The Pensions Regulator seems to have plenty to say for itself at the moment so we decided it was time Retirement Strategy caught up with its executive director of DC June Mulroy. Later this year, TPR will publish the 11 principles it wants to act as a blueprint for trustees, employers and providers in the DC space. A key plank of this work will be looking at charges and whether members are getting value for money from their scheme, an area that pension minister Steve Webb is also exploring.
Webb’s suggestion that he is looking at a specific charge cap has attracted considerable criticism with concern about the unintended consequences of blunt Government action. TPR has acknowledged the Government has the power to introduce such a cap but it is not something Mulroy is desperate to provide a view on at present. Perhaps the TPR will be more forthcoming when it publishes its principles.
One area where TPR has been very vocal in recent weeks is active member discounts. In a statement to DC trustees last month, it warned that it does not view active member discounts as “fair” or “acceptable”, a very bold statement for a regulator to make about a pretty widespread practice.
Mulroy believes deferred members are being ripped off by an increase in charges that does not properly reflect the costs involved in their change in status.
In this month’s issue, Hargreaves Lansdown head of pensions research Tom McPhail and Helm Godfrey head of employee benefits John Deacon go head to head on whether AMDs should be banned.
McPhail says Hargreaves moved away from using differential pricing due to the crosss-subsidies involved through “robbing Peter to pay Paul”. He suggests the argument that members are free to leave the scheme at will is flawed as the whole premise of AMDs is built on the basis that inertia will lead to people staying put and paying more. Giving the counter view, Deacon warns that banning AMDs would increase the costs for many members and lead to consumer detriment.
Elsewhere in this issue, Prudential head of product and sales Matthew Stephens highlights some advice issues around next year’s lowering of the lifetime allowance while John Greenwood takes a look at the range of cash accounts available to Sipp investors.
As always, any comments of ideas for future issues can be sent to firstname.lastname@example.org