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Bank of England chief economist: IFAs have no clue on pensions

Haldane-Andy-BoE[1]

Bank of England chief economist Andy Haldane has suggested advisers do not understand pensions while admitting he too cannot make sense of the increasingly complex pensions market.

Speaking at the annual dinner for think-tank New City Agenda in London last night, Haldane said financial education in schools was lacking in teaching how to apply maths to the real world, such as budgeting, understanding annual percentage rates on loans and deciding on the right savings, pensions and mortgages products.

He said providers have made financial products “deliberately difficult” for the public to understand and “more complex than necessary”, with consumers charged a premium for buying them.

Haldane said: “To give a personal example, I consider myself moderately financially literate. Yet I confess to not being able to make the remotest sense of pensions. Conversations with countless experts and independent financial advisers have confirmed for me only one thing – that they have no clue either. That is a desperately poor basis for sound financial planning.

“This problem is one which, if anything, is becoming more acute over time. More of the risk associated with financial decisions is these days being shouldered, not by the state or companies, but by individuals.

“Take pensions. Over the 20 years, we have seen a secular shift away from defined benefit towards defined contribution pension schemes. That places the investment risk of pensions squarely on the shoulders of the individual, rather than companies.”

Haldane argued this shift to individual responsibility increased the need for easy-to-understand products so that consumers can effectively judge the risks.

He added the Bank of England also had a role to play in explaining its decisions on things like such as interest rates and bank lending to further aid the public’s financial decision making overall.

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Comments

There are 54 comments at the moment, we would love to hear your opinion too.

  1. Phil Holbrook 19th May 2016 at 9:03 am

    Time to change your IFA Mr Haldane. There are some out there who really know their onions, so keep looking.

  2. That’s one individual’s (unchallenged) personal opinion. Is it unreasonable to expect an attempt at balancing the article?

  3. Paul Williams 19th May 2016 at 9:13 am

    This is just so weird. What doesn’t he understand about them? Is he referring specifically to DB or DC?

  4. An Economist who considers himself “moderately financially literate” and is employed by the Bank of England. I think I begin to see why we are in such a mess as a country

  5. What an ill informed statement. There will be a clamour for him to explain himself

  6. Simon Roberts 19th May 2016 at 9:16 am

    I totally agree Phil…Mr. Haldane, if you have no clue on pensions how do you know whether you are being told the right thing or the wrong thing. I think it’s either a poorly written article or you have not had a great IFA experience. We shouldn’t all be tarnished by the same brush? Are chief economists or economists in general always right or held accountable for what they say or do? I think not.

  7. He is a guy who cannot get the countries growth forecast rights let go 2.5% no lets try 1.5% opps i dont understand growth but i get a nice salary

  8. It is depressing. If the chief economist to the B o E doesn’t understand pensions what is he doing working with the Bank Of England. What price the country’s future.

  9. Lindsay Lockett 19th May 2016 at 9:20 am

    Ha ha ha …. going to frame this article so I can prove in at least one subject I appear to brighter than the average Bank of England Chief Economist. Oh and by the way, we didn’t over complicate pensions that was done by successive Governments and regulators. Anyway you stick to your day job of running the UK banking system and leave the hard work to IFAs.

  10. Neil Liversidge 19th May 2016 at 9:21 am

    He can’t understand pensions? Who employed this guy?

  11. He can’t understand pensions and blames the industry for having to operate under the edicts of the Government.

    How did he get his job again?

  12. Methinks this guy is in the wrong job?

  13. Also he has spoken to “countless” advisers he is an Economist does that mean he can’t count?

    • Knowing most bankers Nick countless means more than 4 then they run out of fingers, using the thumb or worse still their other hand is way to complicated for them, much like pensions it seems.

  14. Duncan Gafney 19th May 2016 at 9:24 am

    So the “chief economist” at the Bank of England describes himself as moderately financially literate (a little worrying). He then comments that he cannot make any sense of pensions (again a little worrying), before starting to pontificate about pensions.

    He then Labels the entire expert advice industry incompetent, because he is unable to understand pensions and then blames providers for making pensions complex, having already commented that the market is complex.

    Did it ever occur to Andy Haldane, that pensions might be complex, because of his friends and colleagues at the treasury make the rules surrounding them more and more complex? Did it also ever occur to him, that for a chief economist to admit to being unable to understand pensions, suggested that both his adviser might not be very good and also that he is possibly out of his depth as chief economist, if he cannot understand a pension?

    I just get dismayed at the total absence of quality at the top of the public sector

  15. Glad to see the UK’s fiscal policy is in such safe and knowledgeable hands!!

  16. You couldn’t make it up! Apparently he has. What research did he do? Who did he talk to? Is this article correct or were his words taken out of context?

  17. Philip Milton 19th May 2016 at 9:28 am

    And as we know, the Bank of England, nor the Treasury and most ‘leading economists’ on the Remain side oft he equation, know little or nothing about financial forecasting either….

  18. Matt Wiltshire 19th May 2016 at 9:29 am

    There are plenty of very well versed IFA’s out there who understand pensions, time to change your IFA and stop making blanket statements Mr Haldane

  19. Please tell me that this slur on all IFA’s is not going to go unchallenged by the PFS and other representative bodies. One comment made in the daily press such as this undoes all the attempts we have made to promote knowledge and professionalism in recent years.

  20. Dominic Thomas 19th May 2016 at 9:46 am

    It would appear that either this is highly selective reporting or we should be concerned about the sort of people that are advising those “in power” who seem to regularly reveal sufficient information to disqualify them from their own job and do little to refute the suggestion that they really represent the interests of multi-national businesses.

    The concept of a pension is not complex, the rules and tinkering by successive inept Governments are very (needlessly) complex.

    Is anyone else getting the feeling that there is creek somewhere full of paddles? and a village or two lacking its required resident?

  21. I needed a good laugh this morning, incompetent twit

  22. He should resign. Irresponsible. The role of the FCA and indeed the whole point of the RDR was to restore faith in financial services. This will not happen overnight but any progress that has been made is undermined by headlines like this.
    However, the ignorance of some IFAs as demonstrated at seminars and other such events is still alarming in spite of all the exams that have been taken.
    Wait for the next negative headlines when the Suitability Review comes out which I predict may support these comments. But, some things are better not said especially as it tarnishes all IFAs.

  23. Jeremy Harris 19th May 2016 at 9:51 am

    Brilliant, what a womble.

  24. Chris Gartside 19th May 2016 at 9:54 am

    Did the Bank of England Chief Economist really say ‘ I cannot make the remotest sense of pension’ and ‘I consider my self moderately financially literate’ simply unbelievable! This man should resign IMMEDIATELY and vacate this important position for someone who IS exceedingly financially literate. As others have mentioned it is successive governments and regulators who have made pensions complex not the pensions industry. How very dare he!

  25. Chris Gartside 19th May 2016 at 9:58 am

    By the way ….. I do hope that Money Marketing have a mechanism for ensuring the Bank of England Communication Department is made aware of the reaction from the IFA community?

  26. I agree with Simon

  27. I would suggest there is more than a little selective reporting here.

    That said, the reason pensions have become so complex is they have been used as a political football. This is very simple really, he is admitting he does not understand pensions and investing. Wants someone else to take the responsibility and as he cannot understand it himself, has wrongly concluded that know one else can be trusted. He believes he should be able to understand pensions fully via an hour with an adviser, which we all know is impossible. These comments could have also been made with a very large slant towards sarcasm to lighten what would have been a very difficult speech and reported in a totally different context.

    I think some form of explanation from all parties should now be required. To clarify if how this has been reported is what Mr Haldane meant and evidence to support if this was the case against financial advisers.

  28. Yes pensions are made a bit more complicated than they should be, by the government and HMRC, for the general public to understand but for him to say that he doesn’t understand them is just asking for a rap over the knuckles. What an idiot.

  29. I can only hope that this headline was taken out of context and that upon Mr Haldane reading this (has anyone emailed the Treasury yet) he will set the record straight. If the reporting is accurate I believe he should resign as this is a blatant use of an authoritative position to undermine a profession based around his ignorance. In his position he should increase his knowledge not blame others and act more responsibly. What example does this set. One final note, why is it always people in nice comfy final salary schemes that say pensions are complex, perhaps he should speak to his pensions department and ask for a statement……

  30. What an insult, he just has not spoken to many IFAs, we unlike bankers are constantly taking exams and demonstrating how up to date we are. on the other hand the Bank of England constantly pushes out miss-information, Carney tell us interest rates will increase one minuet and then reducing the next. He has totally lost any credibility he may have had, why don’t the B of E concentrate on trying to sort the SWAP loans scam, by guiding the FCA with their hopeless review board, they are getting it so wrong and so is HMRC with pensions freedom.

  31. This story is also in the FT and the Telegraph business section amongst others, so will be seen by many customers and potential customers. On top of that, Mr Haldane was voted one of the world’s 100 most influential people by TIME magazine in 2014.

    As Uncle Ben said to Peter, “With great power, comes great responsibility.” What hope has our industry and profession got when people of such influence make irresponsible, sweeping statements such as, “IFAs have no clue when it comes to pensions”.

    The majority of the country feels that all Bankers are a similar sounding work begining with ‘w’. We shouldn’t tar all with the same brush as he has done, but Andy Haldane clearly fits into that ‘w’ category.

  32. Panic over.

    This is a belated April’s day joke.

    If this had been said on Yes Minister, folk would say it was too far fetched.

  33. Don’t judge all financial advisors by your (obviously weak) standards. Ignorance and arrogance served up in equal measure here.

  34. …’Conversations with countless experts’ – No such thing as an expert who doesn’t know his/her field!

    Anyway, rather than splitting hairs, if he is suggesting that IFAs’ and others cannot determine comparable performance and lifestyling ‘outcomes’ in the pensions arena, then he may have a point; albeit a stupid one, as a leading economist who should know better. Mystic Meg may be his ‘go-to’ girl on this one!

  35. I wonder what school he went to ?

  36. I think he was using grear British understatement when he (reportedly) said he was moderately financially literate.

    Perhaps he was referring to DC and the fact that no one knows for sure the final size of the pot, annuity rates at vesting or the likely returns from drawdown. Or indeed what rules and conditions might apply at vesting time. Perhaps a good start would be to demolish the cap and all other constraints on saving. That would make things a lot simpler – “The more you put in, the more you can take out”. Even an economist would understand that.

  37. Like most things in life, things get complicated when you start to dig deeper. So lets keep things really simple….

    A pension defers you income until later.

    Any questions?

  38. Glenn Robinson 19th May 2016 at 1:35 pm

    And I quote”He added the Bank of England also had a role to play in explaining its decisions on things like such as interest rates and bank lending to further aid the public’s financial decision making overall.” Does he mean the rigged ones or the real ones????????

  39. In my experience very few economists have absolutely no clue about what is going on in the actual wider economy or understand it all.

  40. Back to School Mr Haldane. and you are our Chief Economist, you are the weakest, goodbye.

  41. It’s at times like this I appreciate the Lifetime Allowance and the thought of his inflated benefits being reduced is comforting after reading the very poor article.

  42. Why would he understand pensions? He is an economist. He is in one of those professions where everybody assumes that they would or should know about pension when in fact they generally do not have anything but superficial knowledge. A bit like accountants.

  43. The thought that the complexities of pensions are in large part caused by continual, meddling legislation has escaped him.

  44. Rehana Hindle 19th May 2016 at 6:22 pm

    Personally I don’t think you are suitable for the job you are currently in, shame on you to comment this way, not professional and only damaging on self

  45. Dennis Burling 19th May 2016 at 7:20 pm

    Who is this Gormless Dork, what a plonker !! So 25 years of study and multiple technical pensions qualifications leaves us without a clue does it – to the block with him !!!

  46. How do these clowns get their jobs ?
    Hundreds of thousands in salary and pensions benefits he does not understand ?
    The problem must lie with who ever selected him for the job
    Surely candidates for this position should be of more than just moderate ability ?

  47. That’s strange no comment from the PFS. What are the PFS there for? Obviously, not to stand up for their members.

  48. The man’s a moron!

  49. It’s funny that. I was just thinking the Bank of England must have very little idea how to regulate the economy or set monetary policy given we have been at intensive care interest rate levels for over seven years. Ghastly man.

  50. Stephen Underwood 22nd May 2016 at 9:19 am

    May I attempt to add another side. I don’t read it as an attack on IFA’s. I read it as the providers doing their best to keep the veil of secrecy on the pension market and then Government has messed about with the rules so much that the sands are continually shifting. I think he is saying that it is a very complex market and that he would not be surprised if IFA’s did not understand the rules. What he has missed is that despite all of the attempts by both Government and providers to muddy the waters, there are some excellent IFAs out there that despite the fast pace of change, actually do understand the rules and do a great job in a difficult market place.

  51. Why all the vitriol? All he’s done is tell the truth, and from the responses, boy does the truth hurt !

  52. Chris Gartside 23rd May 2016 at 2:42 pm

    He certainly told the truth when he said he was only moderately financially literate – albeit he does have a tendency for over exaggeration. He also told the truth (we presume) when he said he didn’t know anything about pensions. But he to say the IFA community as a whole are clueless is irresponsible in the extreme. Even the most blinkered banker must appreciate that!

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