It’s conference season again – that marvellous time of year where political parties and lobby groups flaunt ideas for problems that do not exist.
Usually they back away from these quite quickly once they realise that they have come up with an unsustainable solution for nothing.
Guy Opperman, the pensions minister, had a doozy last week, when he suggested first-time buyers would be allowed to take £10,000 from their retirement savings to help them buy a house. I did not see a single person who supported the idea and it all went quiet quite quickly afterwards.
Lobby groups are usually better at this type of thing, often at least trying to back up their ideas with some kind of research.
Which brings me to the Pensions and Lifetime Savings Association’s big suggestions for, well, how can I say this – making the pension freedoms less free.
The PLSA finds itself in a bit of a tricky situation with regards to the freedoms in that, as a body that is there to support trustees and scheme organisers, it is notionally there to provide what is best for savers. Good investment outcomes and choices should be at the heart of everything it does.
The problem is that the PLSA has to always be a little too closely aligned to the insurance and investment industry, which so vehemently fought the idea of the compulsory annuitisation. (Yes, I realise that in theory annuitisation was not compulsory, but that was never how it worked in practice. Let’s not go there again).
Anyway, the PLSA has identified decumulation as the area where it wants to support members better, with the end result being that it wants primary legislation to compel schemes to provide support for members in decumulation.
They want to be able to signpost certain choices, and as far as I can tell, hold their hand to products, some of which may be designed specifically for that scheme.
I am not sure why the PLSA has chosen this particular area, because the doomsday scenario most people had suggested would happen after the freedoms has not materialised.
It turns out that those who were prudent their entire lives, were also prudent in retirement.
The idea of signposting though is troubling. In which direction should savers be pointed? This smells like advice, and it also has the potential for conflicts of interest with product providers – some of whom may not provide the best value.
The PLSA talks about inertia among savers, as they sleepwalk to retirement, but actually its proposals could exacerbate the problem as savers then sleepwalk into a decumulation product that is not quite right.
It does nothing to solve the problem of engagement. Those savers that do care about their pension will still shop around and seek advice, the confident will still go it alone; it is the sleepy savers who will continue to be shunted from one product to another.