Cynics argue that engagement is a waste of time, and that perhaps even education is pointless. They suggest that automatic enrolment’s success is proof that only inertia and defaults work. I disagree entirely. I think we are doing people a disservice to suggest they will never be interested in their long-term savings, and the choices in retirement now command a level of decision-making, even where consumers have the benefit of advice.
Engagement
Engagement is a journey that starts with a nudge – the simple notion of doing the right thing – and builds from there. Although not explicit, it is easy to infer a recognition of this engagement journey in the regulators’ paper.
More prominently, the strategy makes reference to two specific areas for further work. The first – reviewing the consumer pensions journey – will seek to look at things from a different perspective: the customer’s. This sounds like a comprehensive study of how everything fits together for people trying to navigate the world of pensions, and is a welcome step. Plenty of studies have focused on very specific aspects of pension provision, but this provides an opportunity to take stock of where we have got to.
Undoubtedly, it will give rise to criticism of certain elements, but perhaps more importantly it gives us the chance to do a grass roots review of just how much information we provide and the extent to which it actually all adds value.
This is a golden opportunity for simplification.
The second – driving value for money – is also a welcome development. Now affectionately shortened to VfM, this is nothing new, but there are certainly many trustees and governance committees crying out for greater clarity in this area. The important thing here is not to get bogged down in detail, especially if it leads to providing more detail to consumers.
It was encouraging to see plans for strengthening the work on preventing scams. Relatively few people are affected by pension scams, but the impact for those who are is devastating. The best defence will be to help consumers themselves to spot them, and the work already kicked off by the regulators in this area is helping here.
Naturally, both regulators remain concerned about DB transfers, and so it is no surprise that further work is planned in this area. Everyone recognises the importance of getting this right.
