PLSA Chair Richard Butcher’s main focus for 2019 is building trust in pensions.
People don’t trust you and me. Why? Because we’re involved in pensions.
When people hear the word ‘pensions’ they think about a confusing set of often unreliable numbers that apply to a retirement they can’t imagine (can you imagine yours?). They remember the corporate scandal that left pension scheme members high and dry, there’s anxiety about care costs and concern that the government of the future will tax their savings dry and either scrap the state pension or at least move the age they can get it to a point that makes them wonder if they’ll ever be able to retire.
And pensions are part of ‘money’, which means the financial system. The stock market suffered its biggest fall in a decade during 2018 and house prices fell at their fastest rate for six years. None of this is new. Anyone who got their first job in the last 10 years has mostly known political uncertainty and only known economic uncertainty caused by the financial crisis.
People don’t trust us. But I know we do great things. We’re involved in the governance, investment, administration and management of people’s financial futures.
We make sure people are saving for their retirement: automatic enrolment is the most significant socially positive project in a generation. We make sure people get their money in retirement, paying billions of pounds to millions of people every year.
And we’re always looking for ways to improve: the Cost Transparency Initiative is designed to make the cost of investing clearer; we’re making concerted efforts to improve the information available to savers through the simpler annual statement and the pensions dashboard; and the PLSA’s Retirement Income Targets – our major policy project of 2019 – will help them understand what their retirement lifestyle will look like and how they can change it.
But it’s not enough. There remains a gulf between the work we do and the way it’s seen by those we do it for. So in 2019 I want to have a conversation about trust. At our Annual Conference & Exhibition last October, I talked about understanding the perspectives of savers. How do they see pensions? How can we engage and excite them? How can we protect them (and ourselves) in an uncertain environment?
That started the debate. Now it’s time to ask some deeper questions: what is trust? Maybe it’s genuine support, openness and transparency, and simple and clear messaging. Why is trust important? A simple answer could be that if people trust pensions, they might save more, which would mean better retirement incomes for all. How can we generate trust? What are the regulatory interventions (or non-interventions), the legislative changes, and the changes we need to make to our mindsets and behaviours?
My office wall is covered with post-its about these themes. And at the PLSA we’re building our ideas on them into the policy work I mentioned above. They’re what I’ll be talking about this year. And they’re what I hope to be listening to the pension industry about as I meet you at PLSA and other events.
We’re involved in pensions. And that means, when it comes to building trust with our customers, the buck stops with us. Let’s work harder to reconnect with savers, be open and honest with them, see the world through their eyes and understand the pressures and demands on them. Let’s trust them and help begin to rebuild their trust in us.