Mergers - Who Really Benefits?

One of the things that intrigued me about the 20 year anniversary edition of Professional Pensions was the article by JonathanStapleton looking back at the names of the companies that were advertising in that very first issue.

Names that have now disappeared: Hill Samuel. GAN. Dibb Lupton Alsop. Kaupthing Singer & Friedlander. Capel-Cure Myers. Gartmore. Abbey Life. Hogg Robinson. Morgan Grenfell. Hewitt. Norwich Union.

All gone- and mainly forgotten in a plethora of mergers and takeovers over the years.

And now another one. Aberdeen and Standard Life are to merge.

I suspect the name Standard Life will survive. But then I thought that of Norwich Union before it gave way to the clinically globalised name Aviva.

Pensions Age Magazine quotes the marketing gobbledygook: ‘[the] merger would harness Standard Life and Aberdeen’s complementary, market leading investment and savings capabilities which would deliver a compelling and comprehensive product offering for clients covering developed and emerging market equities and fixed income, multi-asset, real estate and alternatives.’

They mention synergies. And surely there will be. In the way of job losses for the back-room functions mainly. But what about the investment managers- the individuals tasked with making the strategic decisions? Changes are not always welcomed to the people that do the work. They are used to a system, used to a style. When that style changes, so might their appreciation of the job they do. This in turn can affect returns for clients.

Synergies? Cost savings more like. And cost savings don’t always mean benefits for clients.

Being Bold on the Benefits of Pensions

Helen Morrisey’s clarion call in Professional Pensions to be ‘bold on the benefits of pensions’ is welcome.

So often, as pension professionals, we get caught up in the minutiae of the pension issues and forget the big message. But the big message is a simple one and needs saying as frequently as possible. And as simply as possible.

On the bus tour linked to Pensions Awareness Day, nearly 600 people came onto the bus during the week. And what did they ask? Details as to how S2P is changing? No. How to maximise their AVCs? No. What investments will give the best return? No.

Their questions were simple (see previous blog):

–      ‘What’s a state pension?’

–      ‘Do I get any pension from the Government?’

–      ‘Does my employer offer a pension?’

–      ‘Do I have to offer a pension?’ (from an employer)

–      ‘It’s all too complicated’

–      ‘There’s too much choice’

–      ‘Tell me what to do’

To quote Helen, ‘we need something simpler, cleverer and bolder’. Come on pensions communications companies- let’s be hearing from you!

Pension Awareness Day - Keeping it Simple

In September, the Pension Awareness Day bus travelled from Edinburgh to Manchester, to Leeds, to Birmingham, to London.

 

Over 600 people came on board during the week. Pension Wise were there, with different teams at each location. And the good people of Scottish Widows and People's Pension were on hand to help. Local radio broadcast us. Local newspapers interviewed us. An the pensions press supported us. (Thank you Pensions Insight and Professional Pensions for your encouragement.)

And what did those 600 people ask or say? Here's a sample:

–‘What’s a state pension?’

–‘Do I get any pension from the Government?’

–‘Does my employer offer a pension?’

–‘Do I have to offer a pension?’ (from an employer)

–‘It’s all too complicated’

–‘There’s too much choice’

–‘Tell me what to do’

 

You don't get much more basic than that. For all our pensions knowledge, sophisticated communications and strange looking monsters courtesy of the Government, we still need to keep to the simple messages.

A Vote For The Pensions Manager

Professional Pensions Magazine has started this year’s search for Pensions Personality of the Year. Was there ever a greater oxymoron? Pensions and personality. Not usually held in the same sentence. And yet…

When I started in pensions 38 years ago (first job Clerical, Medical & General Documentation Clerk- only staying for a short while to bring in some money. Not interested in pensions….), pensions really was a bit of a backwater. How times have changed.

Contracting out, Maxwell, the Goode Report, personal pensions, mis-selling, the Turner Commission, DC takeover, surplus and deficit, Auto-enrolment, pensions freedom…. And much more. Headlines in the Daily Mail and Daily Express on a regular basis. Scare stories mostly.  Much of it driven by an ageing population.

Nevertheless. A pensions personality? The well-known names tend to be self-publicists. I vote for the little known pensions manager working long hours for an employer that doesn’t understand and dealing with a government that can’t help but meddle.

The Left Hand Doesn’t Know What the Right Hand is Doing

This is an oft-used idiom with a Biblical foundation (‘But when you give to the needy, do not let your left hand know what your right hand is doing’: Matthew 6:3). In its original context, it’s used positively. But we’re talking  pensions here and I want to use it negatively!

Professional Pensions writes about the decision to have a number of different organisations dealing with pensions guidance. There’s TPAS, the Money Advice Service, a new offshoot of TPAS and a new directly controlled Treasury operation.

Three organisations and four delivery mechanisms.

Back to the quote. On the basis that there will not be enough resource put in place, how long before chaos ensues?!

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.

A Long Road

It’s pleasing to see the views in the press that the new DC flexibility could increase member savings (Pensions Expert). I agree. There is room for optimism. Fewer restrictions on the pension should result in more willingness to save.

Another article, this time in Professional Pensions, records the latest LV survey. The income of the average retiree is almost 24% less than the minimum wage. There’s a lot of stats behind that statement of course, but one thing is clear, the new flexibility HAS to increase member savings. The savings gap is growing. We’re on the right track, it’s a good start, but (to retain the track analogy), it’s a long road.

REPOST: The Pig Has It

In honour of the appalling cover to Professional Pensions, 27 March 2014, here's a repost of an earlier blog:

Go onto Google Images, type in ‘pension’ and then see what comes up. Actually, I can tell you what comes up. Ignoring news stories, in the first 100 or so images there were 10 pictures of cash in a jar, 19 ‘beautiful couples’, 12 eggs in and out of baskets, 4 moneyboxes, 6 road signs and a few deckchairs. And twenty-three piggybanks. That's right. Twenty-three pigs.

Is that the best we can do?! Is that a good summary of our ability to convey ‘pensions’ in pictures? You see, if you go behind the picture on Google, to the sites, they almost all lead to providers, consultants and clients pension funds.

Surely we can be more imaginative than a piggy bank? If a picture paints a thousand words, aren’t we falling a bit short with coins in a jar? So come on AHC, Likeminds, Shilling, Ferrier Pearce and all you other pension communication companies…..not to mention the internal departments in actuarial firms…. where are the new ideas? What can we convey that doesn’t include a piggy bank held in the hands of a beautiful couple in a deckchair under a road sign?!

Don't Tick the Box, Run the Scheme

Reading Steve Delo’s comments in Professional Pensions Magazine almost brought out an audible shout of ‘yes’ from me. Slightly embarrassing when you’re in the quiet carriage on the East Coast line. But it deserves a ‘shout out’ for its plain common sense.

Delo is saying trustees are getting too caught up in form filling and box ticking so as to lose sight of the bigger picture and the need to concentrate on the really important stuff.

In my experience, the box ticking/compliance led/admin and member gripe led trustee meetings are far too common. In the same article, Richard Butcher suggests some consultants use the box ticking items in the meeting to hide behind. Yes, I’ve seen that too on occasion. Although, in defence of the consultants, it’s often a risk-averse company that insists on discussing the business plan details at every meeting and recording every minutiae in the minutes. Maybe I just worked for some overly detail obsessive employers.

More time is needed on reviewing investments and understanding investment alternatives. Governance reviews and membership analysis needs more of a look in.

What we don’t need (in my humble opinion) is more box ticking initiatives such as the ones proposed by the Pensions Administration Standards Association (PASA), where we are about to get new admin codes of conduct. And they have the temerity to say they are going to release different codes of conduct every year! (Audible groan in the Quiet Coach for that bright idea).

Yes, Mr Delo, I fully agree. Trustees spend far too long on documentation and box ticking. And it’s not helped by well-meaning industry pension types suggesting even more codes and directives.

Don’t tick the box; run the scheme.

Strong and Direct

Great piece in Professional Pensions. Lee Hollingworth of Hymans Robertson is correct in saying ‘people need a strong, direct approach to tell them what ‘adequate’ is, what they need and how they’re doing against that target’.

The comment comes following analysis by Hymans Robertson via their Guided Outcomes platform which shows only 18% of over one hundred thousand defined contribution members are likely to build an adequate retirement income.

Apathy has done well for us. The new auto-enrolment approach relies on it for getting members into pension plans. But that’s just the start. If the employer stops with the minimum, then pensions at retirement will be inadequate, and as Hollingworth says, poor pension results will lead to ‘workforce management issues’.

We are going the right way with UK pensions. Auto-enrolment was needed. But that’s just the start.

Pensions Week (RIP)

The final print edition of Pensions Week. Some fine words about the benefits of an online edition with a new title (Pensions Expert). But surely this is an admission of poor circulation, high print costs and a saturated market dominated by Professional Pensions?

ADDENDUM 18/12: Tweet from Pensions Week- they are still doing a print edition as 'Pensions Expert' so I don't have to search them out online. Pleased to hear it! Keep up the competition with Professional Pensions you guys!

Reshaping, Reforming, Refining - The Future of Pensions

A few interesting snippets in Professional Pensions this week, indicating changes to the pensions industry. The editor Jonathan Stapleton is quite right to identify Aon’s move to merge its pensions administration and HR processing businesses as the shape of things to come.

Pensions business is changing more rapidly today than ever. The large Defined Benefit plans are getting smaller. They’re all closed plans anyhow, so by definition, will decrease in importance. The admin, which might have been managed within a ‘package’ of fees covering the more lucrative valuation work, is now being exposed. Valuations are less and less big triennial events and much more ‘business as usual’ reviews at pretty much every trustee meeting. The complexities of yesteryear are lessening and the weeks of valuation calculations required of old have been replaced by pre written computer programmes with results at the touch of a button.

All this to say that Defined Benefit plans are not the monsters they once were and legacy administration merging with other processing makes sense. The administration of Defined Contribution plans is growing though, with an increasing numbers of members thanks to Auto-enrolment. Packaging is everything here. Simple plans, large numbers, computer processing, limited choice.

But behind the supposed simplicity of large Defined Contribution plans are hundreds of smaller ones, each with different rules, different needs and employers who often legitimately resist the pull to ‘merge’ with bigger plans and thus lose their identity.

With a combination of pressures on the pensions industry such as the recession and longevity, costs are a clearer focus than in the past. Providers will adapt. Providers will have to adapt, as Aon clearly are.

Admin is here to stay of course. And those plans too small for Aon’s radar will be picked up by smaller administrators. A changing pensions world. But not a decreasing one.

A Saturate of Actuaries

Professional Pensions reckons that with less defined benefit plans, we will have an industry saturated with actuaries. I always wondered what the plural of an actuary was – a ‘saturate of actuaries’ does it for me!

Seriously though, I’m not sure there will be any ‘saturate’. Actuaries are bright people- they will find other things to do rather than hang around 'in a position where they are not needed', to quote Richard Butcher in the article.

And Richard surely has a lot to say! Quoted in no less than FOUR different articles in the same 10^th October edition of the magazine. Lazy journalism of course. Quote the person that reaches out to you rather than seeking views from others in the industry. And accepting the view of consultants rather than some of those at the sharp end. Having said that, at least Professional Pensions are creating some decent news coverage- some magazines seem to have given up looking for new stories and just keep repeating the same old arguments in seemingly new articles.

I Need A Picture, Any Picture....

DAY ONE:

Correspondent: ‘Hello. Is that the Incisive Media graphics department?’

Graphics Department: ‘Yea.’

C: ‘Oh. Well. Erm, a bit of a rush job. You see I have to fill two pages of the next issue of Professional Pensions, but, well, the article is only a page at the most.’

GD: ‘Yea.’

C: ‘It’s a feature. You know. One of the bits we try and fill the magazine with. When we’re a bit short of news.’

GD: ‘Yea.’

C: So, can you help? I need a couple of big pictures to fill the gaps. Kind of half a page each.’

GD: ‘Yea.’

C: ‘Great. The article is on where multi-asset managers invest. So there is reference to US treasury bonds. And to emerging economies. Does that help?’

GD: ‘Yea.’

C: ‘Great. But try not to just use pretty pictures. OK?’

GD: ‘Oh.’

C: ‘I mean, avoid the Taj Mahal when you’re portraying an emerging economy. You’ve done that quite a bit.’

GD: ‘Avoid the Taj Mahal pictures. Erm. Okay. That was what I was thinking though.’

C: Well think again. We go to press tonight so I will have to trust you….’

DAY TWO

C: ‘Hello, graphics department?’

GD: ‘Yea.’

C: ‘I thought we agreed to no pretty pictures? But for the US government bonds section, you’ve used the US treasury building.’

GD: ‘Yea.’

C: ‘And for the emerging economy picture, you’ve used the Golden Temple.’

GD: ‘It’s not the Taj Mahal.’

C: ‘Well at least the article is buried in the middle of the magazine. No one will notice the awfully trite pictures.

GD: ‘Oh dear.’

C: ‘What?’

GD: ‘Er. Well…. We copied the Golden Temple onto the front cover as well…’

C: *Sigh*. ‘No one will notice….’

Politics in Pensions

Roger Mattingly, chair at the Society of Pension Consultants commented in the press that if Auto-Enrolment did not work, it would be the end to the careers of Steve Webb, the Pensions Minister, and his other pension colleagues. I think Roger has got it wrong. (Professional Pensions 11 March).

Steve Webb is a Liberal Democrat. He has no political ambition! It’s a surprise to him that he’s in power at all! His boss Iain Duncan Smith has been to the top of the party and back again- so he is a rare thing, an altruistic Tory!

It is to the pension industry’s advantage that we have two ministers involved in pensions policy  that are able for the most part to keep the politics on the side lines and do what’s right.

As for Roger’s comments, who’s the real one being political then?

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

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.

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.