Tuesday, 20 June 2017

Regulator in Danger of Decreasing Pension Membership

At an SPS conference last week, the Regulator's spokesperson talked of the need to encourage consolidation of pension schemes and how to remove the barriers to consolidation.

At the end of her talk, I challenged her. Is she saying 'big is good'?

She assured me she wasn't saying 'big is good' but then went on to repeat what she had said in the talk- the need for lower fees and economies of scale.

There's a problem with this for the small and medium sized employers that value the pension plans they have. They have put the plans in place for a reason, they value them and they promote them to their staff, with a high take-up. they own the plan- it bears their name. It was designed by them.

The moment they are forced to consolidate into something bigger, they lose the 'family touch'. They lose the ownership.

We have seen over the years what happens when the MD or FD is excluded from the scheme they own as a company. Almost inevitably, they start to devalue the scheme and lose ownership of it.

The same will happen with the Regulator's plan for consolidation. Quality plans will be closed - squandered at the altar of spurious reductions in admin and investment fees.

Ownership is lost. Membership decreases.

An own goal for the Regulator.

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