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Steve Webb slams advisers for ‘dissing’ Nest and chasing commission

Steve Webb 480 LibDems DWP

Pensions minister Steve Webb has attacked some advisers for “dissing” Nest and pushing clients towards schemes that pay commission.

Speaking at a Smith Institute fringe event at the Liberal Democrat conference in Brighton yesterday, Webb responded to a comment from the Federation of Small Businesses claiming advisers are choosing pension schemes based on commission and not client needs.

Webb said: “I was interested in the comment on IFAs. I have found some of the same things, employee benefit consultants have gone around dissing Nest because they do not get the commission. Nest would be very suitable for many small and medium-sized firms but the IFAs and employee benefit consultants are not doing it. We need to make sure that employers make sure the default option is good value, not-for-profit, with low charges. If it is not working and the market structure does not drive down charges then we will have to regulate.”

Nest managing director of scheme development Helen Dean says the provider does not share Webb’s concern.

She says: “I am glad to say that many are recommending us wholeheartedly to their customers. We are working with a large number of advisers and increasingly, our experience is that the advisory community is attracted to our low charges, simple clear communications and sophisticated investment strategy.”

AWD Chase de Vere head of communications Patrick Connolly says: “In the past some GPPs were sold for the wrong reasons but I do not think that is the case any more.

“Nest has its good points but it is not the right solution for many companies. The problem for smaller companies is they need more support than Nest is going to provide.

“Employers should not walk blindly into Nest assuming it is the right solution because often it will not be.”

Webb also dismissed speculation that state pension reforms are being watered down, pledging to release a white paper in the autumn. Reports earlier this month suggested prime minister David Cameron wanted a rethink of plans to create a flat-rate state pension of £140 a week.

Webb said: “It is absolutely still our intention. It is an odd story saying the prime minister is demanding a rethink because if he is then he has not told me and we are still on track for our autumn white paper.”

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Comments

There are 30 comments at the moment, we would love to hear your opinion too.

  1. The Lib Clot conference has been a real eye opener.

    Each day a dafter statement has been issued. They seem to purposely want to demonstrate that they don’t understand either the issues or the detail. Who on earth are they trying to attract? Guardian readership is at an all-time low and would hardly put in a single candidate.
    If we are to believe the daft class distinctions that they are so wedded to the mystery gets even deeper.
    They obviously are not appealing to the Middle Class, certainly not to the Upper Class and the Working Class are not their natural supporters. Don’t tell me that all this effort is directed to Fred and Mabel at East Cheam! Anyway they will probably save a fortune on future conferences – an old cardboard box under the arches at Charing Cross should amply suffice.

  2. But Nest does cost more than a Stakeholder, and has a pretty rotten range of funds, as well as a whole host of other restrictions on transfers. It costing more than a Stakeholder or a GPP at outset which is the most ironic point of it. People and firms do want advice, they don’t believe the Government (for good reason too).

  3. Mr Webb’s qualifications are for recommending a specific scheme to an employer?
    Commission Mr Webb? Isn’t that something that stops on new schemes in January? Did you not know that? Is that amongst the apparently very long list of what you do not know about pension provision? Pensions Minister?

  4. Instead of coming up with a complex, administratively burdensome so called work place pension scheme which has very little flexibility, a limited investment range and at an incredible cost to the contributors, why oh why did the government not simply up the NI contributions for employee and employer and allocate them to their state second pension fund?

    There is also the question of consumer choice, why is the government forcing this expensive and time consuming scheme on the working population and of course adding an extra burden on employers, thus limiting the amount of profits available for expansion and job creation, when quite simply it was not necessary, or would hiking up NI contributions be seen as more taxation.

    A rose by any other name is still a rose, even if it is grown in dung.

    The problems of the costs of pensions could so easily be resolved by stopping all foreign aid, which as can be seen by recent press articles subject to abuse and rip offs by the very countries and organisations responsible for helping the so called poor in these countries.

    Billions of our taxes are being spent by a profligate coalition government which does not even have the common sense expected of the man on the Clapham Omnibus.

    I just hope Janet Greening can see the reality of the waste of public money and stop it. I fear that she will not be allowed to do what is right and proper but will be whipped into shape by someone whose respect for the police service and his fellow human beings doesn’t amount to a can of beans.

  5. Since June 2001 there have been ten different pension ministers. What chance of a meaningful long-term pensions strategy ?

  6. If Nest does not work – blame the adviser community.

  7. Even recommending to a client that Nest should be considered/ implemented is “advice” and requires the full financial planning process from know your client to suitability of advice. This takes time and can be an arduous process particularly if member meetings are part fof the package. NEST is not the Holy Grail as has been touched on above. When discussing with an employer, often the decision maker, they tend to want something “more” than NEST offer as part of their own pension requirements. Sometimes they also favour commission as the basis of remuneration to cut their costs against the compulsion of the 3% salary commitment which is already a challenge for many businesses cash flow.
    Mr Webb clearly does not understand any of the pressures that the whole subject is causing whether it be the employer or the adviser community.
    I notice that in the adverts on autoenrolment so far there has been a complete absence of any information about the costs that either the employer must pay or indeed the employee who so confidently state they are “In”! We shall see….

  8. I would like to know instead of creating Nest ( which I think will be a dead donkey in 3-5yrs time) did they just not make it mandatory that employers contributed to a penstion scheme. I thought this was the whole idea when stakeholder pension came out and remember the charges at the start of stakeholder were supposed to be guaranteed to be no more than 1% then the rules changed to ave over 10yrs there is no way I would advise a product that is run by the goverment and charges are not guaranteed and fixed for entire term with no clause to allow them to change . Clients and firms dont want to pay fees , goverment does not want commission and general public want advice at least one of these people wont get what they wanted

  9. Another clot of a politician, with no understanding of the issues he is empowered to affect. All he has to boast about, like most of his political chums, is his own sheer arrogance. He walks into a post and within 5 minutes starts making unfounded statements, already thinking he knows more about the pension industry than qualified individuals with 20 years experience.

    With all its meddling, the government, past and present, has destroyed pensions saving over the past 20 years. Here is yet another know-all twit who won’t be around to witness the mess he leaves behind.

    Incidentally, I have no respect for politicians who wear Jeans in public or those who use non-words such as ‘dissing’ or slang like “gutted”.

  10. oddly enough spoke to n FD last week and recommended they use NEST for auto enrolment for their 300 employees when the staging date comes.

    most of their staff are foreign but working and living here who will want to go home without a UK pension but with more cash in their pockets.

    do I win a prize?

    the Government could encourage pension planning by

    reduce min age to get benefits back to age 50

    allow financial hardship loans – secured and repayable

  11. ken170647 youtube 26th September 2012 at 9:43 am

    This level of ignorance is terrible. Why doesn’t Money Marketing get some of these people to answer IFAs, talk to them?

  12. John

    “Mr Webb clearly does not understand any of the pressures that the whole subject is causing whether it be the employer or the adviser community.”

    Unfortunately Mr Webb went to school, university, worked at a think tank, worked at a university and then became an MP. I would be surprised if he has any understanding of the pressures in businesses at all.

    To threaten regulation on charges is a joke, given the drop in pension to the lowest level since the 50’s. This is after the stakeholder initiative to drive down charges. The regulators and government are failing to persuade anybody to save, and why should they, when the government has persuaded them that they will be supported anyway through the welfare system.

    IFA’s are just about the only people out there trying to persuade people to build up some capital. He should be grateful somebody is working towards his objectives.

  13. They need advisers 26th September 2012 at 9:52 am

    The process of registering an automatic enrolment scheme, checking eligibility of workers,calculating actual contributions and comparing those against 8% of banded earnings, is so complex that employers need help to do all this, particularly the small ones.

    Nest is more expensive than other alternatives – despite what Mr Webb and others seem to believe. Even although it gets zillions in subsidies.

    Nest offers less options than other alternatives.

    And, as others have said, Nest offers no support to the hapless employer.

    Webb should be welcoming the involvement of advisers with open arms rather than pushing them away.

    Governments don’t normally do pension schemes, but if they did, they would call them Nest.

  14. “Pensions minister Steve Webb has attacked some advisers for “dissing” Nest and pushing clients towards schemes that pay commission.”
    Who is Steve Webb?
    Does he not know that RDR approaches on the first of January when there will be no commissions.
    What a pleb!!

  15. Commission what commission in a post RDR world?

    Doesn’t he mean advisor fees please get it right Pensions Minister !

  16. Here’s something for you to really fret about Mr Webb. As others have said commission is not an issue – so please keep up.

    But what is really going to upset you is that many of us will indeed be recommending NEST as the default (for a fee of course) because our clients will all opt out and NEST (or Not Effective Savings Trust) is the obvious choice for this.
    How long before NEST has millions of empty plans that it has to administer and TATA then advises the UK Government that their charges will triple. (Or they go bust).

  17. NEST is a nonsense for many reasons, not least complexity and starting with earnings of £8100, but some of the comment on here are simply incorrect namely

    – “NEST is expensive” . It isn’t. Run a quote and see the result

  18. I am not at all suprised by the ignorance of this man. God help us…..

  19. I personally will not give advice on NEST.

    It is not a regulated product for which IFAs could be authorised to give advice on and anyone who does give advice on this issue leaves themselves open to a complaint further down the line if it does not produce what it was supposed to do.

  20. Anon 10.49

    “It isn’t. Run a quote and see the result”

    Does your quote include the taxpayer’s contribution? Nest is currently costing the taxpayer at least £10K per member per year. Average contribution will be less than £2,000.

    Is that not a 500% AMC?

  21. This chap needs to do a little ‘blue sky’ thinking as he does not seem to engage with the fact that, whilst the FSA and MAS drive forward agendas handed down by the government, they are funded as private commercial entities BY private commercial entities. Therefore, whilst the concept of ‘not for profit’ pension schemes is very laudable, it is beyond naïve to expect commercial entities to act as charities and not to consider how they will be paid for their efforts (although commission on the sale of pension products does become obsolete after December as one poster has already observed).

    However, if his government wishes to consider the idea of financial advisers who are paid and employed as civil servants, I am sure our sector will look at this! Unbelievable people!!

  22. Huge waste of money and now he thinks it might fail its time to start blaming other people. Why not leave the penions to the companies who have experience in running them. Yes they have to make a profit but it could have all been done via stakeholder for less cost and hassle. If they wanted to keep in out of the commercial world we have a state pension system so use that. Oh but then that would be seen as a tax which does not help from a political stand point for re election. So we have a complicated expensive system just so we dont have to call it a tax increase with the option to blame somebody else for its failure.

  23. I see so when NEST fails its our fault!

    I suppose we should also work for free as well?

  24. If the government wanted to encourange funded pensions then they can simply re-introduce the dividend tax credit. Remember the criticised Gordon Brown for taking it away it is double taxation and equivalent to a 0.49% pa charge. Coulod I position that as a 0.49% commissiinn fee to the government to help pay for unfunded state pensions.

  25. Okay Mr Employer, would you like a scheme with:-

    1. a very limited range of funds, mostly just index-trackers,

    2. restrictions on transfers in and out and

    3. a quarterly bill for my time at £150/hr?

    Or would you prefer a scheme with:-

    1. a wide range of actively managed funds (as well as trackers for those who want them),

    2. access to risk-rated portfolios,

    3. no restrictions on transfers in and out and

    4. the cost of my firm’s services built into the cost of the scheme itself?

    Or would you prefer to save a few hundred quid a year by DIY with no outside help?

    What’s wrong with choice? As somebody suggested elsewhere, at this rate the whole FS industry will become effectively nationalised, with regulators and politicians micro-managing every aspect of what we do.

    Why don’t you do something useful, Mr Webb, such as holding your coalition partners to their pre-election manifesto pledge to put right all the damage done to private pension provision over the past 25 years instead of pontificating about the supposed evils of commission?

  26. RegulatorSaurusRex 27th September 2012 at 11:47 am

    If IFAs have given poor advice they will pay the price whether they recommend a government initiative or not.

  27. Steve Webb has no idea what he is talking about.

    Also, NEST is a nightmare to use for any company without a large HR department. Even something along the lines of Now:Pensions is better as they provide basic processes for an employer to follow.

    Ultimately, PROCESS is what employers will be interested in as failure in this area is what will cause an employee to sue – not a pension with 0.2% higher AMC.

    It is so frustrating that the person “in charge” of this system has NO IDEA at all what he is talking about and, I would venture to say, doesn’t care either.

  28. Quite honestly, Webb needs to find a ‘nest’, go sit in it, and koo. It would make more sense.

  29. Steve Webb was heard to say from the Platform to a Pensions conference earlier this year that MAS was ‘funded by the government’.
    The man appears not to have much of a grasp on reality. He should be the minister for wooly thinking.
    With his boss Mr Cameron suddenly removing a plank of rationale underpinning auto-enrolment in the form of a guaranteed State Pension of £140 a week the illogic continues to nonsense their pensions offering through NEST. Who could possibly recommend a pension scheme which does not allow transfers out? How can advisers offer NEST when NEST does not allow an adviser access to information for either employer or member?
    Are these politicians just arrogantly pontificating and demanding that we try and make their flawed policies succeed for them or we will pay the price for their failures – again?

  30. Terence P.O'Halloran 28th September 2012 at 4:58 pm

    For a man that appeared to grasp the issues so cogently when he started as pensions’ minister Steve Webb is accelerating downhill at pace.

    Why this back biting, continual sniping at commission selling goes on as an answer to every financial services ‘wrong’ is beyond my comprehension.

    Every major study ( not the consumer group: “We have spoken to 356 people” variety) has concluded that the pensions and life assurance industry is commission positive.

    There is no commission bias!

    Why does Steven Webb conclude that there is?

    It is childish and destructive.

    Nest is an unnecessary imposition from many standpoints however the major two are:

    A) There is a £38bn surplus in the NI fund.

    B) The government should be stimulating the economy by letting employers, like myself, employ staff and boost the economy NOT boost a surrogate NI fund.

    Ignorance and political posturing do not go down well. Neither does fiction. Mr Webb should take note. NEST is not wanted, it is counter productive and is a burden on employment. Commission sales are irrelevant to Mr Webb’s arguments.

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