With apologies....

With apologies to my actuarial and marketing friends......

Two people are flying in a hot air balloon and realise they are lost. They see a man on the ground, so they navigate the balloon to where they can speak to him. They yell to him, "Can you help us – we’re lost."

The man on the ground replies, "You’re in a hot air balloon, about two hundred feet off the ground." One of the people in the balloon replies to the man on the ground, "You must be an actuary. You gave us information that is accurate, but completely useless."

The actuary on the ground yells to the people in the balloon, "you must be in marketing."

They yell back, "yes, how did you know?"

The actuary says, "well, you’re in the same situation you were in before you talked to me, but now it’s my fault."

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.

In (Modest) Praise of Pensions

We don’t always get it right. And it’s in our psyche to be critical of ourselves; disparaging even. But, actually, we’ve not done such a bad job with pensions.

We have a State system that works, that despite the recent changes, meets the needs of the poorer in society, and gives the rest of us a ‘not too bad result’ for our time in the workplace.

And we have an occupational pension system that is the envy of many. The Italians have had governments fall because of attempted pension reform. The French are in trouble- surely it is only a matter of time before their system collapses with the emphasis on PAYG and such low retirement ages? And the Greeks… Well, the Greeks.

We’ve made mistakes for sure. The day the accountants beat the actuaries at their own game and insisted on present market values. That was, to my mind, the death knell for Defined Benefits. But our Defined Contribution system works well if the employer is willing to put in a decent amount.

And the new Auto-Enrolment legislation is working. Lots more people in pension plans. A greater awareness of pensions. Less stress on the State as a result. I know… it’s only a start, not enough going in, etc, etc. But don’t be so hard on yourself! It’s a success!

Not only that, we have the longest standing Pensions Minister in history- and he actually understands his brief!

I do wish we would be more careful with the headlines we feed to the press (especially to the Express and Mail!) If we can get into the habit of presenting challenges in a more positive way, we may get a more positive slant on the problems we face in pensions.

Since Samuel Pepys had to pay a pension to his predecessor as Clerk of the Navy Board, we’ve done alright. Not great. Not fantastically. But just about alright.

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.