Do you sometimes feel like you are not being given a straight answer to a simple question — that you are hearing an evasion, a deflection, or some doublethink?
With the Work and Pensions Committee soon to start hearing evidence on the progress of pension freedoms, here are a few old chestnuts we have spotted that MPs may want to look out for.
On pension scams, the conversations about pension fraud often arrow straight to the risks to members of ‘gold-plated’ defined benefit schemes, and the great efforts being made by the government and regulators to protect them. To be fair, there was some catching up to do.
But note how talking DB so often takes the focus off defined contribution members, whose pensions are just as important to them, and which will represent an increasingly juicy fraud target over time.
What I would really like the Work and Pensions Committee to ask those providing evidence is whether they have a problem with automatically streaming pension savers into guidance sessions from age 50
In the DC world, there are no regulated advice requirements or transfer ‘red flags’. It is almost as if nothing, not even consumer protection, can be allowed to get in the way of pension freedoms. For every answer about the DB world, there should be an equally good answer for DC.
Mandatory guidance
This is the archetypal straw man argument, most recently highlighted in the Financial Conduct Authority’s CP21/11 consultation on implementing the stronger nudge.
“Parliament debated mandated (default) guidance, but decided not to take this forward, having heard arguments that a compulsory appointment could be seen by consumers as a barrier… or tick-box exercise,” the document read.
I am sorry. Who suggested guidance should be mandatory or compulsory? My impression is that there is support for automatically booking guidance sessions for people from age 50 in the same way as we automatically enrol employees into workplace pensions.
That has been a stunning success, despite the fact it is not mandatory or compulsory and people are completely free to opt out.
Investment backstops
Driving down a steep hill you may have seen an escape lane, full of soft sand and gravel to stop runaway vehicles. No one plans to use an escape lane, it is just the least worst option at the point of impending disaster.
Similarly, implementing backstops such as investment pathways and ‘stronger nudges’ to guidance should not be seen as policy successes, but as last-resort measures to deal with failures earlier in the pension journey.
They are the least we can do, not the best we can do, and every user represents a failure.
Making guidance the norm
The government tells us it wants guidance to be “the norm”, but has not said what it means by that.
It would be really useful to have a target figure to work towards, but as it stands is just an example of pure political hyperbole that should be called out.
Not so big data
Whenever you hear there are zero signs of stresses or troubles being caused by pension freedoms, it should conjure an image of Admiral Lord Nelson raising his telescope to his blind eye.
We know from the experience of other countries that pension flexibility results in both winners and significant numbers of losers.
It is the losers we need to worry about. If no losers are being identified, then the obvious conclusion is to question the effectiveness of our monitoring and early-warning system, not to start believing the losers do not exist.
What I would really like the Work and Pensions Committee to ask those providing evidence is whether they have a problem with automatically streaming pension savers into guidance sessions from age 50.
Some might exercise their right to opt out or defer, but not large numbers if workplace pension saving is a guide.
That one policy would tick a host of boxes, including helping them to understand their choices well before they have made their minds up what to do — and providing impartial information that is independent of their providers.
Most importantly, it would help engage the significant numbers who say they have never heard of Pension Wise or do not know how it can help them.
Maybe some people are opposed to this idea because they think guidance should be rationed on cost grounds, or they think it will be unpopular with voters or their customers.
Great, let us hear them say that loud and clear. We would all welcome a straight answer.
Stephen Lowe is group communications director at Just Group
