At this time of year, many parents will be anxiously awaiting end-of-term reports for their offspring. Given the time and effort put into rearing the Sandler and Pickering reviews, I can only assume that the Government is similarly nervous.
Master Pickering has proved to be a serious underachiever as his work to date has been both predictable and incomplete. Master Sandler, however, has produced a comprehensive piece of work which proves that any suggestions that the conclusions were written in advance were quite obviously scurrilous comment without foundation.
The common objective of both reviews was meant to be the facilitation of greater self-provision by ordinary folk. What has been delivered is unlikely to produce anything that will achieve that objective.
Regarding Pickering, the Government has stated that it is not ruling anything out or anything in at this stage. Put it another way, this review has not produced any adoptable recommendations.
May I assist this Government without the need of another review. To put it bluntly, the low-paid can never save enough to generate the funds needed for security in retirement, especially if we accept that they are not in a position to invest in volatile markets. As an alternative, can I suggest that state pensions should be subject to means-testing and the money being allocated to promoting investing to the lower paid be diverted to the cost of providing these benefits.
Dumbing down defined benefits has no merit. After all, if the funding rate was the problem, the average contribution to defined-contribution schemes would be a lot higher than it is at present.
Reducing the number of pension plans to three for new investments is of little benefit if existing plans are left to be governed under the maze of current rules and regulations. This does not simplify matters, it merely increases the permutations to 18 from 15.
Meanwhile, the Sandler report has not understood that the stimulus for closing the savings gap is not simplicity or lower costs. The greatest reduction that could be achieved in this area would be obtained from the Government moving to means-testing for state pensions and making that fact crystal clear.
The target group for personal provision should be Middle Britain and not the lowerpaid. For this to be effective, we need to communicate clearly and without complexity. A form of matching contributions would also ensure that the reliefs were targeted on the individuals who would be able to take advantage and not just higher-rate taxpayers.
To be completely fair, the Sandler report does at least address the logistical problems of the DPS by introducing fees contingent on the sale of a product. This would remove the risk of VAT becoming another barrier if advice had to be separated from execution.
Taking CP121 and Sandler together, the banks have been given both a marketing opportunity and a major responsibility in the future prosperity of this country's most vulnerable consumers. Given their inability to make wealth management work through a lack of margins just, how will they cope? It is clear that existing staff and methods will not be effective. Indeed, the redeployment of staff is at the root of the failure of bancassurance to date. New methods need to be found and simply rewrapping the old options will not do.
Perhaps the end-of-term reports for Masters Pickering and Sandler should read as follows. Pickering must submit more imaginative work and remember to answer the question asked, not the one he would have preferred. Sandler needs to remember that producing exactly what is expected of him is rarely as memorable as producing the unexpected. Both students may have to repeat the year if we wish to progress.
Robert Reid is principal of Syndaxi Financial Planning. He can be contacted via email c/o the editor at email@example.com