A Bill for all seasons

29 November 2007

I’m looking forward to the Pensions Bill being published any day now. But I’m not expecting the first read to be earth-shattering. There shouldn’t be any shock news or revelations. And it won’t provide the final statement on how private pensions reform or personal accounts will work. Instead, it will bring the whole picture into slightly sharper focus. Confirm what we know, and prepare the path for us to fill in the blanks.

There are two areas I’ll be watching out for. The first is whether the Government sticks to its guns to make sure personal accounts complement and don’t compete with the existing market. This includes setting a realistic contribution cap, but also not going back on its promise initially to ban transfers in and out of personal accounts.

The second surrounds the setting of a definition of qualifying pension schemes. Employers and advisers will both be keen to see this if they want to continue offering their current pension scheme as an alternative to personal accounts. But it’s likely the detail will be in later secondary legislation. What I would like to see now is proof of commitment from Government that it will work with the industry to find a simple solution to ‘auto-enrolment’ into GPPs. There are over 2.5 million people saving in a work-based contract-based arrangement today, and they should be given a fair chance to continue doing exactly that.

Pensions reform has to get those people not currently saving to start doing that. But it must not disrupt the good saving going on at the moment.

Rachel Vahey
Head of Pensions Development

Back to top

Sprouting from Brussels

20 November 2007

Summer holidays on sunny Mediterranean beaches may seem a long time ago now but when it comes to financial services legislation we’re always thinking about Europe.

We recently had the summit ironing out the details of the Lisbon Treaty (formerly the Reform Treaty, formerly the European Constitution – keep up there at the back!). This aims either to rationalise the intergovernmental agreements created since the EU started, or to undermine the democratic foundations of the nation state, depending on your point of view.

Whatever the outcome, we now have a great new piece of Eurojargon (stay with me, it’ll be over soon), which the press have seized on - the ‘passerelle’. Not something you might be served poached in a light stock, this is actually a mechanism for changing the voting rules without having to resort to a new treaty.

We also have the MiFID Directive in force now, which aims to improve the way the Single Market works in financial services. To what extent it achieves its objectives will be clearer once all countries have finished implementing it.

What’s next on the Euro-horizon?

The driving force behind the EU is the development of that Single Market in goods, services, labour and capital. The Commission is currently reviewing how well this is working.

It’s due to present its final report this week, and an important part of that review will address financial services. Word from Brussels is that we can expect initiatives with a strong consumer flavour, including financial capability, increasing consumer power and improving product literature.

In many of these areas the UK is well ahead of other countries in its thinking, so we can really engage here. In particular, the FSA’s work on Financial Capability, and the Treasury’s Long Term Approach (including AEGON’s own Otto Thoresen’s Review of Generic Advice) have been studied by the Commission as part of its review. So interesting reading ahead for the long dark nights.

Alison Gay
Head of Pensions Development

Back to top

And the winner is …

16 November 2007

I’ve just got back from picking up the team’s award for the Best Online Regulatory Initiative in the Online Finance Awards 2007 for this website. It’s great to know people out there are reading it and finding it useful. And AEGON now has another shiny award to add to the trophy cabinet.

Our main aim of the website, the blogs and factsheets, is to help you make sense of the constant change in our industry, and to sort out the opportunities it could bring to the UK in general and you personally.

We brand our factsheets ‘Thinking Ahead’ and with so many changes – from personal accounts, to the Retail Distribution Review, to capital gain tax changes, it’s never before been so important to work together to think ahead to what the future may hold.

Rather than sit back on our laurels we want to continue our support. Over the next few weeks we will continue our Retail Distribution Review series on the corporate pensions market and share with you our responses to the Review. We’re also launching a new series on pensions reform. And we’re adding a new section on research.

And of course we will continue to give you our thoughts and impressions of our fast-moving world in this blog.

Kate Smith
Consultant Pensions Development

Back to top

What price a blank sheet of paper?

1 November 2007

In the middle of the debates around retail distribution, generic advice and auto-enrolment into pensions, can we call timeout for some consumer insight?.

At AEGON, we had an idea that it would be useful to find out how consumers, if given a free hand, might design access to financial products. So we worked with research specialists, Opinion Leader, to find out. The results are both fascinating and challenging for the industry. The research highlighted that consumers believed they needed to be equipped with the necessary skills, they wanted choice to be easier and felt help should be designed around them. They wanted to feel confident about the advice given and have reliable products. And they needed to be motivated to keep on going.

The research also painted a picture of the consumer’s perfect advisor who always had their interests at heart, was proactive, but didn’t sell to them.

From their ideas we constructed five concepts that reflected different themes:

• The financial guru
• The personal shopper
• The life coach
• The drop-in centre
• The financial superstore

There are many causes for optimism here. Many of the things consumers want are already on offer; the problem is they don’t know about them. What’s more, they can get excited about what financial services can do for them; we just need to press the right buttons.

There is clearly far more scope for variety and creativity in providing advice and ways of buying financial products. Changes to products are also crucial to make them more predictable and responsive to changing needs and information must allow consumers to make easy assessment and comparisons.

And that’s where the challenge comes: how do you capture the essence of what people want and translate it into working business models? They want to treat financial services like other retail goods: how can we, the industry and our regulators, work together to meet this ambition? As a first step, maybe the industry needs to work with government and not-for-profit organisations to devise a complete package of services to meet all customers’ needs.

We think there is a great deal to be learned from this research, but judge for yourself.

• Click here for - The summary of the research findings
• Click here for - A note of AEGON’s conclusions

Or drop me a line at nick.hurman@aegon.co.uk for more details. We can all use these insights to shape our industry’s future.

Nick Hurman

Important note

This blog provides the views of our industry lobbying team. The views are the opinion of the person writing the entry of the blog and don't necessarily represent the views of AEGON in the UK. They are based on their interpretation of industry developments and their current understanding of UK proposed and actual legislation, and should not be interpreted as recommendations or advice.