2019 the year automatic enrolment and master trusts grew up
Paul Budgen
FinTech Co-Founder | International Financial Services | Strategy | Growth and Revenue | Pension and Retirement
Gosh, what a year but what would our report card say...?
To kick-off with, we were busy completing the Authorisation process for master trust pension schemes from The Pensions Regulator (TPR). All applications and fees to be in for the end of March, with lots of work on processes, systems and controls, fit and proper tests and getting capital set aside. As predicted, we saw approximately a 30% consolidation of schemes, that were open in the market, some decided it was not for them, others flew past the post whilst some came in coughing and spluttering. "We counted them out and we counted them back in", however, there a few MIA, latest figure is 37 pre and 1 post, bring the total of master trusts to 38.
The great news for employers and their employees is that no matter how big or small you are as an employer, you have a good choice of master trusts with most scheme prices well below the charge cap, investment numbers north of their performance targets and south of their risk appetite - well done us! However, a quick squint at Trust Pilot and service numbers are patchy, therefore, we get a good 'B+'.
Let's see what the boys and girls down in Brighton (TPR) come up with for those members of small single employer trusts. I think we can all agree that to raise the governance bar has only got to be a good thing for those members and their outcomes in retirement.
We saw a bunch of reports on the performance of default funds, calling out the runners and riders. Well worth a read over the Crimbo period.
Communications just need to get better, far too many people don't know how much they have or where it is, let alone how much it's worth in retirement. We saw Quietroom and Ruston Smith launch a 2 page simpler annual benefit statement (to replace the current 15+ pages potential 'dog killer') which was great, but it was disappointing not to see it universally adopted by the industry - 'D' could do better!
True innovations are a bit like Unicorn sightings, rare and often made up. Let's hope we can do better in 2020 - 'E' see me after school!
In the round, not a bad set of results but lots of room for improvement. We avoided the worst possible outcomes, managed our way into a new and (quite rightly) tougher regulatory regime, with good investment numbers, but, with patchy service feedback and despite some good efforts, the industry really has to do better with it communications and innovation.
For 2020, we should see the benefits of good competition in the provider market, working for the member; better propositions and better value. We need a Pensions Bill that builds on the success of automatic enrolment, that addresses the issues of the self-employed and workers in the gig economy and tax relief (let's not be here next year saying the same!)
Merry Christmas to you and yours. Palace is at home to West Ham on Boxing day, so I would appreciate your thoughts and prayers.
Paul
Non Exec Chair of the Tesco Pension Fund, Non Exec Chair of JP Morgan Asset Management, Non Exec Chair of Smart Pension Ltd, Chair of GroceryAid
5 年Nice reflective summary Paul ! Let’s continue to build on some of the customer led initiatives, work collaboratively as an industry and do the right thing for savers. Great to see some larger providers have just and will launch the Simpler Annual Statement next year as ‘collaborators that care’ following the lead of PensionBee and Smart. It’s all to play for. We can do so much more when we work together, acknowledging some trade-offs, and be proud of the positive difference we can make for savers - because what we do together influences real lives. Result between Crystal Palace and West Ham....? Depends on who eats the most Christmas Pudding the day before ?? Have a fantastic Christmas and Holiday everyone - and let’s ‘smash it for savers together’ next year!