The Daily Mail Fabricates News - Not so new news

The news out today that the Daily Mail fabricates news is not such new news. Working in the pensions industry, their regular pension headlines have been the bane of many a pensions manager.

The Mail had the ability to pick up on a half-truth and fabricate a complete story out of it. The results were usually concerned members of pension schemes panicking that they have the right plans in place.

The negative Mail headlines for pensions caused unnecessary grief and may well have stopped employees from joining a pension plan they should have been part of.

The poor journalism on display at the Mail has found them out.

Good-bye Ros

I wasn’t a fan of the Ros Altmann appointment as Pension Minister and am not unhappy to see her go. She has been a good champion of pension’s miss-selling and other inadequacies in our present system, but she has also been a champion of her own profile. A bit of self-promotion is okay so long as you get the right things done. But in her time as Pension Minister, frankly, she didn’t.

She appeared to put on hold Steve Webb’s Defined Ambition agenda but didn’t push through anything else in its place. She was caught out, seemingly, by Treasury initiatives around lifetime ISAs, and her most publicised comments during her tenure were not on the subject of pensions but her critical observations relating to her then-boss Iain Duncan-Smith.

As she continues to speak for pensions from her seat in the House of Lords, it is likely to be as a populist voice for change, but without the detailed knowledge of how to do it- something else that exposed her during her time as minister.

And I expect we will see a return to the OTT headlines in the Daily Express with Ros Altmann quoted as the expert. I suspect that many of these headlines in the past were her own creations and necessarily lessened whilst she was Pension Minister.

The more junior appointments that follow her tenure suggest a greater hold of pension policy at the Treasury as well as reflecting a perceived government view that pensions doesn’t need high profile ministers.

Belonging

There's some good thinking from LCP on the Brexit issue this week. In the end it may not be to do with economics, but more to do with 'belonging'.

Do we want to be part of Europe or not? To be on the outside may not be the best place for us in the long term, even if in the short term, the financials are not so bad as they are sometimes portrayed.

I prefer belonging to pulling up metaphorical drawbridges, but as the LCP article suggests, there's a lot of emotion and hot air in this debate. The Churchill quote is apposite:  “A fanatic is one who can’t change his mind and won’t change the subject”.

Time Will Tell

"The pensions industry has had over a year to prepare for the changes- and it is encouraging some firms have risen to the challenge. But others seem to be failing to move with the times...."

So says our new Pensions Minister Ros Altmann.

It's all to do with time, not 'moving with the times'. Every provider want to move with the times in the sense of moving with the market. But a year is an incredibly small time to turnaround one of the biggest pension changes in a century. Better not to offer than to get it wrong, as, I fear, many will, either in product or pricing.

Well done to Friends Life for not cashing in cheaply, but in reviewing what is best, and the timescales needed to do so. It may be resources. It may be the merger with Aviva. But better not to go there than to offer the product and fail.

The Daily Mail sees it as a U turn. Maybe it's more like parking up in a layby and letting the market mature first.

David Cameron needs to be careful in warning of a crackdown on providers failing to offer the 'freedoms'. Time (again) will tell whether those that have rushed to market have got it right.

Pragmatic Steps Into The Unknown

I welcome the common sense approach adopted by the Treasury in not, after all, trying to fine individuals who take a pension pot and fail to advise earlier pension providers they also have benefits with.

The revised guidance extends the deadline from 31 days to 91 days and that states that only active providers need be contacted. This gets around the problem that individuals may well have pensions with providers that they have simply forgotten about. I know that shouldn’t happen, but not everyone loves pensions as much as me – and you, presumably, as you are reading this.

Common sense has prevailed.

The major problem remains however.  I’m not sure anyone, including the government who introduced the changes, knows exactly what is going to happen when the full freedoms on pensions come into force. Will there be reckless decisions to cash in pensions? Will advice be adequate? How will the government react to those who take, spend and then come back, begging cap in hand?

One thing is for sure. To change the analogy, the genie is out of the bottle and no future government will be able to put him back.

A pragmatic step by the government with regard to individual fines. But nevertheless, it’s pragmatic steps into the unknown.

Grey Gap Years

'.....the idea that people have one job that they do all of their lives is “history” and second careers will become increasingly common for the over fifties.' Here says the Pensions Minister Steve Webb in the Daily Telegraph.

He's right.

The retirement 'cliff' - in work one day, out of work for good the next day - is increasingly uncommon. And a good thing too. The shock of retirement has led to many an early death, due, I think, to a sudden lack of purpose and lack of appreciation.

With the recent pension changes, we are moving towards a Lifetime Savings Account (something I've championed before) and considerably more flexibility in how we take our tax advantaged savings.

It will also allow for the Grey Gap Year, another suggestion from our Pensions Minister. I'm not sure it will look like a student gap year. Shorter and possibly with more purpose to it (!), but a good time to step back from work, assess, prepare and move back in to part time work, or even a different career.

All possible thanks to these changes. And thanks to the internet revolution. So much can be done from home now. Whole careers can be built around access to the World Wide Web (he says, writing this from the local pub due to BTs complete inability to provide broadband at our new house so far!)

Not so much a dogs life.....

Just had to check my calendar. No, it’s not April 1^st. So the headline in Pensions Age is genuine- the police are paying pensions to dogs!

It’s kind of funny, but sad at the same time. Up to £1,500 per dog, it’s actually a subsidy for the pet owners who take the dogs in at the end of the dogs police career.

At the risk of upsetting pet owners everywhere (and I was one until a couple of years ago- Wesley, our wonderful Chocolate Labrador), I can’t see how we can justify pensions for pets. I work in India alongside charity workers who get less than that a year. And amongst the poorest of the Dalit community who live on next to nothing.

Punter Southall are quoted in the article, saying ‘retired Nottinghamshire police dogs will be better provided for by their employers than many in our society’. It’s a strange world.

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.

The Pendulum Swings

It wasn't long ago that pretty much every in-house pension team you could think of was either moving to outside consultants or at least going as far as a tender for the business. And that included a number of in-house investment teams being disbanded.

As highlighted in Pensions Week, it looks like the pendulum may be swinging the other way again. Tesco and British Coal have both moved back to in-house investment teams, and in Tesco’s case, they went further in choosing to ignore the contradictory advice of their consultants.

Admittedly, with Tesco and British Coal, we are talking about two of the biggest pension funds in the country, but I predict more will follow their lead, for two reasons. Firstly, the blurring of investment advice with investment management. Consultants in some cases are trying to have their cake and eat it. And it’s pretty obvious that’s what they are doing.

Secondly, systems are far more superior nowadays. Even over the last five years, the sophistication of the IT systems behind the trades and the software used to measure and present investments have all improved exponentially.  It’s just easier to manage.

Look for the next lot of headlines. They won’t be far away.

Doing Things Differently

The headlines in today's Telegraph make sobering reading for those in the pension industry:

'I lost £150,000 due to Nineties pension sales frenzy.' 

This refers to the mis-selling scandal of course and tracks the story of one ex-soldier who was persuaded to transfer to a personal pension from the Armed Forces Plan. Disastrous results. And with many of those poor decisions reaping a poor pension, we will be seeing more of this in the press as people reach retirement.

'Pensions' doesn't have a great reputation anyway and these stories are not going to help. Warren Buffett said 'it takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.' And we are doing things differently. But history and reputation are against us.

50 Up

Phew. We've made it to 50 editions of Grumpy Old Pension Men. Who would have thought?! When Brian and I started out a year ago, it was just a test programme, to try and prove it could be done.

A year later and the 50th edition is on line.

Favourite moments? Brian forgetting what he's talking about (common), Henry Tapper's larger than life appearances, presenting a pensions top 10 to the Top of the Pops music. And all the lovely comments.

Will we get beyond 50. Certainly! 51 is already recorded. And after that? As always, it's a week by week decision related to readership, time taken and pensions news worth discussing. Never any lack of the latter though!

EIOPA - Blind or Just Short Sighted?

Dear Pensions Industry

We here at the European Insurance and Occupational Pensions Authority really love you guys. We want to work more closely. So please willyou pay us some money so we can help you? We’ve given you Solvency II. That went well. And now we want to do more for you. More regulations! More directives! You’ll love it!

So pay up. Please.

Love, EIOPA

That’s the latest story to come out of this myopically challenged EU quango. Really?! Do they not get it? They have totally messed up on Solvency II. It cost us an amazing amount in time and energy just to pushback on over 500 pages of short sighted proposals. If they had been enacted, it would more than likely have destroyed UK pensions.

And now they want us to pay them to bully us some more. Hmmm.

The Price of Paper

The DWP has suggested that companies should be allowed to ditch paper communications on the basis that it may save as much as £74 million a year according to their calculations.

Having worked in the industry for years with over-cautious pension lawyers telling me I was not allowed to just communicate electronically, this may appear to be good news. However, I’m not so sure.

The fact we might be able to ditch some of the ‘grey pages’ -the small print that has to go out to everyone, especially for contract based schemes- would be more than welcome. And to be able to make a decision as to when it makes sense to communicate just electronically would be great.

But if the legislation allowed a less than paternal company to ditch paper communications for cost reasons alone, this would not be right.

If we want people to understand their pension, then we need to communicate in a way that best suits them. And that will vary with each person. If we want to get the message over, we probably need to communicate by various methods –electronically, face to face, pay-slips, newsletters, personal letters, notice boards- you name it, we should do it.

In my view, a well thought out communication strategy will always include paper at some stage. It may cost a tree or two, but if the result is a better pension, a better understanding and a better industry, it’s worth the cost.

Democratic Pragmatism

Diageo’s pension plan has been in the news recently.

Praised in the press for enlisting pensioners in order to find the current whereabouts of deferred pensioners, they are in the press again for a change they are making to their trustee appointments.

It appears that Diageo have had to replace their Member Nominated Trustees every three years. Just as they were getting useful, I would think. It must take that long just to understand the intricacies of a Defined Benefit plan.

Now, they will no longer have to replace the trustee automatically and can have them on board for a second term and longer. Slightly less democratic maybe, but infinitely more useful for everyone.

My only concern would be the possibility of ‘Chairperson Control’. By that I mean the fact that trustees will inevitably get set in their ways to a degree. The Chair will have a considerable say in how things are managed. Having someone new in the mix that is not afraid to ask ‘daft’ questions can help improve the way a trustee group operates.

Well done Diageo, but watch for complacency.

Faceless Corporates or a Real Pension Plan?

The latest pontifications from the Pensions Regulator encourages employers to consider moving away from small-scale schemes on the basis that they are less likely to deliver good member outcomes. This is too broad a generalisation. Many (most?) small schemes are run well. They often have the touch and feel of the company to which they belong. They have been nurtured and promoted by local management and relate to the company, carrying something of the company ethos.

So to say ‘move to NEST or NOW or the L&G’ etc (which is what the Pension Regulator seems to imply) is effectively saying to the employer ‘wash your hands of your own scheme’ and let some faceless corporate entity take over.

A move may make some cost savings and reduce investment charges, but at what cost to genuine buy-in from the employees?

Pensions Gone by 2050....

That’s the prediction of Michael Johnson from the Centre for Policy Studies. If that’s what the Centre would do, I’d retire them now!

Pensions get a lot of bad press and Johnson seems to be saying that not only will this continue (seemingly helped by his headlines in the Daly Telegraph: “Pensions will not exist by 2050”) but that youngsters will not invest in something so far into the future.

So far so old hat. It’s been the problem for as long as there has been a pension plan to join- we don’t think we will get old. We don’t think we can afford it, so put off the day. I remember presenting to some DJ’s at Kiss FM- talk about not accepting they were going to get old!

Johnson says that young people today should only invest in workplace pensions if their employer is making “sizeable” contributions and if they are 40 per cent taxpayers, meaning they get more tax relief. He says that if this is not the case then it is “almost certainly not worthwhile” for young people to save into a pension scheme. In the meantime, Johnson points to ISAs as the preferred investment.

With friends like Michael Johnson, who needs enemies? What a load of old…. retirement talk. The Auto-Enrolment of members of pension plans is good news. It means more will invest and more people will have more in old age. Of course there are problems to solve (annuities for example). And the pension may not be at levels akin to previous defined benefit plans, but it’s still a pension; an income in later years with tax benefits along the way, including tax free cash.

Longer term than ISAs and ensuring there is something there to make the final years good years, pensions are here to stay.

The term ‘retirement’ may fade away as people take part time jobs, live healthier longer and manage their life balance – but that’s another discussion entirely.

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.