The auto enrolled, defined ambition, small pot, collective design pension scheme?

Kevin Burge

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Spence & Partners latest blog for Pension Funds Online –

No, I have not invented a new name for yet another possible pension scheme design, although it does have a ring to it! The man in the street will probably shrug his/her shoulders and simply see the word pensions and sigh and the rest of us might be a little intrigued.

Why does the world of pensions constantly look to re-invent itself, thinking that the next idea will be the one to “simplify” itself? Perhaps the easiest way to understand why pensions is where it is would be to reflect on equalisation. Mr Barber and his quest for equal treatment began in May 1990 and still rumbles on with several unanswered questions, nearly 24 years later. Is there any other industry that is still to properly address an issue that has been know about for so long, yet still cannot agree how to implement equalised benefits?

Whilst I would be the first to agree that pensions need to be reviewed and refined in order that they can be fit for purpose for the next generation, do we really need to have the constant bickering that goes on in the pensions press at the moment.

A quick scan of the usual journals will reveal passionate arguments for and against collective defined schemes; a general consensus against small pots and for aggregator pots, but the pensions minister staunchly insists that small pots will be the way forward; a delay in the introduction of any control over charges for DC schemes – could it be that no one can agree what they should be apart from the fact that there should be some control; a survey stating that the annuity market is simply not fit for purpose and then yet another debate on how this could be improved; auto enrolment and what the true opt out rate is and, I could go on but do not have the energy to do so.

It is very hard to accept that the industry in which I work is a mess, but it is and unless there is a concerted effort by us all it will not get any better. We really need to stop arguing amongst ourselves, get a working party together, and agree a way forward and then all buy into that. The good old general public are at best sceptical about whether to trust in pensions and at worst downright untrusting. Our continued debates do nothing to improve this image and we really all need to put our collective energies into agreeing what to do rather than arguing what not to do.

Pension Funds Online

Kevin Burge

Post by Kevin Burge

An experienced pension consultant with specific expertise in Scheme terminations - PPF, FAS transfer and winding up.