Are we on the brink of a new opportunity?
23 January 2019
PLSA Chair Richard Butcher says we should all work harder to reconnect with the saver, be open with them and tell them the truth.
As I sit down to write this, MPs are in the process of filing into the division lobbies for their (first?) vote of confidence in Theresa May's government following the (first?) failed vote on her Brexit plan. You'll know better than me the outcome of this whole process.
Economically, the stock market has fallen massively in the last 12 months, house prices are going down, saving rates are at an all-time low and while unemployment is also very low, so too is job security and the feeling of economic confidence - particularly among the young.
And why would that be a surprise? We've lived through 10 years of economic distress - bailed out banks, austerity and the emergence of employment practices that seem loaded in favour of the employer. Indeed, many young people have lived through nothing else and, on top of that, they have huge educational debt.
In the context of personal finance we couldn't have, even if we had planned it, come up with a set of circumstances more likely to create a sense of fiscal helplessness and fear - all of which contributes to the evident loss of trust in the financial system and, specifically for us, the pension and lifetime savings system.
The world is moving fast and in a direction that, only a few years ago, no one could have predicted. It really feels as if we are on the brink - which, incidentally, is the theme for the Pensions and Lifetime Savings Association's (PLSA) March Investment Conference.
Yet, on the subject of trust, here's the odd thing. Every year we, the pensions industry, pay billions of pounds to millions of people, we've just completed the most significant socially positive project of a generation - the roll out of automatic enrolment, cost transparency has finally been described - soon savers and their fiduciary proxies will see what they are paying for investing, and every year we are pumping out and implementing new ideas, like the simpler annual benefit statement and PLSA's retirement income targets, designed to make the system more reliable and accountable. I set out these and other achievements at last year's PLSA Annual Conference. But I also set out a challenge.
If we are to help everyone get a better income in retirement: to join and stay in a pension scheme, to pay the appropriate level of contributions, to make the right investment and at retirement decisions, we have to change the way we look at the world. We, you, me, your colleagues, all have to see what we do through the eyes of the saver. We must, to mix my metaphors, walk in their shoes. We have to recognise it's complicated for savers, that pensions and lifetime savings live in a wider competing personal financial ecosystem, and we have to find new ways to do what we do - product design, service delivery, communications and engagement.
One of the dictionary definitions of ‘brink' is "the point at which something is likely to begin". The world is at a brink, our world is at a brink, but we can use the opportunity to make this the brink to something good. Experience shows change will only happen if we all collaborate - across government, providers and the wider industry. So, let's all work harder to reconnect with the saver, to be open with them, to be honest with them, to tell them the truth, to see the world through their eyes and to understand the pressures and demands on them. Let's go over this brink, begin to trust them and help begin to rebuild their trust in us.
This article first appeared in Professional Pensions.