Are unicorns just for little girls?

I don’t often agree with my friend Steven Groves (at least not on social media) but we found common ground yesterday after I argued that the charge cap needs a carve out to accommodate performance fees when something goes really right!

It’s easy to forget in austere times for real yield that new companies spring up like islands from the sea and become fertile and create value for their founders and followers.

That Steve has got a return of 30% after fees , doesn’t make the fact that would have been 32% before fees go away, it just says that the 2% in fees represented value for Steve’s money.

I am currently going through the arduous process of raising money for AgeWage. I know what goes on in the selection process and it’s really tough both to get investment and for the investors to sort out the wheat from the chaff. The money changing hands is small change to the likes of Mark Fawcett and Nico Aspinall (the CIOs of Nest and People’s Pension) but it is the money that kick-started Monzo , Revolut and Pension Bee.

Nobody begrudges Romi Savova her millions nor her backers their returns nor should they. But if Pension Bee had formed part of a venture capital fund into which Mark or Nico had allocated their member’s savings, that fund might be asking questions of the cap, especially if the performance fees for the crystallization of Pension Bee’s £370m valuation all came in this year.

The cost of loss

Of course for every Pension Bee, there are twenty of less distinguished failures. Mark and Nico’s fantasy fund can show 100% of its value at risk and expect to see a high proportion of the investments fold. This is not ponzi-land, it is the attrition you expect with start ups and if you can’t countenance failure then you are not a realistic entrepreneur. For me, knowing what failure looks like drives me to succeed, but I know I can afford the cost of loss because I am not betting my life.

This life-lesson keeps a smile on my face when AgeWage gets setbacks, as we do as often as we get wins. The job of the entrepreneur is to treat each imposter with the same indifference and set the eye on the bigger prize.


It is often said that if you are not running your business with an eye to be a unicorn, then you don’t deserve investment. For those who don’t deal with unicorns, “Unicorn” is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion.

To have that kind of valuation you need to be in a market where there is potential for vast revenue, running a sweet shop in Tooting is not a recipe to make you a unicorn, owning Mars is more like it.

Venture Capital is driven by entrepreneurs convincing thick-skinned investors they are serious about making their companies unicorns, daring to dream the impossible dream, doing a Romi.

Which is why I am pleased that unicorns are recognised in the charge cap carve out. If I find out that Mark and Nico are investing in AgeWage I will be delighted, even if a proportion of the return they get goes to a venture capital fund manager. If that fund manager draws down performance fees representing 5 or 10% of Nest or People’s investment in return for delivering up AgeWage as a fully listed company worth £370m, then I am sure I will be toasted and boasted , not berated for creating an accounting problem.

I would similarly expect Nico and Mark to be acclaimed for their foresight in investing in AgeWage at its current valuation!

Dare to dream

I dream of changing pensions for the better,  giving millions of savers access to information on their pensions that helps them take sensible decisions over contributions , pot aggregation and investment pathways.

If my dream turns to reality I will be rich and so will my shareholders and I hope that my shareholders will include Nico and Mark. I hope that I will cause accountants problems accommodating the fees for my success in their charge cap and I am grateful for the Treasury and the DWP for making sure that my dream s are included in the investable universe.

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Where performance breaches the charge cap – everyone wins!


Andrew Warwick-Thompson is quoted in the FT today claiming that “The government is pandering to the asset management industry” and that “Asset managers should be changing their fees structure to fit the charge cap, and not the other way around“. He is right, and any breaches of the charge cap through spikes in “carry” fees , need to be justified on an exceptional basis and not built into fee structures as a kind of regulatory arbitrage.

I’ve written on this before along the lines laid out in the FT, but I’m beginning to understand where there may be a need not just to recognize the challenge to the cap – but to encourage it.

The  Government has set out its agenda as follows;

  1. We want to see pension schemes finance growth opportunities in private companies , including many that will only realise investment gains in many years to come.
  2. In the meantime, we want the introducers of these opportunities to be rewarded for success by performance fees that we realise could be large, where there is extreme success (unicorns)
  3. So as to accommodate the spikes in growth and in consequent fees, we want to account for those fees over a number of years, so that the charge cap is not breached.
  4. We think this will encourage pension funds and asset managers to work together to finance growth opportunities in the private markets.

Through one lens, this is “pandering” and another it is “facilitating”. Andrew clearly thinks that this is pandering but I am relaxed about the relaxation of the rules because I want to see money invested in a more productive way.

A more productive way

The investable universe for large DC plans is shrinking, if we confine that term to publicly quoted equities. Despite the odd exception (Pension Bee being one), very few growing companies are listing on the world’s stock exchanges. The Norwegian Government  decided this year to cut the number of companies in its reference index from the current 9,000 to about 6,600.

The FT reports that the Norwegian Oil Fund (its Sovereign Wealth Fund) is further reducing its investable universe by divesting from smaller companies on ESG grounds. New screening will mostly affect smaller companies in developed markets such as the US and Europe. The fund has sold out of about 300 companies since 2012 due to ESG problems, something it calls risk-based divestments.

The shrinking of the “known world” means a search for “terra incognita”, the world previously unknown to many asset managers and to DC investment platforms.

Oystein Olsen, governor of Norway’s central bank, which houses the oil fund, said:

“The world is continuously changing, it’s not standing still. There are new challenges. To be a global leader, which is still the ambition, we have to move on.”

I would like to see my DC fund move on and I want to see investment into the kind of assets that have the potential for high growth and are meeting ESG considerations, most of these opportunities are off radar and most need new thinking on how they can be accommodated within our DC funds.

A case study

I was talking last week to one of the investment platforms for micro -businesses that invest in small companies like AgeWage and Chris Sier’s ClearGlass, businesses that have growth potential and meet a social need.

Finding , researching and presenting such opportunities is a tough business. Larger asset managers do not get their hands dirty but sub-contract this work to organizations such as Founders Factory, Syndicate Room and Newables. Firms like mine are selected for investment through funds set up at the very bottom of the corporate pyramid and we are expected to fail.  The attrition rate from firms at the seed stage of financing is so high that investment can only be justified by the likelihood that one out of sixteen of these firms will become a unicorn.

It may seem totally counter-intuitive for pension funds to invest in ventures like AgeWage and ClearGlass but that is precisely what the Treasury and the DWP have in mind when they consult on raising the charge cap.

And paradoxically, it is precisely the patient capital of DC pension funds that is most needed in our space and most suited to growing our kind of business. I put Fintech up as a case study for a new kind of investment and ask the question – could investment in Seed Capital happen within a conventional approach to charging?


I think that there are ways for pension schemes to incorporate investments in Seed Capital, into conventional AMCs which do not spike. But to do so, would be to constrain the entrepreneurial activities not just of organizations like mine, but of firms like Founders Factory Newables and Syndicate Room busy finding and presenting opportunities.

Shoehorning us into a world where the most we can be rewarded is constrained by a cap,  disincentiveses both the pension fund and the creator of the fund. For the sake of presentation of a smoothed AMC, the search for the unicorn is called off, capital is allocated to the usual suspects and the opportunity to make capital productive is reduced.

The issue is one of transparency, for early stage financing (proper venture capital) to be included in the portfolio of DC pension funds, there has to be an acceptance of high numbers of failures but equally that success means huge success.

Packaging VC funds into conventional AMCs simply doesn’t reflect what the investment is about and creates an opacity that is the opposite of what is required.

I don’t want pension funds to invest in organisations such as mine with an expectation of bluechip returns. I want them investing in me because I have the capacity to shoot the lights out – or go down with all guns blazing.

So while I agree with Andrew Warwick-Thompson that pandering to conventional asset managers is no way to run a charge cap, recognizing that there are exceptional opportunities where the risk/reward parameters are quite different from valuations based on EBITDA, means accepting a new way of charging and the occasional breach of the cap.

The critical learning is that where the cap is breached because of performance fees, everyone wins.

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How ESG should protect our national game

“Football should be built on community, not built on mutiny”.

Nasser al-Khelaifi – President of Paris St Germain

Protecting football from mutiny

Fifteen years ago I spoke at an NAPF conference in Manchester , the morning after being smashed in the mush by a Manchester United fan at a JP Morgan function in the Manchester Arts Gallery.

It turned out that JP Morgan Fund Managers, unaware of the risk, had gone ahead with a function on the very day that the Glazer brothers had announced their takeover of Manchester United with a leveraged buy-out that took the club off the Stock Exchange and saddled it with £790m of debt (provided by JP Morgan).

Looking back, it was a foolhardy thing for the bank to have done and when we got back into the hall the following day, it was to find that the entire JP Morgan stand had been dismantled and removed overnight. It took a little longer for my teeth and fat lip to recover – indeed my teeth never have!

The cost of the financing of the buy-out is now estimated to be more than £1bn, which is rather more significant to Manchester United. On top of that the Glazers have been ripping dividends out of the club. In return, the Glazers can point to how they have set up enormous marketing revenues for the club by setting up regional deals around the world that made Manchester United a super-brand way before others followed suit.

But that’s marketing. Old Trafford is a rusting hulk of a ground that already looks obsolete, relative to Tottenham and  Arsenal’s stadia .

Manchester City has forged ahead with state of the art training facilities and the use of a relatively new stadium. Liverpool and Everton have plans for new grounds – Manchester United hasn’t.

Things are no better on the pitch. It has been 10 years since United had an iconic player to match Best, Charlton and Cantona. Christian Ronaldo’s departure has not seen a replacement and since Ferguson left, United have appeared a little ordinary.

This is not proving good for business. This year’s Deloitte money ratings show Manchester United are far off their previously held title “the richest club in the world”.

They are having a good season this year but that is relative, they will win nothing and have only secured a place at next table’s Champion’s league for their efforts.

Which brings me on to the aborted superleague, which United appear to have been instrumental (along with Real Madrid) in creating. That Joel Glazer saw it important enough an issue with the fans to publicly apologize does not appear to have appeased anyone and yesterday’s protest showed that no-one inside Manchester is on the Glazer’s side. Certainly the Sky pundits left with nothing to commentate on , were not condemning the fans for protesting and questioning whether the calling off of the match against Liverpool reflected on the excesses of the fans or of the Glazers.

I was left wondering whether the bloke who punched me in the mush was at the ground yesterday, I bet he was. I never pressed charges and I hope that the Manchester police will behave with the dignity they did back in 2005 when I explained why.

Violence is not acceptable, nor is it necessary but it is understandable and avoidable.  As Gary Neville said on Sky last night, this will not be the end of it.

Building football on community

The privatization on Manchester United in 2005 was not for the fans and its social impact has been to distance them from their club. Many wear the yellow and green colors of Newton Heath, to signify their links to the clubs roots and cock a snook at the Americans who they see as caring  nothing for football or of the club’s heritage.

As for JP Morgan, they seem to be detested in Manchester as News International have been in Liverpool. While Murdoch’s treatment of the Hillsborough disaster was distasteful, JP Morgan’s support for the Glazers is an ongoing outrage. JP Morgan appear to be the financiers of the super league and it remains to be seen just what the financial consequences of the unbinding of the binding agreements will be. I suspect that they will leave clubs with heavy legal and banking bills.

While JP Morgan were able to cut and run from the 2005 NAPF exhibition hall, they aren’t in that position today. It would appear that they have made great sums over the years from the bonds Manchester United issued in 2005 and here they are again , looking to cash in on football’s success with little understanding of the negative consequences of their actions.

JP Morgan are of course keen to promote their ESG credentials , both in banking and in asset management. There is nothing fundamentally wrong with issuing debt but that debt has a social as well as an economic purpose in the world of ESG and the societal impact of the super league is universally considered a disaster.

Whether the counterfactual, Manchester United remaining a PLC, would have proved a better option than the LBO is of course a matter of speculation. Manchester United fans point to the fact that for the Glazers to have taken a public stake in the quoted entity, they would have to have taken the debt on themselves and have been answerable for their management decisions to a wider group of shareholders.

This would certainly have limited their capacity to take money out of the club and made them, and not the club, responsible for the servicing of the debt. In hindsight, the concentration of power among private owners does not seem to be serving the clubs or football well and the big win for the protestors has not yet been achieved. Though the superleague is for the moment dead, it could be revived or proposals equally unpalatable to fans emerge in the future.

The Government’s intervention in scuppering the super league will similarly stand for little, if its fundamental review of football club financing does not lead to an improvement in the ES and G of ownership.

It does not make sense to globalize support if the consequence is that fans have to travel thousands of miles to follow their teams. Indeed the concept of the travelling fan is a problem, unless it can be a more environmentally sustainable basis.

And scrutiny of the decision making of club owners must improve. The secrecy with which the negotiations of the superleague were conducted is exactly the opposite of the transparency required by modern day governance.

On all counts, the debt that JP Morgan have and propose to issue is counter to ESG principles and can properly opposed by those who campaign for better standards.

Those who have dealings with JP Morgan, need to question how deep that bank’s ESG principles go.

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We got to see sunshine after the rain!

sunshine after the rain

Bluebirds flying over the mountain again?

Well not quite – this is the Thames valley, but I did see a yellow wagtail bobbing beside the boat around 6 am!

A few hours later my intrepid crew turned up – looking for the boat..

first sight of the boat

and this blog is for the first intrepid crew of the year (with a hat-tip to last week’s crew who had to be delayed due to engine problems)!

It was a day for wrapping up warm..

our fine crew (taken by Andrew)

Picnic lunch in Eton

It had been a four hour trip down the river but our crew kept smiling – and had a chance to put their feet up on the long reaches between Windsor and Maidenhead.

and a chance for the skipper to clean Lady Lucy’s dirty bottom

The dark skies closed in on our way back from our picnic in Eton

The Dartford wiper

We didn’t quite get the sunshine all day. But we got home safely and thanks to Ian and Andrew for putting the boat to bed for me!


And thanks to Lindsey for sending me this link to her photos and this handmade video

Like what you see?

If you would like to organise a party on Lady Lucy – up to 5 till May 17th and up to 11 after, then you need to book using the link below. The boat is not for hire – you come as my guests and no money is required.  All we need is your good company and a picnic!


You can book a day or a weekend on Lady Lucy here.


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C19 actuaries report “very encouraging results”


Weekly bulletin #42

By: John Roberts & Dan Ryan

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 provides a regular Friday update with a summary of key papers and articles.


More Evidence of Transmission Benefits

Two papers published in the last week have highlighted the additional benefit that vaccination brings in terms of reducing onward transmission from an infected person to others. First published was the Oxford study (link) on the effect of vaccination on infection levels.

The primary finding of this study is that the risk of infection is reduced by around 65% after one dose and 70% after two doses of either vaccine. This is consistent with other data, although the confirmation in relation to the now widespread B.1.1.7 variant is reassuring, along with the fact that the results are in relation to a wide post-vaccinated population sample of around 1.3m.

However, of more interest is the fact that the incidence of high viral shedding infectivity, (i.e. a Ct result of under 30) showed a much more substantial decrease of 74% after one dose and 88% after the second dose. This provides good theoretical evidence to suggest that transmission effects may be greater than the headline efficacy figures would suggest.

This was followed by a large population study (link) by Public Health England which tracked actual cases in households – in particular, whether the first infection resulted in further infections within the same domestic unit.

This showed a clear reduction in secondary infections with a headline reduction of just under 50%. There was little evidence of age being a material factor in either the initial case, or in those subsequently infected. Additionally, the effect emerged after around 14 days post vaccination, which is a similar time period as expected for protection against primary infection.

An additional point made by the Deputy CMO in the press briefing to publicise the results is that some infections classified as secondary are likely to have been acquired directly from the same source as the primary one, meaning that it is likely that the results understate the true level of benefit.

This second study, which included nearly 1m infections in its dataset, thus provides robust evidence that the lower viral shedding loads seen in the first study do indeed translate into reduced transmission in the home environment, a point reinforced in the press briefing as part of the messaging that getting vaccinated protects those you live with, not just yourself.

Vaccine Roll-out (link)

The weekly analysis of vaccinations in England shows that whilst in general very high take-up has been seen over age 50, there are clear signs of it dropping slightly as we progress down the age bands. In particular, the 50-54 cohort has levelled off at 89%, and there is a clear trend now we are vaccinating those below age 65. This reduction is consistent with several surveys of age-related hesitancy, although the level of fall in just one age band is a little worrying.

Meanwhile, the main focus during April has been on second doses, and we are getting second dose take-up rates in the region of 90% for those above 75 (by which we mean those presenting for a second dose as a proportion of those receiving a first jab).

With this data already being four days old, we can safely say that the vast majority of those above aged 70 (which are the age bands for Groups 1 to 4) will have had an opportunity to have their second dose by the end of April. Along with care home residents, these represented around 88% of deaths in earlier waves.

Ethnic differences in vaccine hesitancy

There has been much investigation in differences in vaccine “hesitancy” around the world, looking at differences by age, sex, ethnicity, occupation, roles and political attitudes. A further study (link) of 12,000 from the UK-REACH nationwide prospective cohort (link) has specifically examined differences in vaccine hesitancy in UK healthcare workers. This study was able to consider more granular ethnic categories and healthcare roles than many previous studies. Age, lack of influenza vaccine last year (aOR 0.96 95% CI 1.75-2.17) and being female (aOR 1.42 95% CI 1.24-1.62) were found to be the strongest predictors, but no differences were found for different occupational roles after adjustment for interactions.

Clinical and medical news

Prevalence of Variants in the UK

With the successful roll-out of the vaccination programme continuing apace, and much lower levels of prevalence now in the UK, much of the focus and concern is on the possibility that variants will take hold which are either more successful in evading the vaccine or in more rapid transmission (or both).

The government regularly publishes details (link) of totals of all new variants, and this week has seen a noticeable increase in variants from India, with two new ones identified. In total, B.1.617 variants have tripled within a week, with a five-fold increase in just a fortnight, and represented 3% of all cases sequenced in the most recent period.


A recent trial reported in the BMJ (link) regarding the use of Budesonide, an anti-inflammatory drug typically used to treat those with Crohn’s Disease, reported a 3 day improvement in self-reported recovery from COVID-19. 32% of those taking the drug reported recovery within 14 days from the randomisation, compared with 22% for those in the control group.

Whilst there was also a modest fall in those admitted to hospital, the researchers’ view was that this was not significant enough to draw any firm conclusion.

Nevertheless, as a result of this, the NHS has recently issued guidance (link) permitting its use for those over 65 or over 50 with a relevant comorbidity.

Launch of Antiviral Taskforce

The UK Government launched an Antiviral Taskforce on 20 April (link) with the aim of finding at least two effective antiviral treatments by autumn that could be delivered at home. The taskforce will be modelled on the vaccine and therapeutics taskforces which brought together academia, industry and government with clear budget and government approval processes. Success is dependent on the number of drugs currently undergoing clinical trials. The contrast with the vaccine pipeline is quite stark if we consider the situation 6 months before roll-out. In July 2020, there were 19 vaccines in human trials (link). 6 months prior to autumn (just), the list of antivirals in development is much shorter and less promising (link):

  • Remdesivir – found to be ineffective against original targets hepatitis C, respiratory syncytial virus and Ebola, it was re-evaluated under the WHO’s Solidarity trial involving 11,000 patients across 30 countries. No discernible benefit on mortality or duration in hospital. Further research now focusing on earlier administration.
  • Favipiravir – Available in Japan since 2014 for treating influenza viruses. Added to the UK Principle trial that is investigating treatments that prevent hospital admissions and reduce recovery time.
  • Molnupiravir – Currently in phase 3 trials by Merck to determine whether it prevents admissions and support recovery at home.
  • PF-07321332 – Started phase 1 trials in March 2021 by Pfizer

Shift work and severe COVID-19

Studies from the ONS have investigated the likelihood of COVID infection and death in different occupational groups (link). A further study has focused on shift workers inside and outside of healthcare, and whether irregular work patterns have a detrimental effect. The study, with 235,685 participants, found that shift workers in healthcare had a 7.56x increased risk of severe COVID, whereas being a shift worker or working in healthcare was associated individually with a doubling of the risk. Possible contributory factors included greater patient-facing roles for shift workers, and greater representation in healthcare shift workers from men and ethnic minorities. However, the researchers did not control for ethnic group, place of residence or deprivation.

Comparisons between those under and over retirement age suggest the key factor is likely to be increased exposure to the virus. However, shift work is also associated with disruption to behaviours and biochemical rhythms that have been associated with chronic inflammation and higher risk of cardiovascular disease.


ONS Antibody data

The last ONS update on antibodies showed a levelling off across the population, and a reduction for higher ages, presumably due to a waning awaiting the second vaccination. With those second doses now proceeding apace, the latest data (link) shows a resumption in the overall level, and more specifically in those older ages.

In England the overall level has increased from 55% to 68%, with slightly lower levels elsewhere.  It should also be noted that this data is for the week ending April 11th. The effect of vaccinations since then (and indeed the time taken for immunity to develop) means that the current position will be even better than shown here.

The “wobble” seen in the older age groups is clear in the graphs below, along with the subsequent increases referred to above.

ONS Infection Survey (link)

This week has seen big reductions in the ONS estimates of infectivity levels, with England down by over 40% and Wales even more at a 50% reduction, to remain the lowest in the UK.

We’re also seeing some individual regions and age groups round to 0.0% in the report, with the South West now at 0.03% and Over 70s at 0.04%. These are very encouraging results given the easing of restrictions to date.

“R” Estimate (link)

Over the last two weeks SAGE’s estimate of R for England has risen from (0.7 to 1.0), firstly to (0.8 to 1.0), and today to (0.8 to 1.1). The regional estimates are shown below.

These estimates would appear to be at odds with the ONS data on infections reported above, and show the difficulty that there is in coming up with a reliable R when prevalence is at much lower levels in the community.



Elimination or Mitigation

Commentary published in The Lancet (link) compares the success of the two strategies in terms of both mortality and economic impact. Countries following an elimination strategy are Australia, New Zealand, Japan, Iceland and South Korea, whereas no less than 32 countries are considered for the mitigation approach.

The conclusion drawn is that those countries which adopted an elimination strategy fared better both in terms of mortality and in term of minimising GDP impact. Whilst it hard to argue with this conclusion in respect of mortality, relevant factors that may have affected the ability of a country to adopt a successful elimination strategy are not discussed, which may be regarded as a weakness of the conclusion. It’s of note that all five countries are (or in South Korea’s case is effectively) islands, with more ability to reduce border transits effectively than, say, mainland Europe.

And Finally…

It would be remiss of us not to acknowledge the current situation in India, and the desperate plight that the population is suffering as a consequence of the high prevalence of the virus and overloaded health care systems. As actuaries, we rely very heavily on data to inform and advise, but the one thing that appears very clear is that the figures coming out from the country, distressing as they are, are likely to be just a fraction of the true situation.

Our profession is well represented in India, and Indian actuaries, both historically and today, enjoy a close relationship with the IFoA. Our Immediate Past-President John Taylor recently sent a message to the actuarial community there, reproduced below, and we can do no better than echo his words and thoughts at this concerning time for all in the Indian subcontinent.

2nd May 2021

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We talk to retirees the language of a bygone age

Governance improving – but…

The DWP has been asking itself some searching questions about the governance of the workplace pensions that Britain will be increasingly rely on to supplement the state pension and eventually overtake it as our main source of retirement income.

It  established that its policy objectives are being achieved in relation to the vast majority of the provisions it put in place. But…

The review has identified,.. that the policy objectives in relation to the Chair’s statement are not being achieved within the current approach. In particular, using a single instrument – the Chair’s statement – to try to achieve multiple policy goals, in respect of scheme governance and member engagement does not work.

Testing and discussions with interested parties including trustees and service providers’ voices revealed that industry understanding of the purpose and intended audience of the Chair’s statement was unclear.

It does not work as a communications tool for members and there is little evidence that members know it exists.

As a means to keep members informed, the chair statement has failed. As a way of focusing trustee’s mind on the job it has succeeded (though – according to the DWP’s “improving member outcomes” consultation last September, the vast majority of small DC schemes are failing in meeting the DWP’s governance standards, even so.

What do members expect?

Unsurprisingly, the member’s voice is not heard very loud in this review. The output – apart from the sign-off from Guy Opperman is that the DC Governance Group produced a free template which is hosted on the PLSA website. This may be of some help to smaller single occupational schemes but doesn’t address the deficit of  information getting to members.

Frankly , the members are told very little about their scheme and what they are told about the progress of their retirement pot towards meeting their retirement needs is woefully inadequate.

So what do members get?

Speaking last week to the Chair of one of Britain’s largest single employer DC workplace pensions, it became clear that he had totally lost confidence in the capacity of his principal instrument of communicating with members which he saw, not as the Chair Statement but as the statutory money purchase illustration.

Most of us will have seen one of these, it’s the document that tells you what you are likely to get as an extra income when you retire. Typically it’s full of numbers which are calculated based on annuity rates, assumptions about future inflation and growth of the pot net of charges.

The Chair’s complaint was that no matter how simple he made the SMPI , nor how he explained it with video footage, the method used to calculate the numbers was fundamentally flawed, stymied by prescription over the rates that pots were converted to income set out by the Pensions Regulator. Certainly, reading the method used by trustees, it is as if the pension freedoms never happened.

This is a statement made to the clergy of the Church of England using money purchase AVCs. I don’t mean to criticize their trustees, just to show the fustian in which their illustrations are clothed

There follows the growth assumptions on various funds, many of which are negative. If I was a member of the clergy seeing this, I would be asking what in heaven’s name was going on.

Why would I be wanting to invest in funds with negative growth assumptions?

The answer is of course because the expectation within the SMPI illustrations is that you will behave like any DB pensioner and expect a guaranteed income in retirement. Which rather ignores the point of the pension freedoms, as George Osborne proudly proclaimed “from this day forwards, no one in this country will ever have to buy an annuity again”.

We talk to members the language of a bygone age.

The problem here is not just confined to single occupational DC pensions or the AVC schemes sitting beside DB benefits, it is there in the statutory communications of benefits to those in master trusts including the big ones – Nest, People’s, L&G, Lifesight …I could go on.

We set member expectations for their pensions through statutory instruments like chair statements (that don’t get read) and SMPIs – which do get read and confuse the hell out  of us (apologies to the clergy).

Simplification is only part of the story

We can simplify the messaging in Chair Statements and SMPIs but if we do not address the message itself, we only end up confusing in a more simple way.

DB and DC schemes are different, they don’t both end in guaranteed pensions (it could be argued neither does). But that is what the DC SMPI assumptions are really about and that is what the template of a chai’s statement is really about too, it’s all about saying that what you are getting from DC is no difference (in terms of governance) than what you used to get from DB.

It is time that the DWP extended its thinking to what goes on in the member’s head, rather than in the imaginations of actuaries , policy makers and trade bodies. People want illustrations that tell them what is likely to happen and chair statements that tell them what has happened and they want information in clear and easily digestible statements.

The fundamental question over what a DC scheme is designed to do is not being properly addressed. If people continue to strip money out of DC occupational schemes either to transfer to their bank balances or to SIPPs then trustees need to reflect this in their chair statements. If they don’t want this to happen they need to find default mechanisms that channel people into investment pathways or maybe even scheme pensions (using CDC).

Right now, the information being given people who are retiring is couched in the paradigm of a bygone age, an age of DB and of annuities and not of pension freedoms

It may be that trustees are holding out for something better and looking at CDC as something better, it may be they are happy seeing their schemes giving up on members when they reach retirement. But whatever trustees think (and I think most are as confused as the messaging they produce), we need to get the message updated.

When that happens, it may become clear that much of the scheme design of workplace pensions is simply not up to the job members are expecting it to do.

But that is the subject of tomorrow’s blog!


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Must Britains be slaves to online pension fraud?

The Work and Pension Select Committee’s study on pension freedoms has morphed into an all out struggle with the Government to protect British savers from online scams.

In parallel with the WPSC, the All Party Parliamentary Group on Pension Scams has been meeting with the help of its secretariat the Transparency Task Force.

The TTF have been meeting regularly on this subject and a recording of its most recent session can be watched and listened to here.

Stephen Timms is only one of a number of speakers on this recording , his contribution starts at 1.43.

Pension scams pre-date the introduction of the Pension freedoms that came in , in 2015. Prior to the freedoms , scams were about circumventing the restrictions on drawing pensions. Since the freedoms, the emphasis of the scammers has been on the freedom to self-invest pensions and draw the benefits as people like.

People like

  • the imaginative and seemingly responsible investment strategies of the crooks.
  • the delivery of the advertising – seemingly endorsed by google and other platforms
  • the quality of service  which accompanies the scammers offer
  • the freedom of not having to listen to organizations like Pension Wise, telling them to act with caution.

The online safety bill which Stephen Timms refers to , does not cover financial harms , which will be carved out. Timms wants financial harms to be included and it is difficult to find any argument that

Timms’ report calls for prevention against scams and enforcement

  1. restrictions on transfers where trustees refuse to transfer “red-flagged” transfers. This is likely to go ahead in October
  2. support for people thinking of transferring rights – a better pland for making  Pension Wise the norm. Only 1/33 people eligible for Pension Wise currently use the free appointment.
  3. inclusion of financial harms as part of google and other’s “duty of care”.
  4. better sharing of intelligence on scams with legislation for industry participation in information on scams.

Fraud accounts for 1/3 of British crime but gets only 1% of police resource devoted to it. There are so many regulated bodies involved in the prevention of scams that scammers use the confusion to promote their scams , often using a seeming endorsement from one body to justify its crooked actions.

As regards enforcement, the voluntarily funding and voluntarily participation in  Project Bloom, the pension industry’s agency to prevent and enforce against scams, is not-according to Timms, strong enough (and sounds like a gardening imitative). He’s calling for a revamped industry body with proper powers, greater focus and better resource

I’m sure we’d all support the recommendations that Timms is making but they are reactive. Timms warned against the danger of freedoms in 2014, Plato got there before him

The curse pension is under is that we have granted freedoms but have made many people slaves to the scammers.

There is a way to provide order again and Timms’ remedies go some way towards doing so, but they are aimed at limiting the damage, not at preventing its cause.

People generally want a firm direction on how to spend their pension pot and if they don’t get a reasonable direction , they will look elsewhere. Scammers will be in their line of sight and scammers will outwit them.

I am being asked this morning to pay £1.09 to an unknown source to receive a parcel from Royal Mail, in doing so I will no doubt have to give my phone number, bank account details and an authority to the scammer to raid my bank account. The message looks remarkably like it came from the Royal Mail. We only have to fall for a scam once to lose a lot.

Thanks to Stephen Timms and the WPSC and thanks to Andy Agethangelou and his work supporting the APPG on Pension Scams.

We now need to make sure people feel no need to press the link and become the scammers slave.

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Sorting the Pension Gender Gap needs more than a nudge


I’ve turned back to the research done by State Street and People’s Pension on the pension adequacy. The report came out a while ago and it’s not had the attention it needs or deserves, you can read it here. It has some interesting things to say about the gender pay gap

It recommends that workplace pension providers should explore the possibility of communicating with female members who work part-time, in their mid-40s and beyond to explain the ramifications of not having up to an extra two days a week of work would have on the size of their pension pot.

As Jenna Gadhavi points out in a recent blog, many women who leave the labour market to have and bring up children, miss out not just on a wage but on  future pension rights, in whatever form they build up.

The People’s Pension calls for providers to speak with women who have deferred pension rights but no current contributions and nudge them back to work. But this assumes that women want to  return and indeed that it is financially viable for them to do so.

Commenting on Jenna’s article, Norma Cohen posts on linked in.

It is becoming increasingly clear that provision of high-quality, affordable childcare is a necessity, not a luxury, in a modern economy. Given the rising proportion of elderly people in the UK compared with those of working age, it is clear that government policy must aim at helping those of working age be as productive as possible. That means making it much easier for women – a majority of university graduates – to both raise families and participate at work.

I agree, the problem goes much deeper than making working women aware of their need to pre-fund pension contributions prior to having their family. Norma sees a systemic problem and calls for a systemic solution.

People’s claim that the average women has £7,000 pa less in pension rights than men not just because of the gender pay gap , but because they are unproductive and pay no pension contributions when men are forging ahead.

Getting the balance between caring for young families is one thing, but we also know that the majority of elderly care is provided by women and usually on an unpaid basis.  Many women swap a lifetime of paid work for a lifetime of unpaid caring- and have few lower pension rights/pots as a result.

Redressing the balance

There is within the pension system, one beacon of hope for women and that arises from legislation enacted earlier in the century that means that women cannot be given lower annuity rates than men and this  extends to scheme pensions , even when the pension entitlement is linked to defined contributions.

This means that if a CDC pension entitlement is based on the build up of money in a notional pot, that pot cannot pay a bigger pension to a man than a woman, even if a man is likely to get the pension for shorter than a woman.

By comparison, if a woman and a man had an equal pot and set out to draw down the same amount from the same age, the average man would have a much better chance of the drawdown lasting as long as he does. It’s down to women living longer than men.

This goes for the state pension too, which pays the same to women as men (provided both have equivalent national insurance records = I fear that many women have inferior records and this too needs to be addressed).

The conscious decision of the European and UK courts to provide a bias towards women in unisex annuities and equalized pensions has meant that women are benefiting from better pension rates than previously.

But defined contribution pensions that pay out as cash or through drawdown or simply roll-up, miss out on this female pension perk.

The actuarial assumptions that underpin CDC work in favor of women, just as unisex annuity rates do.

Lessons to be learned

People’s Pension is now Britain’s second biggest DC pension scheme (second only to Nest), it looks after the retirement interests of millions of women.

Its work with Ignition House shows that the problems for savers are systemic

  • Savers are scared of planning for the future as they don’t want to discover the ‘truth’
  • Savers also underestimate the financial risk of growing old and don’t understand how inflation can impact their savings
  • The typical saver follows the path of the least resistance – they won’t leave a product or change a drawdown withdrawal rate once they have signed up.

Can we expect people’s behaviors to change with nudges? I suspect that the problems unearthed by the “New Choices, Big Decisions – 5 years on” cannot be nudged away.

Systemic problems need systemic solutions. Is it now time for People’s Pension to consider offering all its members the option of a scheme pension paid from a pooled pot where women can benefit from the same rates as men and enjoy freedom from pension freedoms that can work against them?

The options in the Pension Schemes Act (s48) for multi-employer schemes such as People’s Pension present an opportunity for it to systemically reduce the pension gender cap.

Put more bluntly – People’s Pension could (and in my opinion should) go CDC.


I would be interested to hear from any experts  who can quantify the beneficial impact of unisex annuity and scheme pension rates.

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COVID-19 vaccines and risk management


COVID-19 vaccines and risk management

By Josephine Robertson and Dr. Sarah Chan

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




In this bulletin we consider the non-compulsory nature of the vaccination programme and the ethical and cultural implications of alternative approaches. Approaches to manage risk at individual and population level must be appropriate to the nature of the threat. We consider the impact on building or eroding social cohesion, a vital component in pandemic response.


The emergence of a number of clinically-proven vaccines against SARS-CoV-2 within 12 months of the start of the COVID-19 pandemic is a major breakthrough. The vaccines themselves, however, are only one of the components needed for successful disease control. To affect the spread of the disease, public health policy must also incorporate strategies to:

  • promote and monitor vaccine distribution and uptake throughout the population;
  • assess and publicise evidence of vaccine effectiveness; and
  • understand how these factors intersect with social and behavioural components, including non-pharmaceutical interventions.

By now, national and international measures to control or limit individual behaviour are commonplace but will vaccination status also be considered? Will ‘vaccine passports’ to regulate travel, give access to public spaces, or enable employees to attend work become a requirement? If so, are these restrictions acceptable? Could this approach provide incentives to be vaccinated, and at what cost?

Through this vaccine roll-out and the long-term management of COVID-19, the approaches adopted require careful consideration. These approaches have ethical and cultural implications which can either build or erode social cohesion, a vital component in pandemic response.

Factors to consider: vaccine effectiveness, immunity duration and uptake

Vaccine effectiveness evidence has shown that vaccinated individuals are less likely to suffer from symptomatic COVID-19. Public health surveillance programmes are underway to provide evidence on vaccine effectiveness in reducing infection and transmission risk[1]. A vaccinated individual poses a reduced risk of transmitting the disease to the community around them only if a vaccine provides benefits a and b (shown below).

Another aspect where evidence is yet to fully emerge is the expected duration of immunity (naturally acquired through infection and subsequent recovery or induced via vaccination)[2]. This depends on both a) the rate at which the body’s immune response develops and subsequently wanes and b) on the virus mutation rate. Although more stable than flu viruses (requiring a new vaccine each year), SARS-CoV-2 already has new variants causing concern over vaccine effectiveness. In addition, coronaviruses (such as those that cause colds) tend to produce shorter natural immunity[3]. Evidence for the duration of effective immunity is so far limited to assessing natural immunity at up to 6-8 months[4]. It is hoped that vaccination will produce a more robust and long-lasting form of immunity, even if the response wanes slightly.

The ongoing management of COVID-19 via vaccination may therefore require booster shots to maintain immunity, but how often? This depends on the extent to which new variants require vaccine adaptations to maintain effectiveness. A major contributing factor to the emergence of new variants is the extent to which the virus has the opportunity to replicate. Therefore, the continued transmission of COVID-19 is a material risk for the emergence of vaccine-resistant variants. A novel variant threatens the effectiveness of vaccine strategies not only within the country where it emerges, but beyond. Controlling the virus at a global level should therefore be an overarching objective of all pandemic response strategies.

Finally, the effect of vaccines on reducing COVID-19 risks depends on availability and vaccination take-up rates throughout the population. In the UK, a programme is underway to improve vaccine uptake across all communities, with tailored interventions for groups needing additional support to achieve target vaccination levels[5].

Compliance and coercion: vaccine passports may fail to deliver

Epidemiological data and statistics on the effectiveness of vaccines and rates of uptake can provide an indication of the risks at a population level, but do not accurately assess individual risk. The R-number, for example, is a statistic that represents not the risk from or to an individual, but the average level of onward transmission within a population under given circumstances. These circumstances include social and behavioural conditions particular to that socio-cultural context, as well as any public health measures in play, including vaccination and non-pharmaceutical interventions.

Interventions that propose to introduce differential treatment for individuals on the basis of personal risk status should be carefully and critically considered. While it might be sensible and proportionate to recommend that people especially at risk from COVID-19 ought to exercise more caution, mandating individual behaviour on this basis and requiring compliance (for example through imposing penalties) would not necessarily follow. Moreover, segmenting the population on the basis of differential risk status raises serious ethical concerns around reinforcing historically-grounded harm to marginalized groups, and risks entrenching existing social inequalities[6].

The issue of ‘vaccine passports’ is one that deserves particular scrutiny. Aspects of this approach are already being implemented or considered in various countries – Israel’s “green pass”[7] is one notable example, with the EU considering a similar scheme. It has been suggested that the approach of “immunity passports” by granting more freedom to individuals who are putatively immune might mitigate some of the negative social and economic impacts of lockdowns (and similar approaches)[8]. At the same time, however, the ethical and social issues associated with such a proposal are significant and require attention[9].

Controlling individual behaviour on the basis of individually-determined risk status is difficult to justify. Moreover, the framing of such monitoring in terms of “passports” puts the emphasis for the management of personal and public health risks in the wrong place. It places the focus of pandemic response on the individual’s responsibility to be vaccinated and on individual actions, rather than on the structural approaches that might encourage the uptake of vaccination and other health-promoting measures across the population. This atomistic approach to public health has the potential to undermine solidarity as well as distracting from other, more worthwhile response efforts. It is well-understood in public health, and the course of the pandemic thus far has shown, that assigning blame and responsibility to individuals for protecting, or failing to protect, their own health and that of others is simply less effective than strategies that address structural factors and facilitate collective approaches to promoting public health.

Furthermore, in so doing, it is likely to widen inequalities, not just in terms of health but broader socio-economic terms. Vaccination rates are often lower in groups who already face disadvantages, such as those with chronic health conditions, minority ethnic groups or low-income communities (Bulletin 114, 112, 110). Further restricting the participation of these groups in society will increase this disadvantage.

Finally, the limited utility and validity duration of a vaccine passport scheme, in comparison to the technological, resource, implementation, surveillance and social costs it would entail, weighs heavily against the introduction of such a scheme. Our aim nationally and globally, now that vaccines are available, should be to make them widely available to reach the point where enough of the population is vaccinated to prevent the disease from spreading. Once enough of the population is vaccinated,  it will be even less useful to force everyone to carry proof of vaccination status. This being the case, the use of public funds to commission a passporting scheme that, if all goes well, could be obsolete within the year, could be a poor use of resources. Furthermore, it might be considered a poor use of resources which distracts attention from other, more effective ways of addressing the pandemic and its broader effects.

Compliance and coercion: international travel and inequity at a global scale

The UK does not currently require compliance with immunisation programmes[10], and at a global level, mandatory vaccination remains a contentious idea for ethical reasons, and because of its questionable effectiveness. Where vaccinations are a condition of access to certain places or services, the applicability of this requirement is generally limited with various exemptions in place. Vaccination requirements imposed by US states as a condition of school attendance, for example, usually allow for a range of exemptions including religious and personal beliefs as well as medical reasons. From a public health law perspective, where it is proposed to limit fundamental rights such as liberty and freedom of movement in order to prevent the spread of infectious disease, the curtailment of these rights must be both proportionate in relation to the threat to public health, and essential to protect the public interest in preventing disease transmission[11]. If the restrictions imposed on the unvaccinated are sufficiently severe, this may be a form of de facto coercion or mandatory compliance.

Some governments may require vaccination as a condition of entry to protect their residents from the putative risk of infection posed by visitors. A model for this requirement would be the International Certificate of Vaccination or Prophylaxis (ICVP) provided by a WHO approved center[12]. To be administratively feasible, vaccination certificates should have validity for long periods, such as 10 years, which implies the need for a vaccine to have a lasting immune response.

One such scheme commonly referenced is the certification associated with Yellow Fever. Yellow Fever has an effective vaccine which provides lifelong protection for most people[13], and proof of vaccination is required for entry to a certain, relatively small subset of countries where the disease is prevalent. For those with contraindications, an exemption letter may be awarded. Such a scheme does not entail compulsory vaccination as such: a person retains the right to choose not to be vaccinated, but the consequence of this is that they may be denied entry to the country requiring proof of vaccination.

Given the longstanding acceptance of the Yellow Fever certification scheme, could introducing vaccine passports for COVID-19 as a requirement of international travel be similarly unproblematic? There are substantial differences between the two cases. Yellow fever affects a small number of countries where the disease is endemic, while in the rest of the world it is rare; COVID-19 is currently affecting all countries, even if not equally. As such, COVID-19 vaccine passports would present issues for international mobility generally, rather than entry to specific countries only.

Moreover, availability of COVID-19 vaccines is drastically unequal across countries, and demand will continue to outpace supply for some time to come, with disparities in access being a particular burden in populations in low-income countries. Such populations are already disadvantaged with respect to healthcare generally and further disadvantaged with respect to COVID-19 by having less access to vaccination. Therefore, imposing additional restrictions on freedom of movement could further compound this, resulting in significant perceived injustice.

Further issues arise when accounting for the existence of multiple different vaccines (and multiple routes to manufacture in different countries), which may have different efficacy and persistence. Moving away from one form of vaccine passport to different vaccine type-dependent passports may see certain countries accepting only particular passports potentially exacerbating “vaccine politics”. Recent moves by China to grant preferential immigration access to those who have received Chinese-made vaccines indicate the possibilities for new forms of vaccine nationalism and “vaccine diplomacy”.

Hard or soft coercion: passports as incentives?

It has been suggested that a benefit of introducing a vaccine passport scheme could be its effect in incentivising people to be vaccinated. This simplistic approach fails to engage with the much more complex and nuanced factors affecting vaccine decision-making. To begin with, such an approach assumes that whether or not a person is vaccinated is wholly a matter of their own, completely free choice, rather than dependent on other factors such as their ability to access the vaccine, or their pre-existing health conditions that may interfere with being vaccinated.

Furthermore, for people and groups who may have doubts about the vaccination, for whatever reason, using passports effectively as a means of coercion is liable to amplify mistrust and increase, rather than diminish, resistance. “Vaccine hesitancy” tends to be higher in minority and marginalised groups within society; introducing vaccination as a requirement for people to participate fully in society may deepen inequalities and fuel anti-establishment feelings, rather than promote trust and enable the wellbeing of these groups to be protected.

As seen with other interventions such as mask-wearing and lockdown restrictions, vaccination is already highly politicised. Public health behaviours can rapidly become aligned with ideological differences, and these differences can be amplified and polarised further by the nature of discussion, especially on social media. The implementation of a vaccine passport scheme, and so splitting the population into binary categories, may stigmatise the unvaccinated and restrict their rights. This is likely to lead to even greater polarisation and create deeper social divisions. Social cohesion enables the collective action and solidarity that are essentially required to meet the challenges of infectious disease. Actions which may erode social cohesion may not only dampen collective efforts in the current pandemic but also the next.


Contingencies: vaccination and employment

Similar ethical concerns may attach to employers imposing a requirement for employees to be vaccinated as a condition of work. If the alternative is not to be employed, such a requirement may effectively be a form of coercion, with the burden of that coercion falling particularly on those who are less advantaged. On the other hand, it seems appropriate to require that workers in certain roles involving contact with those particularly vulnerable to infection or high exposure risks to themselves, such as health and social care, should be vaccinated both for their own safety and that of others.

As a contingency of employment in a role, vaccination may form part of the employee health and safety policy. Under Health and Safety, “employers, employees and self-employed have specific duties to protect, so far as reasonable practicable, those at work and others who may be affected by their work activity, such as contractors, visitors and patients”[14] For example, NHS employers may have a policy to reduce exposure to or the consequences of exposure to vaccine-preventable disease for both staff and patients through screening and vaccination[15]. Requirements and recommendations are dependent on the characteristics of and risk posed by the infectious disease, and category of staff based on exposure risk. Framing COVID-19 vaccines in this way may enable us to realise the public health benefits of vaccination in certain industries and sectors while avoiding some of the ethical pitfalls associated with implementing a higher-level vaccine passport scheme across all of society.

Nudging behaviour

When offered a vaccine, the decision-making involves a person “in effect performing complex cost-benefit analysis based on imperfect assumptions.”[16]. The benefits of vaccination were set out in Box 1. The costs can include time, inconvenience, side effects, and money including travel, child minding, and lost work[17]. To improve take-up is then to improve the understanding of the associated costs and benefits, and where possible reduce associated costs. These public health practices can be considered as nudges, reducing the threshold in the decision-making process so that the easier choice is aligned to the individual and collective benefit, while still respecting an individual’s right to choose.

For example, the NHS has a programme of incentives encouraging health and care staff to take up the annual flu vaccination, ranging from community acknowledgement to leadership praise[18]. The COVID-19 vaccination roll-out in NHS England staff has been treated in a similar way to that for annual flu (where take-up is generally around 75%[19]). NHS England has called for staff managers to have one-to-one conversations to improve understanding of the ‘powerful protective effects’ of vaccination[20].

Other employers are considering the provision of incentives for health promotion, such as gift certificates or a full-pay day off to reduce the associated cost of vaccine side-effects[21]. For the self-employed the government could consider a one-off payment similar in concept, if not in value, to the payment for isolation. Again, such incentives should be carefully evaluated in terms of their potential for coercion and effects on inequality. Support to meet the costs of making a choice that benefits individual and public health is likely to help address inequalities; additional incentives, particularly if significant, may start to compromise the freedom of that choice. Even without provision of direct incentives, employers may still be able to assist with vaccine promotion through providing easy access to appropriate information or one-to-one discussions via occupational health services.

These nudging interventions can be focused at the individual level but there are also collective nudges such as public holidays to mark important moments in time (i.e. a level of vaccine take-up). Another collective intervention is education. A key issue affecting decision-making is misunderstanding of collective benefits and individual risk of infection[22]. Not perceiving COVID-19 as a personal risk may tip the scales where prevalence or consequences of infection are not well understood.

Where there is less appreciation for the collective benefits, an individual may also be less inclined to take the associated costs (as mentioned above). A fundamental public health response is education as it enables individuals to make informed choices. It can also enable the robust critique required to disable misinformation, a threat to vaccine take-up. These interventions can take many forms such as school and university awareness, regular training for key workers, health & safety representatives, and society decision-makers such as local and national politicians. Not only does this improve our approach to this pandemic, but also the next.

Concluding remarks

Approaches to manage risk at individual and population level must be appropriate to the nature of the threat. Social cohesion is a vital component in pandemic response, and any actions being considered should have regard to this aspect. Simplistic vaccination passport strategies may be less effective than hoped in increasing vaccine take-up and reducing infectivity, while damaging social cohesion (with various undesirable longer-term and/or indirect effects). Encouraging vaccine take-up through ‘nudging’ strategies may be more effective.


28 April 2021





[4]  /


[6] Ganguli Mitra, A. et al. (2020) Segmenting communities as public health strategy: a view from the social sciences and humanities. Wellcome Open Research 5:104


[8] Brown, R. et al. (2020) Passport to freedom? Immunity passports for COVID-19. Journal of Medical Ethics 46:652-659.

[9] de Togni, G. et al. (2020) Imagining life with immunity passports: Managing risk during a pandemic. Discover society,


[11] See de Miguel Beriain, I. and Rueda, J. Immunity passports, fundamental rights and public health hazards: a reply to Brown et al. Journal of Medical Ethics 2020;46:660-661.




[15]  /  /

[16] Clinical Infectious Diseases, Volume 52, Issue 7, 1 April 2011, Pages 911–916,

[17] Clinical Infectious Diseases, Volume 52, Issue 7, 1 April 2011, Pages 911–916,




[21] /


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IFOA seek a reverse gear for “the great risk transfer”.

Way back in time, before the pandemic hit, the IFOA launched a campaign to better understand the transfer of risk from institutions to individuals. I was in Staple’s Inn when the events chronicled by this video took place.

It is odd to see us sitting at tables and reminds me that the close physical proximity of individuals working on a common cause can give rise to positive results. The positive result in this case is the IFA report that emerged over a year later!

What this is about

We were asked by the IFOA to consider two matters put to us by the actuaries

  • Rebalancing risks – We think there are opportunities to ease the burden for consumers by shifting the prime responsibility for certain risks back towards institutions. The mechanism for achieving this is structural changes to markets, products/services, and the legal/regulatory frameworks that shape them.

  • Helping consumers manage financial risk through good decision-making – We believe a key driver for new products and services should be to help consumers with the complex decisions involved in managing financial risks effectively and affordably. This could dramatically improve outcomes for many people, and for society as a whole.

Essentially, the conclusion reached by the IFOA’s working group – following consultation with other actuaries and a few non-actuaries (like me) was that we need to do more on both but that especially , we need to consider where institutions can reasonably take decisions on behalf of individuals to relieve them of a burden everyday people find too hard.

The interim report , published in July next year made the direction of travel clear. The great risk transfer which has created this burden was not (according to actuaries polled) what consumers wanted, so much as what others wanted for them

This is very important. It is often thought that pension freedoms from a move from DB to DC are consumer driven, they aren’t.

Now the working group has published a second report with clear recommendations for action. These go beyond pensions, but as this is a pension blog, I will focus on the pension remedies

This is right and proper. For those who want a default pension, there is CDC, for those who want guidance on options using pension freedoms , there are investment pathways. Both represent a return to risk-sharing , even the decumulation pathways acknowledge that in giving guidance, institutions are taking back some responsibility for outcomes. This is an important point, pathways are a form of insurance against worse outcomes.

A timely publication

I am pleased with the timing of this paper, albeit several months after it was due. The paper reconfirms opinions set out in recent blogs by the FT and others, that pension risks have been transferred in an unwanted way to individuals who are neither ready nor given the equipment to take the decisions required.

This unwanted risk transfer will leave a legacy for the future which is beginning to be recognized as harmful both to individuals and to society.

The document and its predecessors are good reads and deserve to be absorbed into the policy debate, I will continue to contribute my blogs as evidence that the IFOA are on the right track!


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