The True Colours of the NAPF

The true colours of the National Association of Pension Funds are showing through in their latest comments. They are recorded in Professional Pensions Magazine as saying that signposting members to the guidance guarantee could cost: ‘In the case of the largest schemes this could be in excess of £100,000 a year’.

And so, the NAPF is again exposed as thinking about their largest members. If a plan has millions under investment and the company is a multi-million pound enterprise, then £100,000 could be seen as quite reasonable.

What about the small and medium sized employers? Their costs of signposting may be less than £100,000 of course, but in real terms, a much higher percentage of funds under management or of the company’s value.

The NAPF are also recorded as questioning the need to signpost every time pensions are mentioned, especially if the member is ‘many years’ from needing it. Again, this is missing the point. If the member is in a guaranteed Defined Benefit plan, then maybe so. But if it’s Defined Contribution, then the more they can save at an earlier age the better. Again, the NAPF has shown its true colours. Not just a big company bias, but a DB bias.

Instant Society

Yesterday was Pension Awareness Day. The BBC ran a pensions programme called Inside Out, looking at the pension cheats and the need to save. It even had a cameo performance from Steve Webb, chatting to pensioners on a bus.

Joan is 93. In the programme she comments on the cultural shift towards spending now.

'Nowadays, young people don't know how to save - because they've never had to save. It's a throwaway society. They've never had to make do and mend like we had to.'

There's something in that. In our instant, 40,000 googles-a-second society, everything is instant. Saving isn't.

Pension Awareness Day (2)

Today is Pension Awareness Day. What started as a good idea has grown into a great event. Thank you to all those who have sponsored the day. Well done to Jonathan at Pension Geeks in getting it off the ground.

This is just year 1. What can we achieve in the year to come? How can we help people to think about pensions sooner? We’ve got the infrastructure, the products, the tax regime to help. But we still need to communicate the message.

That’s the Pension Awareness Day challenge.

From Ford Model T to Lamborghini

It’s nearly six months since Steve Webb made his controversial Lamborghini comment - that people should be able to use their pension savings to buy a Lamborghini if they want to. 

And it was the extent of the pension changes announced by George Osborne at that time that took us all by surprise. But six months on, with a lot of reflection, and considerable hard work from the pensions industry, we’re getting used to the idea, the flexibility. And to some extent, the increased simplicity and reasonableness of the changes. Annuities will still exist, but gone is the need for an annuity and with it, the effect of the fluctuations in annuity rates from month to month that created a lottery for the approaching retiree.

In its place is a need to communicate like never before. The trustees need to decide how to respond to changes that affect their plans (the Taxation of Pensions Bill is just out). And then they need to act. Members will need that oft-spoken of information that Steve Webb speaks of like never before.

We’ve come a long way from a prescribed defined benefit pension plan (the Ford Model T of pensions) to the Lamborghini type choice that awaits today’s pensioners. I think that’s good. But trustees need to start reviewing the changes early, and then to shout loud those changes to a workforce that still has a mental block the moment you mention the word ‘pension’.

Laughing All The Way FROM The Bank?

A survey from Fidelity, recorded in the Sunday Times, interviewing 500 people due to retire or planning to retire next year makes interesting reading. It suggests most are going to turn their backs on annuities and take all the cash they can. But how wise is this? Cash now, but poverty later?

Unless they are cautious with their new found wealth, they may well find it runs out a long time before they run out. Then what? In Australia, it’s called ‘double dipping’ – ie taking your pension as cash now and then relying on the State when you run out of money.

Is this what we can expect in the UK? Has the government relaxed the laws around pensions too much?

Pension Awareness Day

As likeminds rightly point out in their blog, one of the key messages on Pension Awareness Day is to encourage employers and pension providers to be more innovative in the way they communicate saving for retirement. 

Are we too quick to assume that people will read what we send them? Are we too reliant on words? Do we assume people respond to communications in the same was we do? 

Having been 83 days (and counting.....) without broadband at home (courtesy of BT Openreach incompetence), it's made me read more in print, text more and attempt to download stuff on my phone that I would normally read on a computer screen. It's been enlightening. The smaller screen on the phone means I skip more, just look at the headlines, respond to pictures more as they take up more of the screen.

I'm not suggesting that my one-man experience should be a key driver in our communications, but it does suggest that the particular communications aim of Pensions Awareness Day is the right one.