Wells Street Journal: Hypocrites Robertson?

With all the excitement of next week’s pension freedoms, it’s easy to forget the other reforms coming into force on 6 April. Of these, the charge cap on default auto-enrolment funds has been among the most disruptive to pension providers.

And many in the pensions and asset management industries put up an almighty battle over its introduction. The Government finally settled on a cap set at 0.75 per cent, yet some – notably Legal & General – wanted it lower.

Scrolling back through the archives WSJ notes Hymans Robertson partner Chris Noon also extolling the virtues of a cap set at a lower level in a Financial Times article from 2013: “We were pleased to see that the Department for Work and Pensions chose to ignore the OFT’s argument and propose a 0.75 per cent cap on charges. But we would have liked to see an even lower cap of more like 0.5 per cent.”

Fair enough you might think. Yet in Hymans’s official response to the DWP’s consultation on the cap, the actuarial consultancy argued against setting the cap below below 0.75 per cent.

It said: “We believe that setting the cap too low may lead to the adoption of sub-optimal investment strategies as well as stifling innovation amongst fund managers which could potentially benefit DC members over time. A 0.75 per cent cap as an average over the whole lifetime of a default strategy is likely to allow some active management to be used.

“Anything lower than this is likely to preclude any investment in active funds and hence will severely constrain the development of appropriate investment strategies.”

While the WSJ applauds individual employees holding different view to those of their firm, it is a slightly different issue when a partner makes a statement in a national newspaper while his employer takes an opposing stance in an arena less open to public scrutiny.


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