Monday, February 16, 2015

Democratise our savings - Why we need a Magna Carta for Pensions

Many thanks to Henry Tapper for the plug on his website "Pension Playpen - Restoring Confidence in Pension".

Henry talks sense and reflects a fairly widespread unease amongst member nominated trustees at least, that "professional" or corporate trustees should not be paid to "represent" the interests of ordinary policyholders on insurance companies "Independent Governance Committees" (IGC).

 I have met a number of excellent individuals, who are professional trustees or advisers and they can often play a vital role in supporting some trustee boards. Some others I am less with impressed with and I am forced to remember the old but wise adage "He who pays the piper calls the tune" is as true for the financial services industry as any other.

 I am always unhappy that they are called "trustees" which I think muddies the water. They are not trustees. They are professional advisers. As said before, there is nothing necessary wrong with that. Yet to be very clear they have no fiduciary duty to policyholders but to only to themselves, their partners or shareholders and not to beneficiaries. That is why it is absolutely crucial that policyholders should represent policyholders on an IGC.

Yes, there will be resource issues regarding elections and the occasional maverick will be elected but so what? To paraphrase we all know that democracy is the worst form of Governance - except all those other forms that have been tried from time to time.

We must restore faith in pensions and the financial services industry. IGCs are an historic opportunity to democratise our savings and protect policyholders from the constant drip, drip, drip of fraud, corruption and consumer rips offs.

Protect policyholders and protect insurance companies’ integrity and reputation at the same time. In that typically horrible but descriptive Americanism it is “win, win” for all.

UPDATE: also check out Nigel Stanley at the TUC website Touchstone
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