Never before has such an obvious own goal been played out in slow motion by our industry as with the National Employment Savings Trust – and just consider the context of that statement for a moment with such gems as Equitable Life, the pensions review, endowments, pension complification and split caps. The list goes on.
To get a measure of how likely Nest is to fail, compare the thoughts of industry leaders. From the good and wise among us to those with flagrant vested interests, the divergence of any common ground is a giveaway.
Politicians and civil servants determined to make their mark are forcing this through despite shouts of disapproval from the sidelines. They plough on regardless, deaf to all criticism and sane commentary.
Plenty has been said in these pages and elsewhere but it is worth repeating that we already have a compulsory state pension and that you can opt out of Nest. So what does Nest have going for it over and above what is already in place?
I would be so bold as to suggest nothing and be assured I have no vested interest in saying this. If you need proof, five years ago, a corporate connection of mine asked me to look at their pensions and staff benefits. I quickly established that the previous advisers had set up a very nice pension scheme indeed, a top-of-the-range stakeholder pension with Aviva. A 0.5 per cent annual management charge, a decent range of funds and Aviva’s splendid online functionality.
What more could anyone want? But staff were left to their own devices with no advice.
Only 35 out of a possible 50 bothered to join, with the well known benefits consultancy presumably busying themselves on more lucrative accounts.
I offered to match their fixed quarterly fee and negotiated a cross-advising clause that allowed me to talk to staff about other financial issues in company time. They now have almost full membership, onsite bespoke advice for all staff and we have a good fixed income, a steady and straightforward pension scheme to run and the prospect of other business, which we enjoy cultivating at our own pace.
Everyone is happy. Value for money is present in spades and it is all using an existing infrastructure. In my view, this is the perfect scheme and a template that could have been used to create a Nest equivalent without the need to spend countless millions.
As much as change can be viewed as a good thing, it is not so in the pension world and clients are screaming out for certainty. We are now faced with is an almighty hiatus, which will upset the applecart with some-thing clearly inferior, not to mention the lost business to UK plc and the diaspora of all those jobs to India.
Tom Kean is director of Thameside