Thoughts on how we can better align service providers, consumers and regulators to find ways to convert pots to pensions

1. When I’m 54
Henry Tapper
DWP
Feb 2022

2. What happens when I’m 54
As a customer
1.” I want a pension – I get
four investment pathways”
2.” I want advice but
I get Pension Wise”
3.” I’ll take my tax-
free cash – it’s the
only thing that
makes sense”.
4.” I want an annuity,
but I couldn’t afford
one!”
As a Provider
I want to turn my
customer’s pot into a
pension.
6. I want my
customers to be
comfortable with the
decisions they take
7. I want to de-
couple tax free cash
and focus on the
pension
8. I want to do what
an annuity does –
but at an affordable
price.
As a policy maker
Do I know what my
good customer looks
like
How can I make this
happen?

3. When I’m 54?
– I’d like my
pension next
year
Because
that’s my
right
Consumers

4. When I’m 54?
– I’d like my
tax free cash
next year
Because I know my entitlement.
Because the Government might take that right
away
Because I have 100% property rights on my cash.
Because no-one has explained an alternative
Because I don’t like paying tax

5. I don’t want to
manage my
pension pot
because…..
I don’t know about investments.
I don’t have an adviser
I ‘m not interested in Pension Wise
I was promised a pension
I’ll take my cash and wait …

6. When I’m 54?
I want an
annuity but I
can’t afford
one
I don’t know how annuities work
I like what an annuity does
but it gives me a lousy pension
and I’m told it’s a rip-off
Annuities are now bought by
financially sophisticated people with
deep pockets and health issues

7. Providers
“As a provider of
pensions, I want
my interests
aligned with my
customer’s”.
I want a
customer for life
- max EV
That’s what I’ve
promised
My customers
aren’t getting
advised
I am worried
about future
outcomes
I know how to
pay pensions
But I can’t
afford to
guarantee them

8. Who will support the physically and mentally infirm?

9. A more manageable proposition for providers

10. Customers for life – maximizing EV
• “

11. A pot-winning solution
• “

12. Policy
“”.
What does my
good customer
look like?
How do I
achieve this?

13. Capital requirements are key
• “
• Set capital requirements too high and insurance becomes too
expensive so people self insure (e.g. drawdown v annuity)
• Set capital requirements too low and perversely society self insures,
when an insurer fails the rest of the industry or treasury step in, both
are funded by wider society.
Steve Groves

14. On getting it wrong
• “
“I aim to be wrong 100% of the time but to be wrong in a fair way”
Derek Benstead

15. On getting it right
• “
Bottom up regulation means listening to the voices of ordinary people
Building policy around the needs of the consumers of pensions
Aligning the needs of providers with those of consumers
Only intervening where there is clear evidence of market failure
And having a sense of humour!

16. www.agewage.com
Henry Tapper
henry@agewage.com
07785 377768