“People are in a defined contribution world, they do need to take control of their own retirement savings. The big problem is that people are ill-equipped to do that and that’s why the Financial Conduct Authority has stepped in and said, ‘We need more consumer protection’.”
For many Hargreaves Lansdown clients, pension freedoms was a good thing, but they are not necessarily representative.
We have to remember, he says, the time when it was launched. “It was 2014, we were coming out of a period of really difficult public spending discussions, we had an election looming, and the Conservative party had low confidence about winning the election. This was a masterstroke of low politics.”
“People in the FCA were pretty irked about this at the time and were not happy about having to deal with this in a short period of time.”
In fact, Mr McPhail, despite this and the criticisms politicians get in the press, is fairly admiring of politicians, especially those that were involved with auto-enrolment, and thinks there are many unsung heroes: Richard Harrington and Stephen Timms both did good work, as well as the well-known Steve Webb. Ros Altmann, he felt, made a “mis-step” going into government as she never felt comfortable there.
“There have been some really good people working in pensions, and it’s always difficult because of the tension between the Department for Work and Pensions and the Treasury, because of the demands and priorities of these departments.”
One of the biggest success stories he has seen is auto-enrolment, from start to finish – from the groundbreaking Turner Commission (started in 2002) to the officials and politicians who brought it over the line in 2012.
It has increased people’s engagement with their pensions, and the arrival of the pensions dashboard will further help, says Mr McPhail, but the system does not go far enough.
He says: “There’s a fundamental disconnect between ownership of the pension pot and the way the system works: if you want your employers’ pension contributions, you have to join your employers’ pension scheme.”
He would rather see a system whereby individuals completely owned their own pension, and have employer contributions paid into it.
“I’m sad I haven’t been able to make more progress with that; I’ve had politicians say, ‘We would like to do that’.”
Mr McPhail has been with Hargreaves Lansdown for 18 years, starting as head of research, before being made head of retirement policy then head of policy. Will it be a wrench for him to leave?
“I’m actually quite relaxed. I’ve been working in financial services for 35 years; all the people I’ve met and the knowledge I’ve built up, it does feel weird walking away from that.”