Small details – Big concern

One of the more outspoken debates on Pensionweb has been with regard to the Pension Regulator recommending 100% accuracy in data for everything post June 2010.

As one of the pension managers says, with their regular interaction with HR, payroll, different company divisions etc, it will never be possible have 100% accuracy on common data such as addresses.  One of the other Pensionweb correspondents suggested that a way out may be to put the company office address where one is missing. And another suggested simply accepting it will never be 100% as constantly chasing deferred pensioners for new addresses is not worth the administrative expense.

The section in the ‘record keeping’ section on the Regulator’s site says this:

“14. The targets for the standard of common data we recommend is achieved by December 2012 are:

• For new data created after June 2010 – 100%
• For legacy data (created before June 2010) – 95%; this lower level is in recognition that many schemes will have greater difficulties with older data and may inherit problems from previous trustees, managers or administrators.”

An unreasonable target? Definitely. For any largish scheme, data changes every day. Yes, I guess you could cheat the system by putting in a temporary address, but better the Regulator understood the issue and stated up front that he was aware that the 100% would not be achieved. Better still, give a few percent leeway, as he has done with legacy data.

A small point. But not a small issue. If the Regulator wants to work with the industry, he needs to be careful how he speaks.

The Value We Place On The Old

Former head of the Benefits Agency, Lord Bichard, has suggested that retired people should be encouraged to do community work such as caring for the ‘very old’ or face losing some of their pension. He went on to suggest older people were a ‘negative burden on the State’. (See main article: BBC News).

Slightly to the right of Genghis Kahn, Lord Bichard’s remarks are ill thought through. Many older people already work voluntarily. A lot of charities depend on them. To suggest that benefits should be lost for those that are not working in retirement seems to miss the fact that individuals have worked a lifetime for their pension and paid taxes for their benefits.

To suggest that older people are a ‘negative burden’ is ageist and extreme. I’m sure there are some who may not deserve the State benefits they enjoy but to target those in retirement is perverse and unworthy of a country that owes so much to the generations that have gone before us.

Bigger, Bulkier…. And less in it? The New Look Professional Pensions

Professional Pensions magazine has undergone a design change. Less a newspaper, more a magazine now I’d say. A bold front cover in a magazine style. A couple of pages of weekly news in a format that looks to have been borrowed from Pensions Insight. And a ‘numbers’ feature that leans heavily on a Times idea.

My distress at the new design is not how it looks but what is in it. Page after page of lengthy articles. Much of it ‘old news’. When will we all have time to read this stuff? That’s assuming Professional Pensions stays as a weekly. It looks more like a monthly now.

But don’t fear, help is at hand… (dramatic music helpful at this point)…. Grumpy Old Pension Men has gone on to YouTube. Everyone can access it. Everyone can comment on it. A short five to eight minute weekly TV digest of pensions news, provided in a slightly provocative manner with a good dose of grumpiness.

 

Go on, you know you want to….. LINK TO GOPM

When the 'P' in Pensions stands for 'Politics'

David Cameron is falling into the same trap as Gordon Brown. He’s worried about votes and is threatening to change pensions because of it.

The laudable ideas from Cameron’s work and pensions secretary Iain Duncan Smith and his able pensions man Steve Webb are in danger of coming to nothing, having travelled so far.

It’s not the first time pensions has become political- Gordon Brown was renowned for this- but at this stage in a new process, it is particularly disappointing. The idea of a flat rate State pension looks like it may be kicked into the long grass and not considered further before the next election.

I suspect that the real motivator here is George Osborne, the Chancellor, and he is ‘using’ the Prime Minister to push home his points. I know the newspaper reports say otherwise, but the reform can be shown to be costly financially and not just costly in terms of the voters who may lose out. Why is Cameron bowing to the views of his Chancellor? Maybe it is the votes. More likely it’s the cost of the changes that the Opposition can latch on to before the election- so votes again, albeit one step removed.

Shame on you Mr Cameron. You could have saved the future of pensions in the UK, simplified the system and added a long term confidence in the system that is currently lacking. Instead, you have bowed to the ballot box.

NAPF Value?

There’s a lot of discussion on Pensionweb right now about the latest proposals from the National Association of Pension Funds to put up their subscription charges.

It raises the same old questions- if we pay, what do we get? Questionable lobbying? Possibly a listening ear? Maybe some good training that may be free elsewhere?

The NAPF has a problem and always will have. It purports to be a spokesperson for the pension scheme- but it is largely sponsored by consultants and investment managers. Its council in years gone by has been flooded with providers, lawyers and actuaries. How can it speak for the pension scheme with such strong external influences?

It gets by- or at least it has until now. If the subscription charge goes up, the very members it says it represents will be the first to leave. Most sponsoring businesses are going through the recession with reduced workforces and cutbacks. The NAPF? No sign of any cut backs that I can see. And not clever to talk of increased subscriptions when times are hard.

It wouldn’t be so bad if they really did speak for the industry, but when there is a need for a spokesperson on TV, the news channels usually turn to Ros Altmann of Saga for the provocative sound bite.

When they do get it right, when they do get on TV as spokespeople, it’s good news. It just doesn’t happen enough. Not enough for a subscription rise anyway.

Stating the Obvious

Sometimes the headlines on pensions and finance require an appropriate amount of humour. For example, the headline in this week’s Guardian that announced a 10 year low in dealings on the Stock Exchange. When was this measured? Last week. The final few days of the Olympics on home territory.  Come on guys!

Or the recent headline in Professional Pensions magazine telling us that employers expect to see an ageing workforce.  Yes…. Tomorrow they will be older than today.

The most obvious pension headlines though relate to communications. Journalist after journalist expresses surprise that the general public know little or nothing on the subject. When we have to struggle with the quantity of pension jargon proposed by the DWP in their glossary of auto-enrolment terms, it's no surprise.

Oh Mr Miliband, You've Opened Your Mouth Again....

The Labour Party are finding a bit of leverage in the polls. But then seem to struggle the moment their leader opens his mouth…

Ed Miliband has been at it again- talking first, thinking later. The problem is he’s been talking about pensions this time. He may think he’s helping by criticising high administration charges, but sadly, when notable politicians criticise the pensions industry, the general public respond- by avoiding that industry!

People who may have invested in pension plans may not do so now because a senior politician has questioned an industry practice. Miliband may be partly correct- there are some high charges still, but generally charges are coming down. And just when we wanted some confidence in the industry with Auto-Enrolment rapidly approaching, Ed’s gone and put his foot in it- or should I say his mouth in it.

We're up and rolling.... the second 'Grumpy Old Pension Men' is in the bag.

In the mean time, the first one is getting some good reviews. See it here:

Grumpy Old Pension Men

Vive la différence?

People are living longer. Governments don’t have the money in the long term to pay pensions, so are increasing pension ages over time.

News a couple of weeks back showed this was happening again- in Bulgaria. But not in France.

With the previous government having negotiated hard to push up the state pension age from 60 to 62 (at 62, still one of the youngest retirement ages in Europe), the new French government is partially reversing the change.

It was a cheap way of getting elected- just promise to reduce pension ages again. And President Hollande has kept his promise.

Like a lot of Europe, France faces an ageing population. It also runs its pension systems on a Pay As You Go basis. So there’s less employed feeding more retired. Hollande’s estimate of the cost of pushing back on the  pension age is €3 billion a year from 2017. In reality, it will be a lot more than that.

A cheap election promise, albeit selectively applied to the population, has sent all the wrong signals. France will have to raise its pension age in the same was as other countries have in recent years (Spain, Italy, Germany, Ireland and, of course, the UK) and when it tries to, the riots will start again.

What price politics.

Retirement at 86?

It's been quite a week. None of us will see a Diamond Jubilee celebrated by our king or Queen in our lifetime again. I’m not particularly a monarchist and the Queen is not a justifiable position in a truly democratic society, but the majority of her subjects would have it no other way. I'm grateful that she has served so well and brought purpose and meaning to a ‘United Kingdom' through her service.

And how things have changed during her reign. The Actuarial Post records that 'a boy born in 1952 was expected to live to 78 and a girl to 83. A boy born in 2012 is expected to live to 91 and a girl to 94.'

Proof indeed of the need for higher retirement ages, though I doubt many reading this will still be fully employed at the age of 86 as the Queen is!

What is a Pension?

First written 31 May 2012

What is a pension?

The dictionary says it’s ‘a regular payment made during a person’s retirement from an investment fund to which that person or their employer has contributed during their working life’.

You could say it’s a payment later in life for work done today. Maybe a promise given for work completed. Or simply financial security. All these and more, I’m sure.

What it isn’t is a promise to continue the promise into the future at the same rate as in the past. Times are hard. Companies have cut back on pensions. Government and local authorities have to do the same. So when council workers and doctors go on strike (or threaten to) on the basis of a reduction to pension, it’s the wrong argument to pick. They still have protected pensions to this point in time and the changes in the future are still far more generous than the average private sector pension plan.

My friend in India has a pension plan. It’s called the goodwill of his children to look after him. We really don’t know how lucky we are.

RISK

First written 16 February 2012

In the pensions industry, we work with risk all the time. Investment risk, trustee risk registers and, of course, good old insurance risks. However, there is another kind of risk……

There was a very cautious man
Who never laughed or played
He never risked, he never tried,
He never sang or prayed.
And when he one day passed away,
His insurance was denied,
For since he never really lived,
They claimed he never really died.

Anonymous poem from Developing the Leader Within You by John C. Maxwell.

Outsourcing, in-housing, deleting, replacing

First written 9 February 2012

The Daily Mail says goodbye to their long serving Pensions Director soon, as Geoffrey Staines retires (Professional Pensions 9/2/12).

Geoffrey cost me a lot of money. I used to work for a media firm and was part of an industry group along with Geoffrey. Each year he provided tickets for the Ideal Home Exhibition, sponsored by the Daily Mail. I couldn’t go but my wife did…. Geoffrey cost me a lot of money!

Geoffrey’s retirement has allowed the Daily Mail to change things around. They are appointing a Group Reward Director instead of a Pensions Director. There is a trend here. Over the years, there has been a pretty constant move to outsourcing pension administration. As this happens, pension departments have been closed or merged with other HR related activities. And Pension Managers have been replaced with Benefits Managers, Reward Directors etc. (As one ex Pensions Manager announced, ‘I’ve been deleted!’)

Against this trend, I’ve heard of a couple of companies recently, contemplating bringing their pension administration back in house. This is due to auto-enrolment and the number of zero’s on the end of the charges from third party administrators for managing the new regime. Are we seeing a reversal of the outsourcing trend? Or will we continue to see Pension Managers replaced by Reward Directors?

The Size of the Pensions Problem in 2011

First written 22 December 2011

New Zealand earthquakes. Japan Tsunami. Japanese nuclear power stations. The Arab spring. Tunisia. Egypt. Yemen. Libya. Gadhafi’s death. Syria. Egypt again. Bin Laden’s death.  Norwegian shootings. Riots in London. Riots in Britain. Phone hacking. Somalia famine. Turkey earthquake. Pakistan floods. Philippines floods. Anti-capitalist camps. Greece crash. Italy Prime Minister. Euro troubles. Euro veto.

Pensions.

Happy Hugs Day

First written 14 December 2011

Today is ‘Happy Hug Day’. It started as an annual event in Korea but thanks to social media it’s going worldwide.

So in the interests of promoting those feel-good moments, here’s a  few happy hugs for the pension industry….

• A modestly genuine hug for Steve Webb, the Pensions Minister for knowing his subject and being honest despite the politics.
• Some really big genuine bear hugs for the little guys –in terms of company size-  in the pension industry that punch well above their weight… Avgi Gregory at Muse, John Watson of John Watson Design, Helen Boylett-Smith at Lorica, Fred Jaffe and Trevor Cook at MPPF….. and so many more, not forgetting my wonderful friends at Anthony Hodges Consulting.
•  And finally a pretend hug or two for the lady who keeps getting on the news and creating pensions panic, and those very nice union chaps who use pensions as an excuse to strike about all sorts of other stuff.

And if you’re reading this, consider yourself hugged.

The Happiness Index

First written 1 December 2011

The latest results from the Office of National Statistics happiness survey – carried out earlier this year and interviewing over 4000 adults- shows money doesn’t make for happiness. The survey shows that as a nation we have a happiness index of 7.4 out of 10. The same score as last time, despite a real downturn in the economy.

So maybe it’s not such a big deal as to what happens to the Euro or whether George Osborne has got his maths right. Perhaps investment managers will be forgiven for backing the wrong stocks and shares.
In that context, it’s not pensions that will concern the UK population (despite the Public Sector fling yesterday), but what really does seem to be valued- jobs. Those out of work had a much lower happiness index number. Not a surprise; we want to be valued; we want to be able to provide for others. We are all of us ‘people’ people and that comes well before money.

One other possibility…. In a seemingly unrelated story in today’s press, research has found that some espresso’s served in some coffee shops are up to 6 times stronger than in other coffee shops. Maybe the ‘happiness’ interviewers were selective in their locations!

Back from India... Pensions still here.... not sure about Greece....

First written 23 November 2011

....or Italy.... or Spain. Even France looks to be under pressure. I was only away in India for three weeks- but a lot is happening in the financial world. And literally the financial WORLD.

We live in a global society. What happens in one market today can shift to another the next day. The speed of financial transactions, the interconectivity around the world markets and the ability to log on anywhere at any time has created globalization. Globalization is a relatively new word and was used primarily to describe the removal of trade barriers. Increasingly it is also being used to describe the speed of travel and the increase in social media and other web technology. Globalization means we can get to everyone from everywhere. And so can the market traders. Countries such as Greece can't hide away. Every action is studied and every move responded to on the market. It is a financial world.

Professional Pensions Show 2011

First written 20 September 2011

Another year. Another show.

And pension concerns show no signs of easing, or of moving off the front page of the newspapers. The fact that the Pensions Minister was willing to share his views (albeit by video) and the heads of the Regulator and PPF were there in person says much for the current climate. It’s one of admitting we know the problems but we don’t have all the answers.

The coalition government have, in my view, done a good job so far on pensions and the fact we have a Pensions Minister who knows his stuff is welcome- and unusual!

I enjoyed the initial debate on pension reform. Kevin Le Grand of Bucks is right to say we need a grand idea (he’s got the right surname for a start!) And, as the debate identified, one of the keys to this is to review how we communicate pensions.

Investment got a good airing throughout the two days, not least with the backdrop of Greece, the Euro and all things heading south. I particularly enjoyed the presentation from the senior economist at HSBC- but as that session was Chatham House rules, I can’t say more!

Well done to David Hutchins of Alliance Bernstein for making sense of asset allocation, and to Naomi Cook of the GMB for a spirited fight back to the Hutton review on local authority pensions. Not sure I agreed with Naomi but it was thought through and delivered with a good deal of passion.

Pensions and passion. There’s a thought. Not sure the two words would usually go together but the timing of this particular pensions show ensured there was plenty of both.

Cheap Headlines

First written 19 September 2011

The headlines in the Daily Express recently read 'Pensions Crisis as Shares Collapse'. Another cheap headline.

It's true of course, but only in the context of the larger Stock Market falls worldwide affecting pretty much every investment. As I read their interview with the ubiquitous Ros Altmann, it began to occur to me that this was not them approaching her, but that she had given them the story in the first place and they ran it on the front page.

Why is she doing this? What good is it doing? You can picture the thirty year old engineer reading the article and deciding not to join the pension plan after all. You can picture the bank clerk that retired early worrying about her pension and whether it will be there in another ten years. That's the sort of harm an article like that can do.

Most companies are decent. They want to provide pensions for their employees. They will do all they can to ensure their pension plans don't go under. They could do without Daily Express headlines.

Ros Altmann would be better taking her thoughts to Stephen Webb or the NAPF. Or the CBI. Or the TUC. But not the Daily Express.