Common Sense and Efficiency

The latest research from Alliance Bernstein carries no surprises. It says that the consumer expects a common sense approaches to investment- a feeling of control but without certainty of outcome. A combination of good governance and a sensible default fund is expected. But consumer common sense also says it’s okay to expect a spread of outcomes at retirement.

What is also expected though is flexibility and freedom at retirement. That’s fine and good if we know what we’re doing. The NAPF tell us in Pensions Expert that we don’t know what we’re doing because the Government has failed to give us the detail. With 30 working days to go before the pension freedoms, what the consumer doesn’t want is someone telling them that ‘yes, the freedoms exist’, but ‘no, you can’t benefit from them because we don’t know what to do.’

Will we get the detail in time? Or has election fever already affected output?

Common sense and efficiency from the Government would be welcome right now.

NAPMI?

The announcement that the NAPF and PMI are likely to merge is an interesting one.

Both are citing improvements in management, pooling of resources and greater influence in the industry. But I guess it also reflects a decrease in DB schemes, traditionally the ‘bread and butter’ for the NAPF. They came to embrace DC rather late in the day and I’m guessing not so many DC schemes are interested in being part of (and paying a fee for) membership of the NAPF.

Of course, the NAPF gets a lot of support and income from consultants and providers as well, but if they can’t claim to be speaking for company pension schemes as well, there’s a problem.

As for the PMI, they came out of the Chartered Insurance Institute originally and have kept close to their original remit of maintaining and promoting pensions excellence through professional exams. I’m not so sure what’s in a merger for the PMI –unless of course they are low on volunteers which would be pretty essential for their continuation.

All in all, it’s a reflection of a decreasing profile for employer sponsored pension plans. And with auto-enrolment and the new proposed tax changes, that decrease will pick up pace as companies embrace standard industry products.

Not the happiest of backgrounds for the NAPF conference which starts today.

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.

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.

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.