Know much about Collective DC? Or you are more familiar with Pot Follows Member? My guess is that even the most assiduous and well-informed investors have only the vaguest idea about these pensions reforms whose introduction was postponed this week.
To me, Collective DC has always sounded more like a rap artist than a workplace retirement savings arrangement that is popular in Holland, although there were huge doubts as to whether it could have been successfully replicated here. Pot Follows Member, meanwhile, suggests a children’s story book with a pension theme. This is appropriate since this system — under which your pension pot would have automatically followed you from job to job — was predicted to end in tears before bedtime. The bogeyman in the process would have been the size and expense of the bureaucratic mechanism required to facilitate the transfers.
Ros Altmann, the pensions minister, said that the time was not right to add to the already onerous burden of new regulation, a sensible decision given the widespread bafflement that surrounds other parts of the pension revolution. This upheaval may have set savers free, but also seems to have left them at the mercy of fraudsters. Phoenix Group, a company that operates closed life insurance funds, revealed this week that it has identified “1,650 companies/schemes involved in scams”. Phoenix says that men are particularly vulnerable to unsolicited approaches from thieves offering “free pensions reviews” and “one-off investment opportunities,” in the shape of worthless boiler room stocks.
Baroness Altmann — who I can imagine giving short shrift to a boiler room salesperson — will not wish to be remembered as the minister who presided over this crime wave and so must ensure that the City watchdog and the police pursue these gangs who wish to condemn their victims to an old age of poverty. However, and this will be a fine balancing act, the campaign against the pension pot robbers must not provide yet another excuse for younger generations to view pension saving as a risky business that’s best avoided.