Buying blind

Can you remember those holidays from hell? Where the Italian villa you booked turned out to be a crumbling shadow of its former glory with no hot water and really bad plumbing? Gone are those days.

My family and I had a wonderful holiday experience this past summer - thanks to Expedia and Airbnb.

In fact, I don’t mean to brag (not much, anyway) but I mainly spent my holiday on a shaded terrace in Tuscany, G&T within arm’s reach, overlooking a lengthy swimming pool dominated by the sound of kids splashing around. My wife and all seven children were happy – this is no mean feat!

plane-1But I was pretty sure it would be this way, because before I booked I not only carefully researched our flights online, comparing all available options to get the best deal, but I had also been able to compare several possible houses. Airbnb tells you everything you need to know about the facilities and of course I read plenty of reviews from other tourists who had ‘been here and done that’ before us.

Just a few years ago, it would have been impossible to obtain such trustworthy and useful information so easily. But most industries are moving towards greater transparency.

You can use mysupermarket.com to compare supermarket prices, Trivago to compare hotel rates, or comparethemarket.com to size up car and home insurance products (yes, that is what they do, despite being best known for the meerkats).

Workplace pension schemes? Not so much.

For the average man in the street, pensions are largely a mystery. There are over 3,000 pension funds in the UK to choose from, numerous fund managers, confusing fees and small print that might as well be in Latin. Most consumers are in the dark about the costs associated with their pensions, and most likely could not explain why the scheme they are in is best for them (which it often isn’t).

As for HR and benefits directors, workplace pension schemes are fraught with complicated governance issues and a whole host of unquantifiable risks. All the issues around comparing funds and managers, fees and small-print apply to them (you), too.

And yet, there is no way to easily compare costs and the performance of all these funds. No way to rate the providers. No peer review structure. No GoComparePensions.com or RateMyPensionProvider.co.uk – as there should be.

Seeing the light

lightbulb-1Clearly there is a need for more transparency and maybe one day it will still happen (we are actually working on an online platform that will help somewhat with this - watch out for our announcement later in the year).

But in the meanwhile, all this got me thinking about the role played by consultants like us here at Punter Southall Aspire.

Over the years, we have seen so many workplace pensions schemes up close, investigating their fees, looking closely at how they are administrated, how they perform and who delivers value for money. We have run every possible comparison for our clients and regularly meet with the top pension providers.

Our perspective on workplace pensions is both broad and deep – a perspective that even the best-informed HR or benefits director may struggle to match, if they’ve only dealt with a handful of schemes over the course of their career.

We are, in a sense, the Expedia and Airbnb of the pensions industry.

I joke, but that’s an essential role in today’s transparency-driven world.

(In fact, one way we’re helping bring transparency to pensions is via our DC Default Fund research survey, published annually to allow far greater insight into how these core funds work. The latest version was published recently so just click below to download a copy).

There are still companies out there that don’t see why they should bring in an outside consultant to help them evaluate their workplace pension scheme. And yet, there are no tools out there as yet that give them the ability to easily compare their options, in-depth, with reviews by real users. Can they really make the best choices without it?

Someone has to perform that role of intermediary, and we’re proud to do it.

 

Posted by Steve Butler

Topics: Workplace Savings

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