Confessions of a benefits manager: Candid looks at pension investments


Smarmy Consulting have invited us for an investment review meeting. Well, actually, they invited just me, but as it is to be held in the Gherkin, Big Bad Boss decided to come along too. At least this means we can share responsibility for any difficult decisions.

I arrive early to take advantage of any coffee and pastries on offer. Just as well, as I hadn’t figured on going through security equivalent to that at Heathrow. For such an iconic building on the London skyline, the bag screening seems a good precaution, but I do wish I had left more time.

The imposing security, however, belies what is a rather disappointing interior. They’ve gone for ‘Utilitarian Urban’, and it makes an airport terminal seem quite glamorous by comparison. We are escorted to the 34th floor, the last one shown on the lift buttons; I’m looking forward to a good view, and consider taking a sneaky skyline selfie when no one is looking.

Meeting with the consultants

We are hustled into a long, thin room with windows down one side. Unfortunately, these look out onto another building, so there is no actual view of the city, or even of sky. Sigh.

As usual, we are significantly outnumbered by Smarmy Consultants; I have noticed that actuaries and pension experts travel in packs. Our account manager, Ollie, is there to make us feel at home, but there are a gaggle of other suits I’ve never met, mainly investment specialists from provider Adequate Life. There is no sign of pastries.

The provider’s investment guy takes us through the selected funds we offer in our defined contribution (DC) plan and displays the performance in the last year and last three years against various benchmarks. None of them are doing well.

Of course, there are lots of political changes and market forces to be touted as valid reasons for the poor performance, but in my mind these are just excuses. Our advisers are paid to advise us for market conditions in the actual world, not an ideal one. I guess they would argue that is what they are doing now with this review, but is this the time to start messing about with fund choices? Surely, the first rule of investing is to take a long-term view and not to get spooked by short-term changes?

Considering the options

Smarmy’s first proposal is simple enough: we change our ‘adventurous’ option to a slightly less volatile fund that still has significant potential for growth in emerging markets and new business. Fine. They also want to look at the medium risk investment and move it to another, better-managed fund. Again, this is fine, but if their advice had been good in the first place we’d have selected the best-managed fund from the outset.

There is much explanation about equities versus bonds and how the markets have moved against the usual norms. I understand the explanations, which is to say I understand the actual words, but I cannot help but feel we are being told a jolly good story. Hindsight is everything.

To cheer us up, we are served a light lunch. I am disappointed to find this is just a small plate of rather boring sandwiches. Still, there is no such thing as a free lunch, and this is all coming out of our fees one way or another, including the vast expense of hiring a room at the Gherkin. Gulp.

Reassessing the lifestyle fund

After lunch, we get stuck into our lifestyle fund. I’m glad they’ve brought this up, because we’ve only got one lifestyle plan, and in these days of retirement freedom, that’s a bit old school. We need our plan members to have a lifestyle strategy to reflect their ultimate retirement choices.

Smarmy presents a series of seven options, and my head is spinning. The point of a lifestyle option is that it does the thinking for you, and automatically moves your investments to lower risk funds the closer you get to retirement. If you have a choice of seven to choose from, that’s an awful lot of decision making for a so-called simple option.

I think we need just two options. One of these plans must be geared towards those likely to take cash or buy annuity at the date of retirement, as surely the goals are much the same. In fact, our current lifestyle profile does just that. More than anything, we need another plan with a longer transition period from growth to income investments, to cater for those taking a drawdown of funds over a period of time.

In a room full of ‘experts’ it is scary to voice such an opinion, but I do. Big Bad Boss stirs and I wonder if he had drifted off when it got boring. Luckily, the experts all nod and agree with me. They concur that any member wanting more flexibility can always make their own investment choices from the full list. Precisely.

Wrapping up

We finish mid-afternoon and I realise we could have done all that in our own office just as easily and much more cheaply. Equally, we could have gone over to Adequate Life’s offices, which are only a tube stop away.

Still, I’ve had a nice day out of the office and been inside a famous building as part of the deal. Big Bad Boss confesses he is close to his station to home so he won’t be going back to the office. I feel that gives me leeway to take a little lifestyle strategy of my own, and am off in search of the nearest shops.

Next time… Candid gets more agile.