protection from their partners both while he is working and after he stops. It means her being aware to an ongoing right to a proper share of his retirement income if he has the bigger pension and separates (whenever this happens). In particular, I’d like to see products like single life annuities only being purchased with the partner’s documented assent.

Finally, there is the thorny issue of state pensions from which women consistently get short-changed. The state pension age increases that form the complaint of WASPI, were introduced because of a wide raft of equalisation measures that include GMP equalisation and the introduction of unisex annuities. The original five year difference between male and female retirement ages was deemed illegal under sex equality legislation, but it was there for the reason that women generally got a lower state pension due to incomplete national insurance histories.

Whatever the rights and wrongs of the WASPI argument, we have to make sure that women are more aware of their entitlements and better equipped to maximise their state pension through good management.

Steve Webb has been very good at advising women to continue to claim for child benefit even when they are means tested out of them, women need to be constantl8y vigilant that they are not needlessly missing out on state pension credits and that they are rewarded for the caring they do. Likewise, women need to be aware of their right to pension credit where they do not have substantial entitlements to private pensions and don’t have the full state pension.

These are things that women need to know about pensions, for they have far more control of income from their spouses and partners than they often think, and they are often more likely to get financial self-sufficiency from the state than from private pensions – which depend on earnings.

Ironically, for all the noise it makes about the pension gender equality gap, there is relatively little that the private pension sector can do to reduce it, this is an area that requires  “girl power” and respectful partners.






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“Using dogs to connect Covid’s not to be sniffed at” – the C19 actuaries 68th bulletin


Friday Report: Issue 68

By: John Roberts & Adele Groyer

COVID-19 Actuaries Response Group – Learn. Share. Educate. Influence.

COVID-19 is still one of the hottest topics for scientific papers and articles. The COVID-19 Actuaries Response Group produces an update on the last Friday of every month with a summary of key papers, articles and data.


FDA authorisation of vaccines for children (link)

On 17 June, the U.S. Food and Drug Administration authorised emergency use of the Moderna and the Pfizer-BioNTech COVID-19 Vaccines in children down to 6 months of age. Previously the authorisation had extended down to 18 years of age for Moderna and to 5 years of age for Pfizer-BioNTech.

The effectiveness and safety data evaluated and analysed by the FDA were generated in ongoing, randomised, blinded, placebo-controlled clinical trials. Effectiveness was assessed primarily via measuring immune response in the children and comparing these to immune response observed in young adults. Analysis of the occurrence of COVID-19 cases was determined not to be reliable due to the low number of COVID-19 cases that occurred in study participants.

Safety was assessed via follow-up of at least 2 months among both recipients of vaccine and placebo and longer-term safety follow-up is ongoing for the study participants.

Moderna reports on successful trials of Omicron specific vaccine (link)

Phase 2 and 3 trials of an Omicron specific booster vaccine mRNA-1273.214 by Moderna have met all primary endpoints (including safety) the company has announced, when its antibody response against Omicron was compared with a booster dose of its original Spikevax vaccine mRNA-1273.  In addition, the vaccine gave an improved response against the ancestral strain and all prior common variants compared with its original vaccine.

Additionally, Moderna expects that the effectiveness will be more durable than using the original as a booster, and intends to provide a 3-month update in due course.

The company is hopeful that the vaccine will be a lead candidate for use as a booster this autumn.


Frequency of Sequences of Omicron Sub-lineages

In previous Friday Reports we noted the proportions of sequenced samples of the newer Omicron sub-lineages. CoVariants provides easily accessible visualisations of sequence frequencies. It is important to be aware that sequenced samples may not be representative of total cases, and that the data is dependent on countries submitting samples to GISAID.

In the United States and Portugal, the Omicron subvariants shown in blue are now more common than the older Omicron ancestors shown in purple. In the US clade 22C (BA.2.12.1) is most common. In Portugal clade 22B (BA.5) is the most commonly reported variant. In the UK, around half of samples are from the newer Omicron sub-variants, primarily BA.5 but with some BA.2.12.1. In Australia, BA.2 is still dominant.

The latest infection survey report for the UK (link) shows the proportion of people testing positive for COVID-19 variants with S-gene target failure (‘SGTF’). BA.2 does not have SGTF, while BA.4 and BA.5 do. The data suggest that the prevalence of the new sub-variants has increased over time and BA.4 and BA.5 now represent around two thirds of total infections. (Note that this is a weekly random community survey and therefore not affected by rates of testing in the community.)

It can be seen though that the BA.2 variants are not falling away in the same way that we previously saw when a variant is usurped. This is likely to be the effect of BA.2.12.1, which as previously noted is more common in the USA and also does not exhibit SGTF.

Variant-specific symptoms of COVID-19 (link)

A pre-print paper has used data from the REACT-1 community infection prevalence study to compare symptoms associated with infection with different SARS-CoV-2 variants. Participants were selected randomly from NHS patient registers and were asked to provide self-administered throat and nasal swab samples for PCR testing. Participants also completed questionnaires which included questions on demographic variables, behaviour, and a list of 26 potential recent symptoms.

Data from June 2020 and March 2022 was used, partitioned into different phases depending on which variant was dominant at the time. Between January and March 2022, sequencing data was used to identify participants infected with BA.1 and BA.2. In total, over 1.5m participants, of whom 17,448 were swab positive, were included in the study.

Logistic regression models were used to estimate the risk of PCR swab-positivity for each variant, conditional on experiencing each of the 26 symptoms.

The authors found that loss or change of sense of smell and taste were less predictive of swab positivity for Omicron than for other variants, and that cold-like symptoms were more predictive for Omicron than for previous variants. When comparing BA.2 with BA.1, they found that those with BA.2 were more likely to be symptomatic and were more likely to report that their symptoms affected their day-to-day activities ‘a lot’.


Immune boosting by Omicron depends on previous SARS-CoV-2 exposure (link)

A study by Imperial College London investigated antibody, T cell and B cell immunity against Omicron BA.1 (Pango lineage B1.1.529) and previous variants of concern among 731 triple vaccinated healthcare workers. They identified individuals with different combinations of SARS-CoV-2 infection and vaccination histories to study the impact of immune imprinting.

In all infection history sub-groups, immune responses to Omicron were lower than against previous variants (see far right box of image). Those who were infected during the ancestral Wuhan Hu-1 wave showed a significantly reduced immune response to Beta, Gamma and Omicron compared with infection-naïve participants, as indicated by comparison of the blue (uninfected) and the red (previous ancestral infection) data points in the figure below.

The study also looked at immune responses among healthcare workers who suffered breakthrough infection during the Omicron wave. While those who were infected only with Omicron gained an immunity boost against all variants, as indicated by the black boxes below, prior infection with the ancestral Wuhan strain limited any such boost as indicated by the similar levels of the red and pink boxes. The authors conclude that immune imprinting may impair immune response to future infection.


Clinical outcomes for Omicron vs Delta in California (link)

A preview study reported in the journal Nature shows that Omicron variant infections were associated with substantially reduced risk of progression to severe clinical outcomes relative to Delta variant infections within a large, integrated healthcare system in southern California.

Adjusted hazard ratios (aHRs) for any hospital admission were 0.59 (95% confidence interval: 0.51-0.69) and 0.21 for death. Among cases not previously vaccinated against COVID-19 the aHR was 0.40 (0.33-0.49) for any hospital admission and 0.14 (0.07-0.28) for death. Additionally, infections with the Omicron BA.2 subvariant were not associated with differential risk of severe outcomes compared with BA.1/BA.1.1 subvariant infections.


Increased neurodevelopmental disorders following exposure to COVID whilst in the womb (link)

A study of over 7,700 babies delivered between March and September 2020 in the USA has revealed that the 222 who were exposed to COVID before birth were more likely to be diagnosed as having a neurodevelopmental disorder during their first year of life.

After adjusting for demographic and clinical factors, for all births the odds ratio for those whose mothers had tested positive was 1.86 (95% CI 1.03 – 3.36), but this increased for those where the positive test was in the third trimester to 2.34 (1.23 – 4.44).

Clearly the confidence intervals around these results are wide, reflecting the relatively low number of births where the mother is known to have had COVID, and the paper notes that follow-up studies are needed to confirm the results.

Effectiveness of Evushield during the US Omicron surge (link)

A pre-print study based on data from the national health care databases of the US Department of Veterans Affairs has shown that Evushield is an effective intervention among veterans who were immunocompromised or otherwise at high risk for adverse COVID-19 outcomes. The study took place between January and April 2022 and compared a cohort of 1,848 patients treated with at least one dose of intramuscular tixagevimab/cilgavimab with matched controls selected from 251,756 patients.

Patients treated with Evushield had a lower incidence of SARS-CoV-2 infection (HR 0.34; 95%CI 0.13-0.87), COVID-19 hospitalisation (HR 0.13; 95%CI 0.02-0.99), and all-cause mortality (HR 0.36; 95%CI 0.18-0.73) compared to matched controls.

Long Covid

Risk of Long COVID associated with Delta versus Omicron variants (link)

A UK study used the ZOE app to to study the risk of Long COVID (LC) associated with Omicron compared with the risk from Delta infections. LC was defined as new or ongoing self-reported symptoms 4 weeks or more after the start of acute Covid-19. Omicron infections were deemed to be those occurring in the period 20 December 2021 to 9 March 2022, while people testing positive in the period 1 June to 27 November 2021 were deemed to have Delta infection. Participants were those testing positive in the relevant periods. All participants were vaccinated, with no record of prior SARS-CoV-2 infection.

Among Omicron period cases, 2,501 (4.5%) of 56,003 people experienced LC and, among Delta period cases, 4,469 (10.8%) of 41,361 people experienced LC. After adjusting for vaccination timing to allow for effects of waning immunity, Omicron cases were less likely to experience LC, with an odds ratio ranging from 0.24 (0.20–0.32) to 0.50 (0.43–0.59).

While the relative risk of LC is lower with Omicron, the very high numbers of infections associated with this variant mean that absolute numbers of LC cases will be high.


Long COVID numbers increase in the UK (ONS) (link)

The monthly study on those with Long COVID (LC) symptoms in the UK continues to show rising cases. Whilst the study has come under criticism for relying on self reporting of LC symptoms, the trend appears clear.

With a threshold of 4 weeks of symptoms post an infection to be included in the figures, with the significant BA.1 and BA.2 waves now beyond that time period it is maybe not surprising that there has continued to be an increase.

Of the 2.0m people now estimated to have LC symptoms, over 70% (1.4m) say that the symptoms adversely affect their ability to undergo day-to day-activities, with 20% saying that they have been “limited a lot”.

In terms of length of symptoms, over 800,000 are estimated to have had them for over a year, with over 350,000 now having experienced symptoms for over two years (and thus having been infected in the initial wave in March and April 2020).


Infection Fatality Rate (IFR) analysis shows higher levels in less developed countries (link)

Many less developed countries appeared to have lower infection fatality rates (IFRs) and COVID deaths than more developed ones, whereas intuitively less sophisticated healthcare systems, greater poverty etc might have suggested the opposite.

However, issues around testing and the fact that many of these countries have much younger population profiles (and thus have lower IFRs, all other things being equal) have led many to be sceptical of any published data.

A study published in the BMJ has analysed excess mortality by country and concludes that in reality IFRs are indeed much higher in less developed countries in the pre-vaccination period and were up to 3 times higher. Of interest, the relative difference appears to be higher at younger ages.


With the initial vaccination of populations having been rolled out much faster in richer countries, this contrast will only have increased during subsequent waves of the virus. Similarly, ongoing booster programmes will prolong the divide between the richer and poorer countries as the latest variants circulate the world.

Outcomes of SARS-CoV-2 reinfection (link)

A pre-print study used the national health care databases of the US Department of Veterans Affairs to show that, compared with people with first infection only, those who are reinfected have increased risks of all-cause mortality, hospitalisation and other adverse health outcomes.

The study included 257,427 people with first infection only, 38,926 with two or more infections and 5,396,855 people with no record of infection. The average age was 61 in the infected group.

The study compared incidence of outcomes in the 180 days following reinfection with incidence of outcomes in the group that had only one infection. The observation period started for the single infection group on an assigned “reinfection” date, based on the typical lag between first and second reinfections in the reinfected group.

All-cause mortality was around double and risk of hospitalisation was trebled in the reinfected group compared with the single infection group.

Outcome HR (95% CI)
All-cause mortality 2.14 (1.97, 2.33)
Hospitalization 2.98 (2.83, 3.12)
At least one sequela 1.82 (1.78, 1.88)
Cardiovascular 2.36 (2.23, 2.51)
Coagulation and hematologic 2.22 (2.05, 2.41)
Diabetes 1.62 (1.49, 1.76)
Fatigue 2.4 (2.22, 2.58)
Gastrointestinal 1.69 (1.58, 1.8)
Kidney 1.7 (1.52, 1.9)
Mental health 1.97 (1.9, 2.04)
Musculoskeletal 1.29 (1.2, 1.38)
Neurologic 1.39 (1.32, 1.46)
Pulmonary 2.49 (2.34, 2.65)


The study also found that, compared with non-infected controls, the risk of adverse outcomes increased in a graded fashion according to the number of infections. Other commentators have suggested that suffering multiple reinfections may itself be an indicator of compromised health.

The authors conclude that reinfection adds non-trivial risks of all-cause mortality, hospitalisation and adverse health outcomes. Therefore reducing the overall burden of COVID-19 death and disease will require strategies for reinfection prevention.

It should be noted, however, that this pre-print has attracted a great deal of comment and scrutiny on social media, both because of the importance of the topic and concerns about aspects of the data and methodology. We expect that formal peer-review will likely result in some modifications to the paper.

ONS Infection Study (link)

Returning to the ONS infection prevalence study referred to earlier, it confirms that we are now in a further wave, following a bottoming out of infection levels around a month ago. Over the last two weeks the increases have ranged from around 70% in England and Wales with a doubling in Northern Ireland and Scotland.

It should be noted that the most recent week’s increases have been lower in England and Wales, giving some optimism that we will see a peak well short of those seen earlier in the year (eg 7.5% in respect of BA.2 in England).

Hospital Admissions Increase Too

Along with the rise in prevalence, June has also seen a significant increase in admissions, with a doubling since the beginning of the month. Currently the daily average is running at around 960, and is likely to rise well above 1,000 with the current growth of 41% suggesting a doubling every 14 days.

As can be seen from the chart below, one further doubling would take us back broadly to the level of admissions seen during the BA.2 wave (and indeed the BA.1 wave before that).

It should be noted that not all admissions with a positive COVID diagnosis are primarily being treated for it. The proportion of COVID beds occupied where it is the primary diagnosis was typically around 75% prior to Omicron, but is now at a much lower level of just under 40%.

And Finally…

Using dogs to detect COVID is not to be sniffed at  (link)

A dogged search for an offbeat story to finish with led us to this scientific paper published on the American website PLOS One.  A team of French researchers has concluded that sniffer dogs can be very accurate in detecting COVID based on samples collected from the armpit or nasal passage, as the results below show.

Amongst the points noted by the researchers are that “the dog handlers, (and the dogs…) were blinded with regards to the COVID status”, and that the dogs were given toy rewards.

The practicality of using dogs to directly assess COVID status is discussed, though it notes that some people’s fear of dogs may make this difficult (presumably direct sniffing of people’s armpits is not envisaged), and that the time for training and certification of an adequate supply of animals would be an issue too. Nevertheless further studies are being undertaken to see whether there are suitable applications by the French High council for Public Health.

Total, n Positive sample, n Sensitivity

(95% CI*)


(95% CI*)

Dog 1 (Oxmo) 89 29 90% (73 to 98) 95% (86 to 99)
Dog 2 (Jinko) 203 73 100% (95 to 99) 86% (79 to 92)
Dog 3 (Leyko) 144 42 95% (84 to 99) 91% (84 to 96)
Dog 5 (Joye) 226 70 100% (95 to 100) 90% (85 to 95)
Dog E (Ortie) 23 7 71% (29 to 96) 100% (79 to 100)



24 June 2022

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Call out the Karma Police – (they’re at it again)

As if the Karma Police weren’t busy enough, we have more work for them!

Legal & General, like Hargreaves Lansdown. have found a way to demand money of us to swell their coffers in aid of narrowing the gender pay gap.

L&G say “give us your money”

One solution , according to L&G , is for Government to change the rules

“We are.. making a call for regulators and lawmakers to look at reform; including dropping the minimum age of auto-enrolment, abolishing the auto-enrolment minimum salary threshold and providing further support to help families with childcare costs.”

Of course! Force women to pay more into their pensions and fill up those nasty little pots.

Call the Karma Police!

This is self-serving nonsense from L&G. The gender pay gap does not ease because low-earning women aren’t saving into L&G pension pots!

We cannot have a DC system providing gender pension equality until we have gender pay equality. Career earnings of women are on average much lower than men because of the life choices that women are required to make. Apart from the biological implications of giving birth, there are societal norms about childcare which have developed over centuries and are not going to change at anything but the “glacial pace” that L&G worry about.

Which is why smart friends of mine think of pensions as a household item and urge us to think of the joint pensions of a household as equal possessions, as the house is an equal possession – when jointly owned -regardless of whose pay is used to service the mortgage.

If women felt they owned half their partner’s pension, they would not feel as financially vulnerable as they do. It is a lot easier to change attitudes over the ownership of pensions (especially if households split) than it is to engineer equal pension entitlement.

Call the Karma Police and arrest L&G’s marketing department! They are imposters, fake feminists, greedy for easy assets from pension taxes from the lowest earners. Rather than playing nicely and helping women combine their small pots, they want to strip them of what little disposable income that comes their way, to turn small pots into profitable pitchers.

What women need to get even is a proper share of the households’ assets, including a right to half the pension assets. They need a full state pension , independently of their partner and they should not need to go to court to get it.

Where women choose to have financial independence, they should not be patronised by hand-outs but paid on merit and on the responsibility of their jobs

Then there’s this

“We know that women feel significantly less confident, and are more likely to struggle on knowing where to start, when it comes to making financial decisions. Industry and government must therefore work together to ensure education and engagement around savings and investments increase. For example, too few know about the flexibility that couples have in being able to contribute to their partners’ pension while they are on parental leave. This is something that can significantly reduce a women’s pension shortfall.”

We’re using that same facility that Hargreaves Lansdowne were suggesting to sort the gender pension pay gap. Men pay into woman’s personal pension – queue MaPs

If you are not earning enough to pay Income Tax, you can still receive tax relief on pension contributions up to a maximum of £3,600 a year or 100% of earnings, whichever is greater, subject to your annual allowance.

For example if you have no income you can pay in £2,880 and the government will top up your contribution to make it £3,600.

Another person, like your partner, could also pay into your pension for you.

Note , MaPs do not make a big deal of that final paragraph because it hardly ever happens because the earning partner is usually struggling to pay into their pension when the spouse has no earnings. This fixation with equalising pot sizes is down to the insurer’s myopia. For Legal & General , just as with Hargreaves Lansdown, the pension gender pay gap is measured  by the size of the DB pot.

But the pots of two common law partners are a joint asset just as are rights to pensions. just as are the the illiquid assets of house and home and it is infinitely more important that we help women claim their fundamental right to half of these household rights than chase the chimera of equal  independent liquid assets.

As a man, with a fair amount of pension owing to me and a substantial DC pot to my name, I am fully disclosing my pension income and wealth to my partner and she is doing the same to me. It is our mutual non-destruct treaty, stopping us press the nuclear button of separation! And frankly, I feel considerably better about having equal rights to what the future brings than I do in trying to even any gender pension gap between us.

I call on the Karma police to enforce full disclosure .  Stella, your dashboard is my dashboard, and vice versa. We plead innocent – 1 Coleman Street is the other side of the City officers!

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21st Century Pensions – how it all began

In my beginning is my end

I happened, purely be the  serendipity of social media to come across this post remind me of the genesis of 21st century pension policy in  a White Paper called “simplicity, security and choice“. This was the basis of the Pensions Act 2004. The Pensions Act 2004  provided the platform for pensions to make progress in the 21st century.

Simplicity – Security and Choice

This White Paper introduced us to the concept of the Pension Regulator (tPR) and The Pension Protection Fund (PPF)

Before the establishment of the PPF and the Pensions Regulator, occupational schemes were regulated by the Occupational Pensions Regulatory Authority which ruled the roost between 1995 and 2005 when tPR succeeded it. OPRA had wide ranging powers but was insufficiently resourced, some would say that tPR is over-resourced and under-powered. Regulators have an infinite capacity to expand!

While TPR’s development since 2005 has been controversial, the Pension Protection Fund, has been a model of a state pension scheme that has worked with the private sector to restore consumer confidence. It’s architects should be very proud of what it has become.

Alongside the PPF, the 2004 act , which grew out of this paper, scrapped the one size fits all Minimum Funding Requirement with Scheme Specific Funding which still survives and looks like it will survive the DB funding code which now looks to become so diluted as to be but a ripple in the stream.

Consumer Protections

The paper also led to important consumer protections in act, meaning that people who left occupational schemes within the first two years, vested a pension rather than a cash refund of contributions. Members were given consultation rights on changes to their pensions and most importantly priority orders were established to ensure that pensioners were put first when a scheme got into trouble. Employers were required to meet their pension obligations and could no longer wind-up a scheme without full funding.

But less good news for consumers was the allowance for schemes to further limit increases in payments of pensions, which has eased employer liabilities but means that at times like now – members are less protected against high inflation than previously.

Pension freedoms

The paper even pointed towards developments in pension communication which are arriving today. It called for Combined Pension Forecasts – the precursor of the dashboard which would have allowed us to see our prospective state pension and our occupational pension on one statement. Nearly 20 years will pass before this becomes a reality!

And the paper calls for more flexibility in the way we can draw our retirement benefits. While I’m sure that the authors of “Simplicity, security and choice”, hadn’t the pension freedoms in mind, they did recognise that new structures for the way we were paid our pensions would emerge.

Hot on the heels of this paper we had the Turner Commission which looked at adequacy and  came up with radical solutions to get everyone saving for their retirement. That was glamorous, this White Paper isn’t. But my thinking is that we would not have had the confidence to stage auto-enrolment had it not been for the measures contained in “Simplicity, security and choice

The history of pensions

I’m very grateful to the Pensions Archive Trust, whose Chair is Alan Herbert and CEO Grant Lore – two good people. They have brought me back to the beginning of my interest in pension policy. But of course the history of pensions is a lot longer than the scope of time since this White Paper and I look forward to delving into the history of this subject in weeks and months to come.

Thanks too to the National Archives, for making this fascinating White Paper available again.

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We need courage not legislation – to sort out small pots


Courage in adversity


Dress it up as the industry may, the progress report of the Small Pots Working Group is a disappointment. The Group was set up to find a working solution that commanded consensus from the ABI, PLSA and the key participants offering workplace pensions, it has failed to do this.

After three years it has reached this  conclusion.

“A whole of market solution must also include those pension pots in contract-based schemes, and transferring these pots ordinarily requires the consent of the owner. It is therefore the view of the industry representatives that this will require legislation”

The conclusion from the key participants is that the various solutions under consideration since the first report in December 2020 are all too hard. A super consolidator would be an administrative mess and no one could agree on one provider to lead on this. Nest would have been the obvious candidate, but Nest seems to have pretty well withdrawn from the Group.

The pot follows member idea and the default consolidator model, both have push and pull variants, and both could work – were it not for a failure among providers to put the common good above individual provider considerations.

Most disappointing of all, the “member exchange” pilot, for which many had high hopes appears to have disintegrated into a feasibility study between NOW and Smart Pensions. People’s Pension apparently withdrew from the pilot because they coveted their exclusive protected normal minimum retirement date, Nest claimed it could not do bulk transfers and Cushon, who are now rivalling Smart and NOW in size do not appear to have been involved. As for the insurers and the ABI, they do not appear to have come to the table.

Like with the Pensions Dashboard, the industry made a promising start and like with the Pensions Dashboard, it soon got caught up in the detail. The visionaries got subsumed by the concept of “potential member detriment”, while those in charge of the commercials for all the major players saw compulsory pot consolidation as a risk rather than an opportunity.

No doubt the pensions industry will take pride in the latest numbers from the ONS that show shows an increase in overall DC membership by just over 1 million members over the quarter to 31 December 2021. This increase brings total DC membership number to 26.7 million.

However, if you dig a bit deeper in the numbers, you can see that the driver of this 4 per cent quarterly increase has predominantly been an increase in deferred members rather than active members, with respective increases of 6 per cent and 2 per cent. These figures highlight both the success of auto-enrolment in increasing membership, but the rising problem of small DC pots and the consolidation ‘nettle’ that the government and industry is going to have to grasp.

The problem is focussed on a small group of providers with huge numbers of  small pots on which they have to pay levies that will ultimately make them unprofitable unless they put up their prices. Consumers will continue to struggle with “small pot fatigue” and will inevitably over pay for unnecessary administration , disclosure and regulation. The Government is now back with a problem that it thought it had outsourced and without any legislative window, it is difficult to see small pots being properly addressed this parliamentary term.

This is a dark day for the PLSA, ABI and the pot providers. They may blame the DWP for handing them a poisoned chalice but the DWP will rightly point out that this was a problem they set out to solve for themselves – and failed. Consumerists have every right to be disappointed, this shows an inability of pension providers to solve a complex problem with energy and pragmatism.

Having started out boldly, the next steps are so cautious it is hard to see consolidation happening at all.

The Group hopes that the outcome of the next phase will prioritise a model (or models) to take forward and make progress on understanding what changes are needed to implement it.

All that appears to have happened since the last report is a lot of jaw-jaw, set out as a smokescreen in endless tables, flow diagrams, risk analysis, and considerations of parallel initiatives all of which adds up to the square root of anything.


None of this work has more than passing relevance to the aims of this project which are very simple, to improve outcomes by consolidating people’s pots. All of these workstreams are no more than excuses for inactivity and temerity from the working group.

Let’s be clear, bulk transfers of deferred member rights between occupational schemes is legal and happens all the time. It is how the occupational DC market is consolidating. Member consent is not required, there is simply a requirement to get on with things. 

So why does the working group now need legislation.?

Let me be the first to challenge the reasoning behind this admission of failure. The group claims legislation will be needed to:

compel all in-scope schemes and providers to take part in implementing the preferred solution

Why should compulsion be necessary when it is in the interests of a small group of commercial providers to reduce small pots (the report suggests that not doing so is too awful to contemplate).

So what if only a few providers agree to participate? Wouldn’t it be more painful to be excluded than included in the program? All the evidence from successful data sharing exercises is that those who stay outside are those who suffer. We do not need a “whole of market solution”, we just need free-flow of small pots between a few master trusts with the option for other schemes to join the venture as it suits them.

To enable contract-based providers to carry out transfers without member consent and to broaden the scope for transfers without consent from occupational pension schemes

This idea appeared in the ABI’s recent blueprint for moving AE along. It is an absolute non-starter. Trustees have always had the power to do bulk transfers, GPPS are a collection of individual policies owned by individuals, there is no power to bulk consolidate or even individually consolidate personal pensions without member consent. If insurers are holding out for this to happen, then it is hardly surprising the project has ground to a halt. We do not need a whole of market solution to include personal pensions, much as the insurers would like it.

Define the deferred pots and schemes in scope

Pick a number between £100 and £5,000 and get on with it

Set standards to identify eligible receiving schemes

Simple – the master trust assurance framework provides the standard

Define the liability model for trustees, providers and others involved in the relevant processes

The sweat on the brows of the risk officers at the thought of doing something as radical as small pot consolidation is evident in every word of this sentence. The DWP should make it abundantly clear that it will stand foursquare behind the consolidation project and provide master trusts and any other trustees who participate in bulk switches which have clearance from tPR, with safe harbour status. This does not need legislation; it needs a regulator with courage and providers acting with conviction.

Bulk transfers of deferred members of occupational schemes have been going on for decades. They are key to the consolidation process, small pot consolidation is just a part of this,

Let’s remind ourselves, in the words of this report – that there is a cost of delay which exceeds any member detriment from the proposed solutions under consideration. In the words of the report

The longer this issue takes to resolve, the greater the number of small pots that will need to be moved and the greater the risk that savers will experience sub-optimal outcomes.

Cross industry constipation

I feel sorry for the committee’s chair Andy Cheseldine and for Adrian Boulding,  the driving force behind the small pots working group. They have been swamped by vested interests, they cannot be blamed for the neutering of what was once their dynamic venture.

Tellingly, the report is accessible off the ABI website and it lands days after the ABI’s blue print for AE (which I found equally self-serving). Since when has the insurance industry had control of the occupational pensions agenda? How can the Minister for Pensions give them the red card so decent people  can get on with helping consumers, rather than themselves?

My recommendations to the Group are

  1. Get the trade bodies out and return the project to the commercial entities that have most to gain by getting this sorted out.
  2. Nest must play a central role and it must be enabled to do bulk transfers.
  3. Providers should be able to operate in a safe harbour as a result of clear support from tPR and the DWP’s policy unit.
  4. New blood be introduced to the group.
  5. The objective of the group be clear – industry driven solutions within the current legislative framework.



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Hargreaves Lansdown apprehended by Karma Police

This is what you get

According to a recent FOI request made by HL, 14,500 girls aged 15 or under had money paid into a pension for them compared to 15,300 boys in 2019-20. The gap is closing. In 2015-16 only 13,800 girls had money paid into a pension for them compared to 15,800 boys.


Parents and grandparents can get their loved one’s retirement planning off to a flying start by making contributions to a Junior SIPP.

You can contribute up to £2,880 per year to a child’s pension (or any non-earner for that matter up until age 75) and they receive tax relief topping it up to £3,600.

Actuarial Post 


I suspect quite a few people are getting fed up with special pleading from financial services firms to address societal issues by buying their products. I am one!

I was pleased to see that super-sleuth actuaries Stuart McDonald and Adele Groyer (known to us as leading lights of caught Hargreaves Lansdown with their statistical pants down.

There is a gender pay gap, but it’s not created by loaded parents pre-funding their little darlings SIPP accounts (and taking advantage of one of a source of tax-relief that frankly is an abuse of privilege).

Infact the lucky infant SIPP holders  are more male than female in precisely the proportion that they came out of the womb (51.3% v 48.7%). Why more males get born than females is not a societal but a genetic question.

The pensions gender gap is a serious issue and arises out of very real societal injustice (women do not get the same opportunities and pay as men). It leaves many women in real poverty in later age, especially where they are bereaved, divorced or deserted.

Sadly, the more important gap at birth is the gap between rich and poor parents.


Hargreaves should not indulge in hand-wringing of this kind. Not only is the hook line for its SIPP marketing campaign trivialising the issue,  it’s fake news. The campaign brings both the issue and Hargreaves into disrepute.

Thankfully , the Karma Police , in the form of Stuart and Adele, are a lot smarter than the people who dreamt up this particular campaign.

Thom Yorke:

Karma is important. The idea that something like karma exists makes me happy. It makes me smile. Karma Police is dedicated to everyone who works for a big firm. It’s a song against bosses.


Ed O’Brien:

When someone in the band behaved like an a–hole, one of the others always said: ‘The Karma Police is gonna get you.’

Here’s the 2003 Glastonbury version – as it’s that time of year

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Positions on redress for British Steel workers harden.

The FCA is in an awkward position as it consults on the redress it is looking to pay to British Steel workers who claim they were advised poorly to leave the BSPS scheme.

On the one hand they have disgruntled IFAs who see substantial claims coming their way for actions they were no part of or for advice that they feel they gave in good faith but is now questioned because of the special circumstances of the BSPS redress proposals.

On the other, they have disgruntled steelworkers who argue that the time elapsed  since Time to Choose has allowed a toxic compensation culture to grow up in steel towns leaving many excluded from the redress scheme and subject to what they see as arbitrary and opaque payments from FSCS or through FOS. Although there is general acceptance of the redress scheme as fair going forward, the steelworkers argue that it should also cover existing claimants whose claims should be reviewed.

Sadly the compensation culture which both IFAs and steelworkers accept has developed in steel towns has led to a breakdown in trust, where trust has been earned. This has to be expected – it needs to be managed.

The FCA face a complex situation where IFAs are arguing with the benefit of five years hindsight, where markets and annuity rates are extremely fluid , where large numbers of claims have been settled and may need to be reviewed and where many claims will be made, some bogus and some genuine claims won’t be made, because of loyalty to advisers – or simply because some people don’t claim.

Recognising all these dynamics will be tough for the FCA, though many – myself included – will argue that its failure to act earlier , on market intelligence – is the cause of the problems it faces today.

IFAs organising opposition to the redress scheme.

Impacted IFAs have created a lobby group called the Association of Pension Transfer Specialists (APTS) who have produced a well researched argument that has been submitted to the Work and Pensions Committee in parliament.

It argues that a combination of a weakening employer covenant to support BSPS, improved CETVs as a result of a lower discount rate applied to scheme liabilities and consequently a low target return for the reinvestment of transferred money made it good advice for many members to transfer.

Despite this , the FCA continues to argue, that on the basis of the evidence it has collected from IFAs, 46% of the transfers were poorly advised.

Andrew Bailey, in his evidence to the WPC referred to the methodology  cited by the APTS when explaining how the FCA assessed the quality of advice.

Bailey went on to explain that the FCA initially  had no data on which to act. Most recently Nikhil Rathi, the new FCA CEO has reinforced Andrew Bailey’s excuse for FCA’s lack of proactive intervention prior to and during Time To Choose on the lack of real time data available to the FCA. Although the FCA has the power to create rules to get real time data,

collecting data from firms in real time would likely introduce additional cost for firms and is less valuable to us than the collection of aggregate data on a periodic basis…

 firms with full permissions to advise on pension transfers are currently required to provide us with data about their activities (and those of their appointed representatives). These data include numbers of customers advised to transfer, transfer values and revenue generated from pension transfer advice. Collected every six months on a backwards-looking basis, these data can be used to inform our supervision of the market.

The FCA’s “backward-look” doesn’t however explain how long it took for it to come up with a redress scheme, nor indeed the delay in banning contingent charging , nor its inability to work with tPR on protecting members when the RAA was being drawn up, nor its inability to respond to the warnings from the media which grew throughout the summer and autumn of 2017. In short, the FCA were blind-sided by the shortcomings of a data driven approach that took no account of the vulnerability of Tata’s steelworkers or the urgent timescales of the RAA.

So the FCA may be considered by many IFAs to have colluded in the transfer activity it is now seeking redress for. Did the FCA lead them on?

We hear that 300 IFA firms are being invited to a meeting to discuss the proposed redress scheme which the FCA reckons will see 1400 former BSPS members get £71m in redress.

I expect IFAs to argue from the position laid out by the APTS and question how nearly half of the advice could be deemed to be poor when their analysis of the CETVs on offer suggests that they would generally be attractive.

Arguing from a moral high-ground – as the ATPS is doing , shows that the many IFAs who practice as transfer specialists take pride in their work and are extremely professional in their approach.

Indeed we know that a large number of steelworkers not only felt well advised , but got good advice. Many steelworkers who are being urged to come forward and claim against their IFAs are not doing so. We should not assume that because 46% of the advice was bad that 54% wasn’t good.

But in arguing from a professional standpoint , they risk making the same mistake as the FCA did. The transfers made by many BSPS members were made by people who often had no means to manage the financial opportunity and were, in any event, pressured into decisions by time, distrust and high pressure sales tactics. The professional arguments fall away when you talk to the steelworkers.

Not only were steelworkers not ready to understand what they were giving up but many were in no position to take advantage of the financial opportunity of the CETV.

The redress program is going to have to make extremely difficult judgement calls going forwards and do so, in the face of a determined and well organised group of IFAs.

And the IFA’s are only part of the FCA’s challenge. Now let’s look at what is happening among steelworkers.

Steelworkers arguing for existing claims to be reviewed.

The general position as I understand it , is that steelworkers are generally happy with the redress scheme. This is how Rich Caddy opens his response to the FCA’s consultation

The proposed redress scheme has been well constructed with the aim of seeking 100% redress for members who have not yet raised a complaint

The problems centre around those who have made complaints and had their claims calculated and paid either by the IFA or FSCS.

Claims against IFAs and against FSCS have been made and settled for some years now. These claims will not form part of the redress scheme which is worrying many steelworkers who see the payments made to them as arbitrary and inconsistent.

The FCA is now facing calls from steelworkers to include in the redress scheme,

  1. People whose compensation has been reduced by fees from lawyers and claims companies
  2. Steelworkers who have transferred but get no compensation for the cost of advice (due to having no adviser)
  3. Steelworkers whose compensation has been cut by a notional tax-charge (which isn’t understood)
  4. Concern that the compensation was calculated by advisers who the steelworkers are claiming against ( a conflict in their view)
  5. “Insistent clients” (who transferred despite being advised not to)

Not all of these demands are equally compelling, but the list shows how confused claimants have become. FSCS in particular, stands accused of being obfuscatory in explaining the rules for calculating compensation. Many claimants believe they have been tricked out of compensation to which they were entitled.

There has indeed been a  growing “compensation culture”  created by Claims Management Companies (CMCs). Steelworkers claim that this has been allowed to develop because of the slowness of the FCA to put in place a proper redress scheme.

And CMCs are now very much part of the problem. According to the Financial Services Compensation Scheme, 18% of compensation awarded to BSPS members through third-party representatives has been paid in fees to these firms. That represents £3.2m.

In his response to the FCA’s redress scheme proposals, Rich Caddy explains how the CMCs have prospered. (Rich is himself a steelworker).

Due to the slow response in recognising the harm, many members who were informed that something may be wrong with the advice were left unsupported. For a long period of time, the suggestion was that ‘You may have received unsuitable advice to transfer your pension, if you think you have received unsuitable advice, then contact the firm to raise a complaint‘.

So the option for members was either challenge the firm (financial professional) or recruit a solicitor or CMC (claims management company). The result of this is that members will only receive a % of the compensation they should have received.

Steelworkers confused by tax deductions

Infact, many of the steelworkers who have already  received compensation through FOS are complaining that they cannot understand the basis of the payment. FOS claims are paid after the deduction of a 15% tax charge (the effective rate of tax the FCA’s FG17-9 guidance estimates would have been paid on the benefit foregone).

This 15% is not deducted from FSCS claims , which mystifies steelworkers comparing notes.

Steelworkers confused by lack of compensation for future advice costs

Further problems have arisen where advisory firms have walked away from clients they have advised, refusing further fees. The result is that such claimants are considered as “non-advised”. Many claimants have found their original adviser is no longer trading and are claiming against FSCS. They will not get compensation for future advisory bills unless they get a new adviser

The currently toxic atmosphere is making it hard for many steelworkers to get ongoing advice and will get no redress for advisory costs because they have no adviser to help them.


Calculation of compensation and exclusions

Understandably many steelworkers are as confused by their claim as they are about the original transfer. The claims were calculated by firms against whom the claim was being made and though these calculations are overseen by the FCA, the steelworkers want an independent check.

There is a feeling that advisers are using every trick in the book to minimise claims, including using the 15% tax deduction to reduce the advisory claim (which is not tax privileged).

Finally, some steelworkers who were advised not to transfer, found a way to get their money as “insistent clients”. Some claim that they were tricked into being insistent clients so that advisers would not be on the hook if trouble arose. These steelworkers claim that they had become so vulnerable that they should not be held responsible for their action.

Redress – progress or regress?

Undoubtedly the situation in Scunthorpe, Port Talbot and elsewhere is still toxic. The redress scheme will hopefully put on a lid on the sorry BSPS RAA saga.But it will do so at great cost to many existing IFAs who risk  suffering substantially from claims.

The FCA are in a no-win situation , one largely of its own making. It now has to satisfy not just those still to claim but those who have claims made and paid, that they don’t feel happy with.

The progress out of the mess that BSPS has become is going to create a lot of collateral damage, but it is damage to the advice industry that could and should have been avoided. This blog has been saying as much for five years and is not going to stop now.

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PE continuation funds – “greed washing”?


As the investment of our workplace pensions moves inexorably into  private markets, we would do well to understand the perils (as well as the advantages) of using private equity funds and employing the very clever (but sometimes unscrupulous) firms that manage them). It is important that we read and listen to academics such as Chris Sier and particularly Ludovic Phallipou who consistently highlight the bad practice in private equity. We should also remember that good practice is also in evidence, I recently wrote about the share ownership culture being put in place by KKR and others to improve productivity and reward those who deliver it on the shop floor.

The FT is doing a good job of alerting us to the pitfalls that can beset us. One such is highlighted in today’s FT – it is the “continuation fund”.

The FT takes as examples Belron and the Access Group who we know as Autoglass and perhaps Access Payroll. Both have grown hugely over the past ten years through organic growth, acquisition and through the injection of private equity.

Access is now (privately) valued at more than the publicly quoted Sage while Belron is now valued at nearly £20bn. Belron has grown in value by 600% since 2-017, Access by a staggering 3800% since 2015. But how reliable are these valuations? The purchasers of shares in these businesses are not venture capitalists but pension funds and other institutional investors who are pouring money into funds run by the less than household names that appear in the image at the top of this blog.

The job of continuation funds is to replace capital supplied initially by the more entrepreneurial end of the private equity market, allowing those entrepreneurs to enjoy the kind of growth in valuation enjoyed by Belron and Access. But there is something rather worrying here.

Vincent Mortier, Amundi Asset Management’s chief investment officer, said this month that parts of the buyout business ‘look like a pyramid scheme’ because of ‘circular’ deals in which companies are sold between private owners at high valuations.

And who is making the money second time around?

Some of private equity’s own investors complain that the deals can in some cases serve to enrich buyout billionaires and multimillionaires at the expense of their pension fund clients by enabling them to keep levying fees. The Securities and Exchange Commission wants to reform the market, requiring more checks that valuations are fair.

And will the new investors get value for their money? The FT has concerns

private equity firms often arrange continuation fund deals without running a competitive sale process in which corporations or rival buyout groups are invited to bid. In those deals, the pension plans and other investors in the older fund selling the company say they cannot be sure they are getting the highest-possible price.

These funds look likely to be flush with cash as our workplace pensions scramble to diversify away from publicly quoted markets. There is every opportunity to make more money this way, so long as funds arrive for further continuation. The worry is whether this is sustainable.

As with much in private market investment, there needs to be a light shone on what is going on and questions asked that weed out bad practice. ESG claims are  under scrutiny, private equity valuations  should be too.

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ABI sets out how auto-enrolment can work better for insurers.



All smiles in the City but are there storm clouds overhead?

Insurers have long benefited from Government pension policy in building up their funds under management. Lobbying from the ABI has led to the establishment of personal pensions which have been used not just as a means of accumulating wealth but of stripping DB plans through transfers – lately transfers boosted by the prudential funding against member liabilities. Insurers have also grabbed the lion’s share of those choosing to opt-out of Serps/S2P. Most recently , they have benefited from the successful implementation of auto-enrolment. But all this is not enough, the ABI are now calling for 20 further reforms to further boost the profitability of its members.


There is no roadmap for the next chapter of AE, despite 5 years having passed since its last significant review.  This report suggests such a plan, and what changes we think need to happen to build on the success of the policy.

The proposals are designed to increase overall flows to insurers but reduce the number of small unprofitable pots. They argue for financial inclusion where those saving provide a profitable revenue stream but suggest exclusion of the poorest most financially vulnerable.

There is a debate to be had on whether those who are financially insecure should remain in pensions saving

First the fluffy stuff

Back in  2014 when the OFT reported 

The ABI managed to deflect the OFT’s criticism of insurers by encouraging IGCs to become consumer champions. Value for Money was to be used to help employers and savers make better choices. But, having staved off the threat of punitive measures from Government , they are now happy to consign IGCs and Trustees to a fiduciary backwater.

Detailed, technical documents such as Chair’s statements and Independent Governance Committee reports benefit from
independent professional scrutiny; their primary aim should not be to attempt to use them to engage customers, as there are other tools at industry’s disposal to deliver that.

Just what role the ABI see trustees and IGCs playing in DC governance isn’t clear.

What is clear is that the ABI’s view of the consumer journey is long on saving and short on spending. Considering the ageing of those who have been enrolled, it’s odd the proposed consumer journey looks no different going forward than it does today.

There is nothing in this consumer journey about “pensions”, the entire thrust of the journey is towards “drawdown & UFPLS” and decumulation is reduced to the receipt of benefit statements. The ABI’s view on innovation which might help the non-advised to turn pot to pension, seems stuck in pre 2015 annuity purchase.

Meanwhile VFM is given a nod as an important part of pension communication.

Government should ensure Value for Money frameworks are aligned across workplace pension schemes and are focused on improving member outcomes.

Having dismissed IGCs and Trustee VFM statements to a regulatory backwater, it is not clear what VFM reporting is designed to do other than improve voluntary savings ( aka “improve member outcomes”).

VFM reporting has long been a branch of marketing to the ABI and it’s hard to see it supporting any initiative that allows the public to determine where value is not being given for their money invested in retirement.

The nitty gritty

The ABI’s proposals are back end loaded, with the proposals on how AE can be reshaped to its advantage coming at the end of the document. But early on it acknowledges that pension taxation is already doubled in the past 20 years.

Most of this tax relief has benefited the wealthy and the ABI don’t use this paper to push for any reforms that might re-balance that. Instead, they are looking for Government to increase the taxes on small businesses paying minimum contributions and particularly on the self employed.

One idea proposed to fund pension saving is to increase Class IV NICs to 12% for all self-employed people but divert 3% of this to a pension pot if individuals also contribute to into a pension. (sic)

As far as I can see, this would be a compulsory pension tax on the self-employed with no opt-out. What you get for the extra 3% if you don’t set up a self-employed personal pension with an insurer isn’t clear.

After a nod to the potential solution to the net-pay anomaly, (which the ABI claim to have been lead in sorting), we get to the mainstream reforms they propose for auto-enrolment.

This involves getting contributions to be paid from pound one by gradually reducing the Lower Earnings Threshold. This helps insurers by increasing contributions per pot , improving overall profitability especially on smaller pots (which lose AE providers money).


We propose that year on year, the lower qualifying earnings threshold is lowered, starting in 2023/24 to signal within this Parliament that the 2017 review recommendations will be acted upon. This will be especially beneficial for the 30% of
employees who only receive pension contributions on band earnings (earnings on salary over £6,240 and under £50,270 currently). The DWP estimated that removing the lower
qualifying earnings threshold would create an additional £2.6 billion in annual pension savings

As reported on this blog earlier this month, the small pots initiative has floundered as no pilot has been agreed. Blame has been placed on the Treasury for allowing protected retirement ages to get in the way of auto-consolidation. The ABI is now looking for force majeure from Government to sort the problem it has failed to sort itself.

Government to include the small pots solution legislation in the same Pensions Act with AE eligibility changes. This legislation should also enable contract-based providers to carry out non-consented transfers.

The proposal that personal pensions can be consolidated without member consent begs the question “whose pension is it anyway”. The one distinguishing feature of a personal pension is that the pot is  the property of the policyholder rather than a trustee. This feature cannot be set aside to suit insurers when a personal pension is not profitable.

There are further suggestions for Government which are equally self-serving. This includes a recommendation to keep low earners excluded from saving, at least till the ABI has got its way on other proposals

Government to keep the earnings trigger for automatic enrolment frozen at £10,000, at least until the LET is removed and a solution to the small pots problem is in place.

The ABI scurrilously suggest that low earners may not be best served by saving into a pension at all, I wonder how many ABI members have thought through the implications of having “needs met by the state pension” – this is the language of the 21st century poor-house.

Any reduction to the earnings trigger should include an assessment of the benefit of private pension saving for those whose needs will be met by the State Pension.

And to further improve the financial metrics of auto-enrolment (to the insurer’s P/L and balance sheet) , the paper climaxes with a proposal to increase contributions to 12% of total earnings in the next ten years. For many people this will mean an increase  of band earnings from 5 to 6% and a further payroll deduction for the 6% of earnings they would now pay on earnings below the lower earnings threshold. But for employers, already struggling with massively increased NI costs, the cost of auto-enrolment would more than double in 7 years.

As if all this is not enough, the ABI finally propose an utterly cynical proposal to solve the small pots problem.

Government should launch a green paper investigating early access to pension saving in the case of significant financial hardship. This should consider expanding the list of permitted reasons for authorised payments from pension savings to
include financial hardship. Any reform should coincide with the increase of minimum pension contributions.

So, to prevent any squealing from consumerists, people would be allowed to cash in their pension pots when they chose because they claimed to be broke. This will certainly reduce small pots but at what cost? I find it hard to fathom how the ABI has the gall to float this idea which is wrong in so many ways.

Last words

The ABI clearly see auto-enrolment needing a boost. These proposals are designed to boost the profitability of the insurers, they are designed to weaken the protection of consumers and they do not even try to solve the problems people have turning pots to pensions. The principal issues that AE providers have are addressed through various measures to reduce small pots and improve the size of bigger ones. But this is at the expense of lower earners who would continue to be excluded by the earnings trigger.

The self-employed would be expected to pay 3% of earnings more in NICs to be enrolled , for which they would get no incentive but what’s currently on the table and the paper darkly hints that most poor people would be better off relying on state pensions and using whatever pension savings they might accidentally make, on relieving immediate financial hardship.

It is hard to think of a more cynical set of proposals.

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Railway unions and employers – look to a 3rd way to provide pensions.

The Railway Strike which starts today and could recur all summer is in large part about pensions. Cuts in real pay through below inflation pay rises feed through into lower pensions while changes  in the formula for calculating pension benefits make for a further shortfall in expectations.

Taking things away from people, once they’ve been promised is not easy to do. It results in industrial unrest and when the workforce is unionised and where the union is well organised, the result is industrial action.

Unfortunately, there are commentators who are only too keen to fan the flames of prejudice  and deepen the divide between haves and have nots.

It is true that when the value of “deferred pay” – eg pension , is added to today’s pay, many railworker’s total remuneration looks a lot more attractive. The same can be said for all public sector workers – and the quasi public sector workers who are entitled to benefits from SAUL and USS.

People may think that by simply cutting pay and benefits of the public sector and those with quasi public sector pensions, we are creating a fairer and juster society.

I have some sympathy with the argument at an abstract level, but not in practice. In practice, cutting benefits without proper negotiation leads to strikes and that is what we’ve got. We have strikes at universities and on the railways, we are threatened with strikes throughout the public sector. Pay and deferred pay are the reasons for the disputes.

Another way – a better way

There is another way, the way pursued by Royal Mail. It looks like the way UUK want to go with USS – linking pensions to the performance of the scheme  and paying increases out on the basis of what’s in the pot. This is known as conditional indexation and it is only a short step away from putting a scheme on a collective DC footing.

However, those commentators who are noisiest about public sector benefits are also the fiercest critics of  CDC. They create a tension on both sides which is not helpful to the resolution of disputes or the bridging of trust between the two sides of the argument.

We will have , by August , the means for schemes like the Railways Pension and the Transport for London pension, to apply to be CDC schemes. We have advisers who are used to helping explain CDC to unions and employers and we have in at least one union (CWU) a group of experts in pension scheme dispute resolution.

Rather than fanning the flames of the dispute, the journalists and commentators who are writing about the divide between those who have DB and those who rely on DC pensions, should look to a third way – in place of strife.

A woman who solved problems.

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