THE PENSIONS DEBATE

Ian Neale, Aries Director, is a frequent contributor to the debate in the national pensions press.  Read Ian's incisive commentary, and share his unique insights into the problems and opportunities of pensions in the UK.  Here is a recent sample to get you copied in. Ian welcomes your response - just click here to send him an email.

  PENSION FREEDOMS: SOUNDS GREAT, BUT IS IT WORKING?

in Pension Funds Insider

Ian Neale debates the ideas proposed by the WPC when it comes to deciding what to do with your pension pot.

The House of Commons Work and Pensions Committee (WPC) thinks pension savers need more help to make a good choice. Flexible drawdown can be difficult and expensive to access, and advice is similarly costly. The key question remains, who's pulling it all together? In a potentially influential new report, the Committee has come up with three big core ideas to address these industry issues.

The WPC believes that when it comes to deciding what to do with your pension pot, there should be a viable alternative between cashing it out entirely and spending it all on an annuity. Flexible drawdown ticks the box, but not every DC provider offers it. Among those that do, a competitive market has yet to develop, so there is no incentive for pension savers seeking a drawdown solution to shop around. Many are also reluctant to pay for advice, and so they tend to stick with the name they know.

The solution proposed by the WPC is twofold: first, that NEST should be allowed to enter the drawdown market, and second, that every drawdown provider should be required to offer a default decumulation pathway suitable for their "core customer group" by April next year, with charges capped at 0.75% as for auto-enrolment.

Neither the WPC nor indeed the FCA has put forward any idea of what this default drawdown route might look like. As such, many commentators have been sceptical because individuals' circumstances in later life are so variable, so defining a "core customer group" can become challenging. That might be less difficult when workers are being auto-enrolled, many for the first time, . . .

04 May 2018   Read the full article

 
 
  SCRAP THE CAP? PPF RULES CHALLENGED AT CJEU

in Pensions Expert

Fewer than 400 PPF members are currently affected by the cap, and of those, very few are not receiving at least 50 per cent of their accrued pension

It will be interesting to see if the Pension Protection Fund compensation cap survives the impending Court of Justice of the European Union's decision in the case of Grenville Hampshire v The Board of the Pension Protection Fund. Mr Hampshire, a former senior employee of defunct manufacturing business Turner & Newall, is challenging the cap on the grounds that it fails to comply with Article 8 of the EU Insolvency Directive 2008/94.

That directive obliges member states to "ensure that the necessary measures are taken to protect the interests of employees and of persons having already left the employer's undertaking or business at the date of the onset of the employer's insolvency". It applies "in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivors' benefits" promised by any occupational or inter-occupational pension schemes that are not part of a country's state pension or national social security.

Following a referral from the UK Court of Appeal, the case was heard by the CJEU on March 8 2018.

Anti-cap precedent is mounting

The debate over the PPF cap stems from another CJEU decision, involving Allied Steel and Wire, sometimes known as the Robins case, back in 2007. That found that not ensuring every member received at least half the benefits to which they were entitled could contravene Article 8.

The interpretation cropped up again in the 2013 Hogan case, also known as Waterford . . .

25 Apr 2018   Read the full article

  YOUR CHOICE: OVER AND OUT

in Pension Funds Insider

Minimum employer pension contributions to double and employee contributions treble but it still isn't enough. There are tough decisions for members to face in the coming months.

In a famous paper published in 1956, the American psychologist George Miller proposed that the number of items the average person can hold in working memory is limited to seven, "plus or minus two". Others have since claimed the figure is no more than four, though it depends a bit on the complexity or familiarity of the material (eg digits are simpler than words, and everyday words simpler than technical terms like 'drawdown').

It is not surprising then that we have readily ceded control of information processing to computers, which have no such limitation. Computers tend also to be freer of the biases which infect human thinking. So-called 'robo-advice' has entered the world of financial planning, though it must be acknowledged that the primary driver has been the unwelcome cost of human expert advisers.

It's often hard enough to make immediate decisions on the basis of information to hand, never mind the multiple 'ifs' that enter the fray when planning for the future. So people focus on the here and now. What are my immediate needs, and how can I meet those needs?

'Cash is king', it is often said. As a people, we're not really into deferred gratification. No surprise then that flexible access . . .

16 Mar 2018   Read the full article

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29 Station Road, Desborough, Northants NN14 2RL
Tel 01536 763352
email: ian@ariesinsight.co.uk

 
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