“People taking their own decisions”?! How the Lewis’ gang up on IFAs.

I don’t know if there’s something in a name, but if I was an IFA, I’d be butting my head against anything called “Lewis” this morning.

There’s Martin Lewis, talking to us on the TV of taking control of our own finances.

There’s Paul Lewis, poking IFAs with a sharp stick, from his twitter bully pulpit.

Now there’s Sue Lewis, (Chair of the Financial Services Consumer panel) claiming

“The industry will not produce straightforward, easy to understand, value for money products because it does not make enough money out of them.”

It looks like “Lewis” is an “anti-IFA” super-brand!

IFA’s doing very nicely thank you.

ifa-1I’d been thinking about IFAs anyway, ever since Per Andelius sent me a report in Money Marketing about IFAs living the high life. The reality is that most IFA’s in the UK are “ex IFA’s”. Numbers of regulated advisers plummeted post the implementation of the Retail Distribution Review in 2013.

Those advisers who climbed over the fence and have practicing since 2013 are a lot more canny , better qualified and – dare I say it – more respected!

They’ve managed to generate revenues not from commissions, but from funds under advice.

On average, restricted advisers say 70 per cent of their remuneration comes from percentage charges, with 24 per cent coming from fixed fees and 6 per cent from hourly charging.

You might say that drawing your revenues from a percentage charge on the funds you advise on is the same as taking commission but that would  be like confusing “advice” with “guidance”.

As Paul Lewis points out, “advice” is a word that IFAs have a virtual trademark on.

Following criticism from advisers for using the term “advice” to describe a service that cannot give personalised recommendations, the Treasury has previously admitted “the name ‘Money Advice Service’ has always been misleading as MAS cannot provide regulated advice.” – (Justin Cash;Money Marketing)

Similarly, the Pension Advisory Service, Citizen’s Advice – even the “Money Saving Expert” Martin Lewis has had to register as a financial adviser!

Lewis 4.PNG

It’s that grumpy Paul Lewis – moaning again!


Advice is a very expensive commodity. It is owned by Financial Advisers.

And  IFAs are not going to let it be devalued by allowing the ABI to produce simpler products following the 2013 Sergeant review.

If you remember, Carol Sergeant, recommended the introduction of a “simple financial products badge for qualifying products via a robust accreditation process”.

But four years on and the ABI has allowed the simple product initiative to wither on the vine.

Enter Sue Lewis , intent on reminding people that

“Financial products are more complex. There is generally too much choice, rather than too little. Terms and conditions are lengthy and incomprehensible and many products have hidden fees and charges.”

I am sure that Paul and Martin would say three cheers to that. But that is not the end of the story. In a wonderfully written article in FT Adviser, Emma Hughes quotes Patrick Connolly , a financial planner at Chase de Vere

“People want more choice and more flexibility, but with that comes more complexity and a greater likelihood that they will make the wrong decisions.

“This opens up the need for advice, because the decisions people are taking are often too important to get wrong. This should be independent financial advice and could be facilitated through employers, which can make it accessible to more people.

“Unfortunately, we currently have a system with complicated products and ever-changing rules and regulations, where too many people are encouraged to make their own financial decisions. This sounds like a recipe for potential disaster.”

Patrick is right, it would be disastrous for financial advisers if we had simple products which we could buy without advice. It would be disastrous to have more products like the state pension , or occupational defined benefit pensions. It would be disastrous if we rolled back the pension freedoms and started offering simple products that paid a lifetime income to people.

We need complexity, we need lots of rules, we need financial advisers and we need them to maintain and grow their standard of living.

Otherwise things would be really awful.  The last thing we want is people to take their own decisions – heaven forbid!


Want to read the articles first hand?

For the article talking about keeping “advice for advisers” read here.


For an article condemning the ABI for capitulating to advisers over “simpler products” read here


For an article showing how well IFAs are doing out of current complexity, read here


Posted in pensions | Tagged , , , , , , | 15 Comments

Was DC the only choice for the Tata Steelworkers?



Tata pensions


Speaking on the radio yesterday, John Ralfe called the decision of Tata Staff to accept the loss of future accrual into a final salary scheme in exchange for a 10% contribution into a DC pension fund as “inevitable”. This blog looks back on why he ‘s currently right and questions the sense in the binary decision they were left with.

It is not my choice but were I faced with the job/no job choice when I’d worked in steel all my life, I wouldn’t have thought hard about choosing job +DC pension over no job and no future accrual into any pension.

Nor would I have thought Tata to be putting a gun to my head. They are competing globally against organisations that are not guaranteeing a percentage of final salary to its workforce as part of labour costs.

Nonetheless, knowing what I do about pensions, I would have been deeply saddened to lose future accrual into one of Britain’s best run pension schemes (Tata is reported to be managing membership at an all-in cost of £62 per head). On a pound for pound/benefit basis, the income purchased from the 10% DC contributions is unlikely to provide such value for money. There are no long-term winners in this switch from DB to DC.

I’d be saddened too for those managing what was the British Steel Pension Fund, who have done nothing wrong and plenty right.

I would not be pointing a finger of blame at Tata the company, the pension fund or the unions – but I would be asking questions as to just why steelworkers who have no history of managing their pensions, are expected to manage a DC pot through retirement.

An unusual concession.

The day to day reality for Tata steelworkers will be unchanged, working conditions, pay and immediate benefits will remain the same. What has changed is the future promise in retirement, the capacity of what are mainly manual workers, to enjoy the longest holiday of their lives.

This is an unusual concession for a worker to make, to give up future gratification in return for the right to work today.

I am not one who sees the choice as binary between DB and DC. Had we persisted with the ideas for defined ambition pensions, proposed by Steve Webb and enacted in the Pension Act 2015, we might have been able to offer future accrual of a defined ambition pension scheme which would not have involved financially empowering people having no wish to become their own pension experts.

A defined ambition scheme, operating with a targeted pension promise but using best endeavours to pay rather than guarantees, could have been set up using the excellent infrastructure of the British Steel Pension Scheme. Such an arrangement could have operated as a genuine mutual, tapping into the economies of scale of the £15bn BSPS and its administrative and actuarial resource. Accrual into such a defined ambition plan could have been based on what a defined contribution would have purchased, rather than what Tata guaranteed.

A missed opportunity

The opportunity to convert future accrual for Tata steelworkers from DB to DA was lost when Ros Altmann pulled the plug (or at least mothballed) the DA legislation in the summer of 2015.

In doing so, she consigned the unions, Tata, the BSPS and Tata Steelworkers, to a DC pension scheme. I am sure it will be a well-funded DC pension and that care will be made to give workers every available tool to manage their pension freedoms.

But I am pretty sure that most of these workers will find managing their freedoms problematic, good advice expensive and hard to find and the maintenance of cash-flows through later retirement very difficult indeed.

DC is a sub-optimal solution and Tata could have offered a more acceptable CDC type benefit, if Government had not closed down a third-way pension initiative.

The opportunity cost of  “pension freedom”.

Why this blog grumbleson against the various initiatives to empower us, is because of this opportunity cost. The pension dashboard, the lifetime ISA, even Pension Wise, will have little to offer the Tata steelworkers.

They need job security first, and that (mainly through changes in the economic climate) they currently have. They need a decent post retirement promise second. What they have accrued is safe (there is no question of the BSPS going into the PPF) , but they are being asked to give up certainty for uncertainty, a managed pension for an unmanaged pot of money.

The cost of operating a CDC arrangement, appropriate for the needs of the Tata Steel workforce, could have been capped at the 10% DC rate, but the promise – an undefined scheme pension , could have offered so much more.

If there are winners here, it will be the intermediaries who will now be buzzing around Port Talbot with pension dashboards, aggregation tools, TVAS calculators and cashflow modellers. The Tata Steelworkers will be empowered to take financial decisions about their futures based on all this technology and fine words.

I wonder how many will know what they are doing, any more than they know what they have done in accepting the new conditions of work.


Tata Wales


Of all the critics of the Defined Ambition agenda, and of CDC in particular, John was the most outspoken. I wonder, were he a Tata Steel man today, whether he’d be quite as opposed to a scheme pension paid without guarantees.

Posted in actuaries, advice gap, FinTech, Jersey, pensions, Pensions Regulator, Politics, pot | Tagged , , , , , , , , , | 1 Comment

The employer’s “duty of care” to choose a workplace pension; the parliamentary debate.


In my most recent blog, I expressed a hope that the amendment to the Pension Schemes Bill would be accepted (in the full knowledge that it wouldn’t). It was withdrawn by the Shadow Pensions Minister but not without debate.

I am pleased that Alex Cunningham chose to quote from this blog in arguing that employers have a duty of care and I’m grateful to Colin Meach and his team for bringing our arguments to the attention of the House of Commons!

The debate on New Clause 7 is recorded in Hanson and can be found in full here; https://hansard.parliament.uk/commons/2017-02-09/debates/99a77916-316a-4b54-bf82-ab8673e42e5a/PensionSchemesBill(Lords)(FourthSitting)

New Clause 7

Enrolment in Master Trust scheme: duty on employers

“Before an employer enrols in a Master Trust scheme they must—

(a) take reasonable steps to ensure themselves that the scheme is financially viable;

(b) ensure the scheme is on the list of authorised Master Trust schemes maintained by the Pensions Regulator (section 14); and

(c) take reasonable steps to ensure themselves that the scheme will meet the needs of their employees.”.—(Alex Cunningham.)

This new clause would require employers to conduct basic checks before signing up to the Master Trust scheme.

Brought up, and read the First time.

  • It is almost as if I am doing an aerobics class; I have already warmed up, even in this cold Committee Room.

    New clause 7 would provide employers with a fiduciary duty and a duty of care to members to ensure that the master trust of their choice meets the needs of their staff. The auto-enrolment process in the UK rests on the employer making the choice of scheme for those purposes. The new clause would ensure that, before authorisation, the employer is duty-bound to ensure that the master trust is fit for purpose and has all the necessary information for that choice to have a sound footing.

    We need to ensure that the employer has a defined duty to carry out due diligence when choosing a workplace pension. Otherwise, many employers—through expediency or otherwise—will continue to make choices that may not be in the best interests of the scheme’s beneficiaries.

    The past 20 years has seen us lurch from one mis-selling scandal to another. Pension transfers, endowments, payment protection insurance and interest rate swaps have all been subject to class actions, and to massive retrospective penalties being imposed on those found wanting in due diligence.

    In the US, the employer has a fiduciary responsibility to their staff and chooses their scheme in their best interests. That means that if employers do not take due care in the choice and governance of the plan that they set up for their staff, they are liable to civil prosecution. Employers in the US take fiduciary obligations seriously, not least because scheme members are now taking and winning class actions if they do not.

    A class action can focus on the choice of scheme provider, failure to establish suitable investment options and failure to monitor how funds perform as the scheme progresses. Some advisers in the UK, such as Pension PlayPen, think that the information given to employers to choose a workplace pension is insufficient, and that there is little supervision of the due diligence process by regulators, which is in sharp contrast to what happens in America.

    The other day, Pension PlayPen stated on its blog:

    “The common law includes the concept of an employer’s duty of care to staff, not just for their health and safety but for their financial welfare. This duty of care forms part of a social contract, the implicit responsibilities held by individuals towards others within society. It is not a requirement that a duty of care be defined by law.

    An additional worry is that employers do not see this as their choice. Too often we get answers from employers ‘we did what our accountants told us to’. It is as much in the interests of accountants to ensure the employer states why they have chosen their pension as it is the employer’s.”

    So what happens when the duty of care and fiduciary obligations go wrong? The only option is the courts. According to a Financial Times article last November, there has been an “explosion” of class actions in the USA on the issue of financial detriment to scheme members. These suits have not yet gained much public attention, due to the reputation of the US legal system, but it is also partly because the legal action is fragmented and spread between different courts, and cases are often settled in private with binding confidentiality clauses. What is more, pensions have the unfortunate reputation of being rather dull, even though the sums involved dwarf those of the multibillion dollar settlements seen in banking since 2008.

    However, the basis of the complaints are sound and echo a warning that we have been making about the lack of transparency and engagement for members of schemes. Members may have been charged excessively high fees, the most noticeable or important point being that the investment process may be used to extract wealth.

    As in other financial suits, such as PPI suits, the cases claim that financial organisations have used opaque structures, so that transactions extract money that ought to go to members of schemes. In one case, JP Morgan has been sued by a participant for allegedly causing employees to pay millions of dollars in excessive fees, through a scheme motivated by “self-interest”. The plaintiff claims that JP Morgan, as well as various board and committee members, breached its fiduciary duties by, among other things, retaining proprietary mutual funds from the bank and affiliated companies for several years, despite the availability of nearly identical, lower-cost and better performing funds.

    Not all of these cases are just related to charges in the investment chain; some are also about administrative processes. A website—401khelpcenter.com—highlights that members of Essentia Health in Minnesota filed a class action lawsuit against the sponsor, claiming that the organisation paid excessive fees to their record keepers

  • The hon. Gentleman has mentioned many times the potential for class action, particularly in the US, on various issues. Does he not believe that having the word “reasonable” twice in the new clause that he has tabled actually becomes a licence for class action, rather than closing it down?

  • I certainly do not. I am not a lawyer, but I believe that the new clause is sufficient and does not open the way for such action. What I am trying to do is provide a protection for employers within the scheme, and therefore also for members.

    The latest complaint was filed in January against Aon Hewitt Financial Advisors, accusing the company of breaching the Employee Retirement Income Security Act 1974, or ERISA. That is the fourth lawsuit to target the fee arrangement for services provided by a computer-based investment advice programme.

  • The Chair

    Order. May I ask the hon. Gentleman to move away from discussing court cases in his comments?

  • I am doing that now. We have a clear warning that if a company fails in its fiduciary obligation, litigation may be an option. We know from the FCA report that implicit costs are opaque and likely to be much higher than those that have been explicitly presented. We believe that it will not be long before legal teams from the US alert their operations in the UK of potential opportunities for litigation. I can see the adverts on TV now: “Problems with your pension fund? Have you been subject to high fees and transaction costs that you never knew were there?”

    The most important “don’t” must be, “don’t assign a low priority to your employees’ auto-enrolment choices.” The big lesson of the litigation—albeit US litigation—is that employers must assume that they have that fiduciary duty, as do trustees, and that they always need to have auto-enrolment choices on their radar screens. It is a lesson once again that the lack of transparency in the governance process, the administration process, the investment process and the advice process will lead to the detriment of the member.

    To ensure that we can help build citizens’ trust in the system, we must have transparency for employers and members. We must have the information in front of the employer choosing the scheme to protect them and their employees. I commend new clause 7 to the Committee.

  • The employers’ duty is met by scheme choice, because that is what auto-enrolment is. It is not like a defined-benefit type of scheme, where the employer has to ensure that the contributions are enough to be able to pay out what they are contracted to pay out in the scheme documentation. They have to make a reasonable decision based on the whole authorisation regime. I argue that asking for more would be inappropriate and burdensome for employers.

    It may help the hon. Gentleman to see my point if he looked at the regulator’s website—he might have done so already—which has comprehensive guidance for employers. Under the new clause, a typical employer would be doing exactly what the hon. Gentleman says is inappropriate: they would basically be doing what their accountant or adviser tells them, because most employers, particularly the small ones, by definition do not have this kind of knowledge. They are not professionals in this area; there are there to run their own business.

    I do not understand, whether from a personal or a Government perspective, how asking them to do meaningful checks after they have gone with an approved and regulated scheme would add anything to the process. It is well-meaning, but it is unnecessary and should not be part of the Bill. I sympathise with the intent. The hon. Gentleman is trying to protect members from people acting in a fraudulent way.

  • Perhaps the Minister can address this very simple question: is he satisfied that employers could not be subject to legal action against them if they end up making a bad choice on behalf of their employees?


  • I absolutely agree. In fact, such schemes are often criticised for precisely that reason. They are criticised for being too conservative—in the investment sense, not the political sense—and for missing out a lot of good possible investment decisions, and the thought of that being reviewed by every single employer. I mentioned NEST and its 230,000 employers. I cannot believe that it would be fair to place such a regulatory burden on them when they are choosing from an approved list. The whole purpose of the regulation is that the schemes are approved, proper and regulated.

    I am trying to see where the hon. Gentleman is coming from. I hope that he can see where the Government and I are coming from, and why I am not of the view that the new clause would be appropriate. I respectfully invite him to withdraw it.

  • I accept the explanation that the Minister has provided about the employer making a choice from a regulated scheme and the protections included within that. If he is satisfied that employers will not face legal challenge as a result of the choices that they make within a regime where they must choose a scheme on behalf of their employees, and has placed that on record, I am content. I beg to ask leave to withdraw the new clause.

    Clause, by leave, withdrawn.

    Bill, as amended, to be reported.


Posted in pensions | Tagged , , , | 1 Comment

Brexit sets our pensions free!



We are where we are; Brexit is changing things. Brexit is a disruptor of old certainties and a bringer of new opportunities. The pensions and savings industry has grown fat on the old certainties but is now being confronted by populist ideas like “value for money”. What Brexit has done is to give confidence to those wanting change, that change is possible, even in pensions!
I don’t think we can accurately predict the impact of Brexit on markets or on the cost of providing pensions. All the predictions made last summer have proved wrong. When I listened to the second half of the super bowl with Atlanta having an “unassailable lead” a commentator reminded us not to turn off the radio, we might wake up as we did on the morning of the referendum. The unexpected happened again.
Brexit – Leicester – Trump – New England Patriots, we are learning to expect the unexpected. This is seriously disturbing many people and encouraging others. I sat at the bar with Nigel Farage a month before Trump won. I asked Farage what made Nigel Farage famous, he replied – “you tube”.  He told me that twitter would win Trump the White House.
Farage described Trump as an imperfect candidate but a necessary agent of change”. I feel the same way about Brexit!

Five game changers that will set us free!

  1. We break our DB schemes free from the shackles of Gilts plus valuations to benefit from growth assets!
  2. We establish collective decumulation schemes as default options for those spending their pensions
  3. That we demonstrate the cost of intermediation by adopting the FCA’s value for money proposals
  4. That we accept that employers have a duty of care to choose a workplace pension suitable to the needs of their staff
  5. That we put the consumer and not the pension industry as the beneficiary of the pension dashboards!

Please wish our amendment well!


The statement at the top of this blog is for my friend Dawid who is putting together a chapter of a book for pension people’s reactions to Brexit.

I had to think of how Brexit has changed the way I think. Though I voted “remain”, I have accepted that now I must move on. Moving on has been liberating, Brexit is making me free to dream that some of the things I thought impossible, might be possible.

I genuinely think we will see the five changes I’ve listed above. There are many more changes I could include, including better prevention of scams, a more inclusive charge cap, IGCs and Trustee Chairs who were more effective and above all an engagement in the need to save harder and longer for extreme old age.

But we cannot get people saving longer till we get the infrastructure right. This week we see parliament debating the Pension Schemes Bill and in particular the amendments brought before the house. One of these amendments directly relates to 4 above. I hope – with all my heart – that this amendment is not thrown out. Every amendment debated so far has been – the odds are long against it staying. But in a world where strange things happen, perhaps the amendment will survive!






Posted in pensions | Tagged , , , , , | 1 Comment

The tale of the “scammed”

scamproof scorpion

This is the testimony of one victim of a pension scam. I cannot verify whether every aspect is true, but it is not the work of a vindictive person. It has been written to help trustees of pension schemes to better protect members and for  Regulators to better help trustees.

There is nothing so powerful as such a personal testimony for it asks us to consider how we might have reacted, both as a potential victim and as a fiduciary. I thank Stephen Sefton (who wrote the piece and is pictured below).

Testimony of Stephen Sefton



The Cambridge English Dictionary defines a scam as: an illegal plan for making money,  especially one that involves tricking people“, source: http://dictionary.cambridge.org/dictionary/english/scam

I’m Stephen Sefton. I am a real victim. I am 60 years old and live in Milton Keynes, UK. I’m the Optimus victim referenced in Angie’s email of 10th Feb regarding Trafalgar Multi Asset & STM Fidecs, and this is my story.sefton

I was a member of a defined benefit scheme in the care of Mercers but I heard of the changing rules coming into effect in April 2015 and I wanted to take advantage of these with a flexible drawdown rather than an annuity. The latter made no sense to me with my current health issues. My ceding provider said I couldn’t have a flexible drawdown in the defined benefit scheme and I would have no option other than to transfer out.

Enter the  confidence tricksters. Wolves, salivating at the opportunity to fleece a victim and line their own pockets with my hard earned pension. No doubt they ordered their luxury cars and tickets to Vegas with the anticipated commission and admin charges that will be syphoned off my pension over the years, until they’ve bled my pension dry. This is what they do – routinely and typically.

The very framework of law and regulations, designed to protect me, failed me spectacularly, letting me down and later, abandoning me on the grounds that because the advisers were unregulated I had no avenue to any redress or compensation! Like many other victims, I would be on my own when I discovered what had happened!

Between March and May 2015 I was illegally invited by an adviser from Square Mile International Financial (“SMIF“), formerly Aktiva Wealth Management, fraudulently posing as a regulated IFA, to participate in two Unregulated Collective Investment Schemes (Blackmore Global and Symphony). It is illegal to promote these kind of investments to retail investors in the UK (Sections 21 & 238 of FSMA)

I was mis-advised by this adviser to transfer my pension to a QROP even though they knew I was a UK resident with no intention of leaving the UK. Their first suggestion was Kreston, which is based in the Isle of Man but my application was turned down by Kreston (reason unknown) and so SMIF switched to a QROP called Optimus Retirement Benefit Scheme No.1 which is based in Malta. There was no explanation for the change of jurisdiction. It seems SMIF were happy to move my fund to any QROP provider that would take it – no matter where they were based.

Optimus Pension Administration Ltd. (“OPAL“) provide back office services to Integrated Capabilities Ltd., Malta (“ICML“), who are the trustees of the Optimus Retirement Benefit Scheme No.1 (“the Scheme“). The SMIF adviser made fraudulent claims of tax benefits on the income I would get via a QROP and also fraudulently claimed OPAL were approvedby the HMRC. Even today,  the OPAL website: http://www.optimuspensions.com/scheme-1/  makes the claim (in the footer) “… is registered with HMRC as an approved scheme.” HMRC DO NOT approve pension Schemes! This misinformation is used to add legitimacy to the Scheme and mislead the client and is typical language used by the scammers.

SMIF used the cold calling back office services of a firm called Aspinal Chase (Albion Wharf, 19 Albion Street, Manchester), and Pensions & Life UK Ltd. (“P&L”) of the same address – the director’s of these companies being, Nunn & McCreesh, who, I later learned, are also the directors of the toxic fund, Blackmore Global in which the majority of my pension fund was invested! I also later learned Nunn & McCreesh are on record for participating in the 2012/13 Capita Oak  and Henley pension scams; cold calling victims to participate in the purchase of worthless storage pods losing in excess of 500 victims over £7 million!

Forms were couriered to and fro to me and in the summer of 2015, and on instruction from P&L, Mercer transferred a sum approaching half a million pounds of my pension fund to the Optimus QROP in Malta.

I received a letter in July 2015 from ICML, advising me 75% of my fund had been invested in Blackmore Global and 25% invested in the Symphony fund. The letter later turned out to be highly inaccurate with respect to Symphony when I compared it to the financial statement I received of my account (10 Nov 2016), which showed suspicious anomalies in the dates of the Symphony share purchase. These anomalies were conveniently explained by ICML as simply “administrative errors” but professional businesses don’t just accept financial anomalies as administrative errors! ICML have continued to evade further explanation of these “administrative errors”.

I began to suspect something was not right in the Spring of 2016 because the Scheme was terribly opaque. I had had no further communication from any party. I had not been provided any audited report from the trustees (compiled to end of Dec each year) even though the trust deed (section 19.3) gives me a right to it. Later, when I asked for it, I received only the first two pages! When this was questioned I never got an explanation as to why I didn’t have the rest of it, nor was I ever given the rest of it. The first two pages did however show that in 2015 the Scheme went from 26 members to 1100+ members – roughly 100 new members per month. It is inconceivable I am the only one invested in illiquid, toxic UCIS’s held by the Scheme, wholly unsuitable for pensions – which must have prudent, diverse, low-risk, liquid investments by definition.

I began to question the OPAL directors, who vehemently denied I was a victim of a scam and bizarrely insisted SMIF were appropriately regulated even though I shared with them the reply I got from the FCA, categorically stating SMIF were not licensed to give investment advice nor transfer my pension. I also shared my email from the FCA with the SMIF adviser who rattled his sabre threatening to set his lawyers onto the FCA. Yeah, ok.

Subsequent communications with SMIF (which I have on file), made claims the funds were suitable for retail clients and I quote one said, (email 27th May 2016) ” … both Funds are properly recognised and audited collectives, regulated in their respective jurisdictions accordingly.” This is yet further misinformation, some would say fraudulent. Neither fund (Blackmore nor Symphony) has published audited accounts to date! I also have it on record that my trustees were totally unaware of this fact until I brought it to their attention and requested (24th July ’16) a copy of the Blackmore audit. ICML replied there wasn’t one and later, in a letter dated 26th August 2016, added: ” The first audited financial statements for the Fund are being finalised for the period from October 2013 to April 2015. We have been advised the audit will be completed in the next month [Sep 2016]. We have asked Blackmore to explain the reason for the delay as we share your concern. ”

This naturally begs the question, just how much due diligence was performed by the Investment Managers of the Scheme (Lombard Bank, Malta) before advising these funds be approved as appropriate assets in the Scheme? My suspicion is Lombard didn’t approve these assets, but they were added to the Scheme on the advice of unlicensed advisers, in breach of Maltese regulations 1.3.8/1.3.9 Investment Advisor. However, when challenged over this, ICML were evasive. If these toxic assets were approved on the advice of unlicensed advisers then it begs the question why the MFSA were not enforcing regulations and taking them to task? Yet another part of the system, designed to protect me from being scammed was letting me down.  The system will only protect victims if everyone plays their part at each step!

I started a blog on the Citywire forum for a number of reasons. One, I wanted to reach out to anyone who might be in the same boat as me and secondly, see if there was anyone that could offer advice as to how I could recover from this disastrous pension transfer. Since I had been abandoned by the UK authorities, I had to explore any source of help I could get! Being alone is devastating to a victim! I was documenting the scam on the forum, as it was unfolding in real time, reporting the facts and giving updates on my progress at extricating myself from this situation. I did get a lot of good advice from that forum. Then …

Enter the blood sucking lawyers.  On 12th July 2016 I got an email from the Lawyer representing SMIF regarding the content of my forum thread! They asserted my allegations against SMIF were untrue and defamatory. Citywire buckled and took down the posts! Citywire missed a big scoop. I was simply reporting what was happening to me; reporting the contents of the adviser’s own self incriminating communications and reporting what I was being told by the authorities (FCA), the Pensions Advisory Service and many legitimate IFA’s. SMIF threatened legal action but gave not one shred of evidence to counter my allegations, just feeble assertions it was untrue. However, undeterred I decided to hit back and when I threatened I would take this to Action Fraud, this was the shocking SMIF’s John Ferguson’s response to his lawyer on 5th Aug 2016: ” All fine as Action Fraud are nobody & have no authority. ” Is this the behaviour of a professional, ethical business? You decide. But it speaks volumes about SMIF’s ethical policy.

However, I did later discover that SMIF were right about Action Fraud since hundreds of victims of other scams such as Ark, Capita Oak, Henley, Westminster, London Quantum etc. have made reports to Action Fraud and yet nothing has ever been done to bring the perpetrators to justice!

Not to be outdone by SMIF, ICML (my trustee when all is said and done) decided they would also have a go at me and their lawyer sent me a letter on 26th Sep also threatening legal action action because, and I quote, “… they [ICML] do not appreciate the tone you have used in recent correspondence” Really? Give me a break! I was at that time, £415,000 out of pocket because a negligent pension trustee had approved toxic assets into the Scheme without adequate due diligence, unquestionably on the advice of unlicensed advisers and sunk my pension into them! At no time were the trustees able to give me an accurate valuation of my assets because the NAV of one of the funds (Symphony) was never updated on the platform. Quite naturally, my tone was at times showing frustration but who’s wouldn’t! I was worried sick about the very real possibility of losing the pension I had worked hard to build up for many years.

Patrick McCreesh (director of the Blackmore Global fund) has very recently decided to object to Angie’s blog describing the fund as “toxic” and threatened legal action. Really? I asked ICML last year to provide a list of sub funds of Blackmore Global. ICML sent me the list on 5th Aug 2016, but I must point out, they had no idea of this list until I asked them for it and they had to do some research. The Blackmore Global offer supplement shows one of the directors being Brian Weal, already on record for his participation in the Blevedere investment scam, but also banned in 2014 by Gibraltar FSC from directorships of professional investor funds because of his failure to operate the Advalorem Fund (later renamed Swan Holdings) in a manner that was not detrimental to its investors. Whilst he is not currently a director of Blackmore, two of the sub funds of Blackmore (according to the 5th Aug email from my trustees) include Swan Holdings and GRRE – both of these are owned by Brian Weal. Furthermore, Swan Holdings bought an 8.36% share in Etaireia Investments who, under the direction of Stuart Black, purchased land in Scotland on the fraudulent promise it had planning permission for a number of residential properties. How toxic does it have to get before the label toxic is appropriate?

The Symphony fund is a sub fund of the Nascent platform that purports to provide a cost effective solution to “budding” fund managers. I have no idea how many funds are under this “umbrella”. I know only of Symphony and the Trafalgar Multi Asset Fund (now suspended and about to be wound up). Richard Reinert is a director to both these funds. The Symphony fund documentation explicitly states it is a professional fund and not to be promoted to UK retail clients. The trustees knew this but still accepted members from unlicensed advisers, who are also the global distributors of Symphony (according to this announcement anyway, http://www.international-adviser.com/news/1007006/symphony-capital-partners-launches ) , targeting UK retail pensions. The directors of this umbrella platform have responsibility for (according to their Symphony documentation ) ” … safeguarding the assets of the Sub-Fund, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. ” The appointment of James Hadley as Investment Manager for Trafalgar and the subsequent winding up of that fund shows this responsibility was clearly not discharged. I allege, the Directors knew the investments for Symphony were being sourced by their distributors from UK retail clients and did nothing about it! The regulators need to start regulating here! Yet another example of the system designed to protect me, letting me down.

On a positive note, I have managed to redeem 87% of my original pension fund (but this doesn’t take into account lost interest and costs of repatriation plus emotional suffering) and repatriated it to a proper regulated UK provider. I have, however, lost a lot of money plus a lot of sleep and would still like restitution.

To give credit where it’s due, OPAL waived their exit fee and one years admin fee; likewise Investors Trust – the Cayman Island Assurance Bond used by the scammers to syphon my money into the toxic funds – waived their exit penalty and refunded some admin charges. NB: I did question the trustees whether Investors Trust were licensed to operate in the EU as they are not listed on the MFSA’s own register ( http://www.mfsa.com.mt/pages/licenceholders.aspx  ) – but I got an irrelevant and evasive answer yet again about membership to the AILO.

Blackmore “promised” a refund of their 7% early exit penalty, almost 6 months ago now in a “gesture of goodwill”, but I haven’t seen a penny of it – an empty gesture. Symphony not only chose to keep their 5% early exit penalty, but after reporting I would make a healthy profit since investing I ended up with just 70% of my investment and no one has seen fit to give any explanation despite numerous requests for one! Symphony has really stitched me up and Reinert thinks it’s not his problem! Yes, it really is, in my opinion!

The website of the cold calling company, Aspinal Chase (owned by the directors of Blackmore) has been taken down; the supposed audit of Blackmore is very late and a director of ICML has admitted he is unable to get hold of the directors of Blackmore. A pension trustee that cannot get hold of the directors of an asset in their Scheme? …  you make your own conclusions about what’s going on there!

There are hundreds of innocent people still invested in toxic funds approved by negligent trustees, totally unaware of the financial ruin they face. Trafalgar has already been suspended and innocent people are staring financial ruin in the face! It’s just a matter of time until the other funds collapse because they are always founded on risky harebrained schemes designed by people who have no idea how to manage investment funds! These people syphon charges and commissions from the funds for their own enrichment and care not one iota about the innocent people who are unlikely to recover from the loss because the money has been squandered by these so called “budding” investment managers!

I have had interest in my story from a highly respected National newspaper and a TV channel. I have been reticent to go to the media as yet because I feel it might not be in the interest of myself or other members of these Schemes. Such publicity would undoubtedly open the flood gates and cause others in the same boat to do a run on the funds. The fund(s) would collapse and wrap up and liquidators would drain the funds dry in admin charges. A controlled unwinding of this mess is what’s in our best interest in my opinion.

There are people on the addressee list with the power to act and clean this mess up. I implore them to do so. The system should no longer let people down, but start redressing the wrong done to so many by arrogant companies that show contempt for the law and think they can do this with impunity because they see Action Fraud as “Nobody”.

What would I like to see?

  • Trustees stop taking new members sourced from unlicensed advisers – immediately!
  • Trustees stop approving UCIS’s into their Schemes – immediately!
  • Proper due diligence carried out on the appointment of Investment Managers
  • Trustees to take stock of the number of toxic funds in their Scheme and the number of members locked into them
  • Regulators in the UK and Offshore start doing some regulating
  • Member’s funds redeemed from these toxic investments in a controlled manner
  • Waiving of early exit penalties by all parties – and laws passed internationally to ban any pension investments with early exit fees
  • Unlicensed advisers, illegally promoting UCIS’s, prosecuted, stripped of their assets which are to be returned to members, and then thrown in jail – the key being dropped in the ocean.
  • Negligent trustees to pay the initial fee for regulated Independent Advice to those members wishing to repatriate their pensions
  • Negligent trustees to pay the set up fee of a new provider for members wishing to rescue pensions and repatriate to UK regulated providers

Angie has told me she has been contacted by another victim of this same Optimus scheme. He was cold called by a firm called Gerard Associates and half his pension invested in The Resort Group (Cape verde holiday flats). She informs me Gerard Associates were acting as introducers  to Stephen Ward of Premier Pension Solutions back in 2010/11 in the Ark case and that subsequently Gerard acted as adviser in Ward’s London Quantum case.

I am a real victim of an organised pension scam and this has been my story.

I thank you for your time.

Stephen Sefton

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Is there any “challenge” to this Pension Dashboard?

I was invited yesterday to the Treasury’s “Challenge Panel” , held to discuss the proposals for the pensions dashboard, a prototype of which will emerge next month. Actually, I wasn’t invited – I went in someone else’s place. I went to challenge.

“Challenge” was not a word I’d have associated with any of the 120 minutes we spent listening to and discussing the pension dashboard’s details and principles of governance.

For the Pensions Dashboard is not as sold. Sometime between the kick off meeting in September and today, the dashboard has been taken over by the ABI and it has gone from something that could make the life of consumer’s easier, to something that every Insurer, SIPP provider, master trust and occupational scheme will have to participate in.

COMPULSION, according to the ABI’s Rob Yuille is a pre-requisite for the Dashboard to work. That means placing a burden on those organisations struggling to provide pensions to provide regular feeds to whatever portal an individual has chosen to sign up to.

It is clear what the direction of travel for pension money will be. Money will be moved away from the large collectives which are focussed on paying pensions and into the modern self-invested personal pensions. To a forward thinking Treasury, bent on personal (digital) empowerment, there could be no challenge.

And so it proved. For the first hour we were talked to by the Treasury and the ABI and for the second, we were given a list of questions to answer that gave so little scope for debate, that I really didn’t know why I’d bothered going. Here are the discussion topics for “principles of governance”.

  1. Should governance strike a balance between a commercial or public model? What is this balance?
  2. What responsibilities should fall on dashboard governance? Is there a role for regulators?
  3. Where should risk/accountability sit for dashboard governance?
  4. What rules or standards should there be governing operators of front-end dashboards? Who should or should not be allowed to have one?

We went on to discuss the details of “governance”, which was really a discussion of “who pays for what” and “how does it fit together?”.



I still don’t understand the questions and though I hear lots of answers , none of them addressed the concerns I wanted to discuss!

So what about COMPULSION?

Having been told, that everyone agreed compulsion was needed to get those who weren’t going to benefit from the dashboard – to participate, I wanted an opportunity to challenge!

I don’t see why all kinds of legacy pensions should be required to provide real time information to the dashboard. I tried to ask the ABI what sort of RTI a defined benefit scheme would be giving, I was told that the ABI had thought of that and had a way round my problems. Not having heard what my problems are, I am surprised about that!

I don’t see why organisations running long-term investment strategies based on the defined benefit should be required to lay before the dashboard what is effectively a work in progress. Whether a defined benefit pension scheme or a with-profits pension, the value of the pension is based on it being a pension, not an immediate property right.

Since we were not able to ask the questions, I cannot give readers the answers. But if all four moderators and two of the four speakers were from the ABI, I can be pretty clear that they are in control.

There are (according to the Treasury) 63.8 million pension pots. These include what were referred to as “DB pots”. For the Treasury, the success of the governance model they arrive at is based on it being “open”, “flexible” and “trustworthy”.

But if we are being compelled to play the dashboard game, what part of this is “open”?

If we are to treat everything as a “pot”, where is the flexibility?

And if the whole shooting match is to be managed by the ABI – how can I call it “trustworthy”?

We need a default in retirement product before a dashboard is made compulsory.

I am not walking away from the “challenge panel”- convinced. The relentless attempts to undermine our pension infrastructure and aggregate it into DC pots may suit the ABI and its members, but it may not suit the consumers – especially the consumers who do not have the protection of true fiduciaries.

Nothing was said at this meeting about what people would do once they’d seen all their retirement savings on one dashboard, but if the next step is aggregation, my next question is “into what”. Since the “decumulation solutions” being put forward by ABI members are simply not fit for the purpose of managing ordinary people’s pots, I see the dashboard as a way of leading horses to water, and then throwing them into the sea (to sink or swim).

Concurrent with any development of this financial portal, we need to find a collective way for ordinary people to spend their pension savings. People want and need a lifetime income and – short of the individual annuity – we are not providing them that!

Pension Freedom is not a solution – nor is the dashboard.

Giving people the freedom to do what they like is not a solution- it is another problem. Personal empowerment will not happen because people can see one big pot of savings, people need to know what they can do with it! Reducing pensions to savings pots assumes people can live off capital- most can’t – they need income in retirement.

What I saw yesterday was very worrying. There was no challenge in this “challenge panel”, all that we had was a discussion on the minutiae of a “fait accompli”.

The big ideas are going unchallenged while the debate is being talked out , moderated by the ABI. This is no way to make policy and will certainly not get universal support when the implications of this compulsion are realised.





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Trouble at till …Tesco’s pricing problems are a lesson to us all!


Something’s wrong at Tesco when the offers you see on the shelves don’t show up on your bill. The BBC went shopping and  in 33 of 50 stores visited, multi-buy promotions were marked on the shelf, but the time-limited discounts were not applied at tills.

Listening to the feedback from Five Live listeners working for Tesco, the problem is with staffing and especially the burdens placed on duty managers.

Too many unaccountable untrained staff , not enough experience.

I worry when the finger is being pointed at shop floor staff, I’m a boss and I know it’s my job to make sure that either the work they’re asked to do can be done, or that my staff’s skills improve.

It seems self-evident-store problems on this scale result from senior management failure. Trouble at till’s triggered by decisions taken in Cheshunt!

Wake up shoppers – you win!

It seems that if you get offered an out of date promotion that doesn’t appear on your bill, you can claim twice the difference at the customer service till. This sounds great till you remember till pressure. Please don’t check your bill at the till – it really annoys those behind you!

In practice, most of us have to get out of the store due to kids/partner or general time pressure and don’t have the time to check. We trust our supermarket brand and if it turns out they’re selling you short , you won’t return. My missus is currently boycotting co-ops for repeatedly failing to scan yellow labels (charging full price for short-dated items).

In my experience, self-service is the way forward, though I am so ham fisted with bar-codes , I often stand in line at the fag counter rather than see that little red light flash above my head.

So what’s with all this?

When we’re at the till, we’re spending a few pounds, when we buy financial services, we’re spending thousands. We see a rate and believe we’re getting it. There is no till receipt telling us what we’ve actually paid. We only find out what’s come out , years later, and then the cost of sale is lost in a miasma of gains and losses.

As with Supermarkets, the more fancy the marketing promotions, the more that can go wrong. What we as consumers crave is value for money, but our products are so complex, even the experts can’t read the till receipts.

As with the supermarkets, this is not one that can be blamed on the shop floor staff, the problem lies with the failure of those designing the products and managing the sales enterprise.

The issues are exactly the same. In time, customers will turn to financial services that do what they say on the packet, rather than the fancy-priced promotions that fail to deliver.

I would love to see fund managers who promise one thing and deliver less, refunding twice the difference to customers. There might even be an ongoing role for the financial consultant in doing the checking for the retail customer!

I would enjoy seeing lists of managers who displayed one price and charged another on generally available websites, so that I could either claim that refund or take my business elsewhere.

And I’d love to hear customers using financial products complaining about the challenges of over-complex pricing on national radio shows!

All this is possible!

The shift to transparent pricing which can be monitored by trustees and IGCs is already afoot. We have ways of finding the true costs of the products we invest in and ways to display that information. What we need now is consistency of approach.

Over the next few weeks, we hope to satisfy the calls of the DCIF who are asking for the quality gap between master trusts to be properly exposed. On Wednesday, MPs will debate an amendment to the Pension Schemes Bill prompted by this blog and the work of http://www.pensionplaypen.com/alex-2

Of course we want more than basic checks. But what we’re calling for is the equivalent of checking your bill.

What is needed (beyond this) is the provision of information that allow employers, their advisers and the super fiduciaries who act for the consumers of these workplace pensions, to ensure that what comes off the shelf – does what it says on the packet!

A duty of care

We don’t expect our bosses to help us with the supermarket run, but we do expect them to choose a workplace pension wisely. We pay advisers to help us to choose the right retail  funds, they are our personal shoppers, we expect them to pay for themselves in time.

But if they can’t trust the labels, should we? If financial services can’t tell us what we’re buying and what we’re paying for, can we really expect to trust financial services.

Ultimately, I’m impressed by supermarkets like Tesco that accept the blame and promise to put things right

 “We take great care to deliver clear and accurate price labels for our customers so they can make informed decisions on the products they buy.

“We are disappointed that errors occurred and will be working with the stores involved to reinforce our responsibilities to our customers.”

Oh for such contrition from fund managers and investment consultants!

You can read the article on Tesco on the BBC website here; http://www.bbc.co.uk/news/uk-england-birmingham-38893887

You can’t read the DCIF’s call for better reporting of value for money as there website is under reconstruction, but you can read about the report here; https://www.corporate-adviser.com/dcif-finds-quality-gap-master-trust-investments/


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Time for the pension nimbys to pipe down



The law as it will be from this April will mean that people who choose to enjoy part of their pension freedoms while earning will have pension tax relief limited to the first £4,000 of their annual contributions.

The move is being met with by fierce lobbying by  SIPP providers and in particular by the Tax incentivised Savings Association (TISA) who argue that


Those impacted are already enjoying the fruits of their tax incentivised savings, they are still able to enjoy recycling of these savings to get a second dollop of tax relief on the same money. All that has happened is that this privilege has been restricted by 60%.

The sense of financial injustice is exacerbated because it only impacts those eating the cake of freedom!


Put in everyday language, this is unfair on the tax-privileged saver and in particular on the tax-privileged tax-saver who is using pension privileges for tax-avoidance .

I have seldom come across such specious arguments. The generous tax-reliefs given to  those who can afford up to £10,000 pa pension contributions, do not come from some entitlement. They are not “earned” but belong to an archaic system that should have been overhauled in 2015. The impetus of reform was stalled by the EU referendum and reversed by the Brexit vote.

The only reason we have kept the absurd inequalities which subsidise these well-heeled pension savers is that our Government is terrified to lose their support. They vote, their votes matter and they vote Conservative, if you are sitting on an 11 seat majority, you do not annoy the clients of Hargreaves Lansdowne.

These pension nimbys have no fiscal case to retain what is called the £10,000 Money Purchase Annual Allowance. Nor can they complain they are being treated unfairly relative to those in receipt of defined benefit pensions. While it makes sense to talk about drawing down from defined contribution pots, it makes no sense to talk of DB pots- as TISA do.

People who receive a DB pension are not gaming the tax system (whether the DB is state or occupational pension). I am one such person and my reason for wanting a pension for life has nothing to do with tax ( I did not take my tax-free cash on my DB entitlement). I have need of later life income to pay people’s bills.

Ironically, I could have drawn this income from my DC pot but chose not to do so because I wanted to continue to fund my pension to whatever I could afford ( a lot less than £40,000 pa). It was perfectly obvious that crystallising DC benefits would mean jeopardising my capacity to save for the future. I did not need a financial adviser to tell me this , I only used google.

If I had been advised by a financial or tax advisor to have drawn down my money purchase benefits that I had an ongoing capacity to fund at £10,000 pa , I would have rejected that position.

The Government in introducing the Money Purchase Annual Allowance, made it absolutely clear that the £10,000 limit was an interim measure – the direction of travel was clear. If you had decided to rely on recycling of up to £10,000, then you  have had substantial opportunities to flex your PIPs (pension input periods). You have had chances to use unused reliefs and only now are you being restricted. The Government even provided a handy calculator to make my calculations easier http://www.hmrc.gov.uk/tools/pension-allowance/index.htm

It is time for the pension nimbys to pipe down

I should not pick on TISA exclusively, the howls of indignation at the curtailment of privilege come from all concerned with pension wealth management. There is no reason to have an MPAA at £10,000, even a £4,000 allowance is generous. The message needs to be clear.

Tax relief is for pensions, not for fooling around with flexible lump sums. If the wealth managers remembered that , then they would be encouraging their clients to use restraint and defer gratification. If the wealthy were interested in pensions, and not wealth preservation, we would see them calling (as I am calling) for alternatives to income drawdown which drew on collectivism to create economies of scale and insurance against extreme old age.

The pension nimbys protest too much, they are over-playing their hands and they are antagonising not just me, but many in Government who are fed up with their special pleading.


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John Ralfe, Ros Altmann and the cost of central heating.

John Ralfe kindly promoted my article on the lack of diversity in the AE review.


Responsible John

By happy coincidence, I can promote an article of John’s in the FT. You may not have access to the FT online so let me quote John’s conclusion to an article “Don’t cash in your final salary pension scheme (link below)

But most people are not so wealthy and their pension is a large part of their overall retirement wealth, so those guarantees are very valuable. Despite eye-watering multiples for cashing in, do not think now is a clever time to take the money and invest in equities.

The higher expected return of equities versus bonds is just the reward for the risk of holding equities. It is not a guaranteed “free lunch” or a “loyalty bonus” for long-term investors.

John and I agree on how he got to his conclusion, he asks  the $64m question

So how can I decide if the higher expected return of shares versus bonds is worth the higher risk I am taking?

and concludes that most people cannot manage the risks inherent in equity investing – at least not when they’re in need of regular long-term income.

John is writing on behalf of ordinary people, the ones who are beguiled by pension freedoms, freedoms that are already proving illusory. The people who may struggle with their heating bills in years to come.

Irresponsible Ros

Ros Altmann is also writing about transfers this week; she too is writing for ordinary people but her conclusion is radically different. Writing for FT Adviser she concludes

More DB transfers could prevent care ‘disaster’

Ros seems to have adopted the position that the pensions we have been promised from funded DB pension schemes are an unnecessary luxury that had better be dismantled and used for social care. I do not agree with Ros and I’ll focus on just one of her statements to explain why

She argued that a £50 a week final salary pension could be worth around £100,000 as a transfer value.

As an income, she said this might not be worth a great deal, but as a lump sum, it could be “hugely” beneficial in helping to pay for care

But that £100,000 transfer value isn’t exchanged for nothing. That £50 per week will be around for ever, the £100,000 is only around before the pension is in payment.

The direction of travel is obvious, granting property rights on DB pension in payment – a freedom that is as illusory as the prospect of a secondary annuity market.

Ros has, I fear, lost touch with the importance of £50 pw to pensioner households. I travelled on a bus yesterday talking to a pensioner who was about to walk home in the middle of the night for 40 minutes.

You’ll be cold- I said.

Not as cold as when I get home – he said

Haven’t you got central heating – I said

I have but I can’t afford to keep it on – he said

I am not belittling the problem of funding our long-term care bills, I am preparing to help fund those of my parents (which is precisely why I didn’t take a lump sum but chose to draw my pension as pension).

I don’t want to see homelessness , or see those who have homes unable to heat them, I don’t want people giving up their heating money in their fifties and sixties to fund for potential social care.

Meeting the costs of central heating

What we need, is a way to help those who have cash (in a DC pot) convert cash to income. Taken as a workforce, most of us in Britain have only one source of guaranteed income in retirement – out State Pension. Most of us will have a pension pot which is unlikely to afford us the luxury of £50 pw.

We should be focussing our energy on finding ways to give people that £50 pw from an average DC pot. Currently the average DC pot is around £35,000.

There are two ways to do this

  1. Encourage people (and their employers) to put more in so that the pots are bigger
  2. Find ways for people to take more out of the pot, than they can get from bonds (annuities)

The AE review is rightly looking at question one (despite its failings in composition and TOR).

The Pensions Act 2015 put in play the collective mechanisms we could use to create better collective pensions.

We are addressing how to increase the pot, now we must address how to make the pots pay. When we have addressed the primary need, income in retirement, then we can address the secondary need, insuring against rising healthcare costs.

John is right, we must keep our current DB pensions infrastructure in place, both at a personal and societal level, we need pensions

Ros is wrong, we should not swap pensions for cash. We need to find a better way to solve our care funding problems , than by turning off the heating in our houses.

John Ralfe – Don’t cash in your final salary pension scheme – https://www.ft.com/content/9bfda9b2-ec9e-11e6-ba01-119a44939bb6

Ros Atlmann – More DB transfers could prevent care disaster – https://www.ftadviser.com/pensions/2017/02/10/more-db-transfers-could-prevent-care-disaster-altmann/

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Narrowing the range of thought…


I get back from a few days in the North East to this headline in Corporate Adviser

First Actuarial versus the world: DB’s glass half full or half empty?

(you can read the article on the link at the bottom)


Binary worlds make good stories but reality is rarely binary, there are shades of grey, First Actuarial works with clients who have all kinds of strategies. Some of our clients are 100% invested in bonds in readiness for buy-out.

But as most people who read this bog know, most of our schemes (like most schemes in the PPF7800) have both growth and matching assets and would , were they to be measured on a  best estimate basis, collectively be in surplus. If the PPF were to be measure on a best estimate basis, it would show a substantial surplus.

It is only when you look at things from a worst case scenario, that the £250bn deficits emerge. Experts – whether they’re called George Osborne or David Blake, like to point to these worst case scenarios to demonstrate the need to stay in Europe or turn off dividends to fund pension deficits.

Arguing a more optimistic position, as we are beginning to do about Britain’s economic future post Brexit, requires a glass half full mentality. It requires a similarly imaginative frame of mind to suppose that growth assets will grow faster than bonds and that companies will still be around to pay dividends in years to come.


Here’s Winston being talked to by Big Brother in Orwell’s 1984

  • Don’t you see that the whole aim of Newspeak is to narrow the range of thought?

  • In the end we shall make thought-crime literally impossible, because there will be no words in which to express it.

  • Every concept that can ever be needed will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten. . . .

  • The process will still be continuing long after you and I are dead. Every year fewer and fewer words, and the range of consciousness always a little smaller.

  • Even now, of course, there’s no reason or excuse for committing thought-crime.

  • It’s merely a question of self-discipline, reality-control.

  • But in the end there won’t be any need even for that. . . .

  • Has it ever occurred to you, Winston, that by the year 2050, at the very latest, not a single human being will be alive who could understand such a conversation as we are having now?”

Here is John Ralfe, quoted in the Corporate Adviser articlenarrow-5

By saying pension liabilities should be valued by reference to return on assets not by reference to bonds, First Actuarial are effectively saying that the actuaries have got it wrong, that accountants have got it wrong, that TPR and the PPF have got it wrong and that the people who are buying and selling bulk annuities have got it wrong.

“I sometimes feel like we are back in the early part of the last decade. Wasn’t this an argument that was fought and won back then?”

Of course there have been times that the received wisdom has been very much in favour of a total-lock down into gilts, but I know that the Pensions Regulator’s position is not as Ralfe supposes it, the PPF does invest in growth assets and even Goldman Sachs are now arguing that we should not ignore the upside of equity investment in our recovery plans.

“In the gloom, the gold gathers the light about it” wrote the poet when all seemed set against him.

First Actuarial is very grateful to John Ralfe and Charles Cowling and those others quoted in the article, denying the possibility that employers will stay solvent and continue to pay dividends.

We don’t run businesses with the intention of failing, nor do we run pension funds that way. We adopt best estimate positions based on the known data and on the assumption that the sky is not going to fall on our heads!

In those rare occasions when trustees would rather buy-out the pension liabilities through an insurance contract, a strategy should be set to make that possible, but there is no invisible law that says this is what trustees should do.


The conversation continues…

I am sure that the readers of this blog, like the readers of Corporate Adviser, will be looking to continue the conversation, despite John Ralfe (and Big Brother’s ) best efforts!





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