Considering he is the man charged with changing the world, Tim Jones, the chief executive of the Personal Accounts Delivery Authority (PADA), certainly doesn’t look like he has the weight of the world on his shoulders.
Okay, so the world he is seeking to change is that of occupational pension provision in the UK, but that is no mean feat in itself.
History tells us that attempting to deliver a government-sponsored project, especially one that has technology at its core, is a thankless, often fruitless, task.
In its short lifetime, PADA has attracted considerable flak, and as top banana, much of that has been directed at Jones.
“Because PADA or Nest [National Employment Savings Trust] is a government initiative it’s going to get a lot of scrutiny and that’s good,” says Jones. “What we’ve tried to do is to set a high bar for everything that we do and it’s been hard sometimes.”
The low, he admits, was in the summer of 2008, when it became apparent PADA’s internal investment work “wasn’t in a particularly good shape” and he had to have some “difficult conversations with the board”. It resulted in a good deal of soul searching and not a little luck in finding Mark Fawcett, formerly of Thames River, to take over the investment process, says Jones.
It was in the resolution of the investment problems that Jones believes PADA hit upon one of its key strengths, which he sees as its approach to testing ideas and solving problems.
“We’re not saying we’re clever,” says Jones. “We’re saying that we’ve got this focus and if we can put good resources around it, we can act as a focus for debate across a number of topic areas.”
And driving debate has been an important element of the whole PADA project.
“What the reforms have brought to the debate is a recognition that – for better or worse – defined contribution (DC) is going to be a very big part of the future of UK pensions and that, therefore, all aspects of DC deserve the level of scrutiny, debate and focus that defined benefit has had.
“The days where you could be a pensions professional and be slightly sniffy about DC are on the way out,” he adds.
PADA was criticised recently for its rebranding of personal accounts to Nest (National Employment Savings Trust). Although the logo was a snip, the whole process cost a small fortune, and all for a product that doesn’t even exist yet. But Jones is adamant that an alternative was required, as personal accounts as a brand had failed to resonate with its target market. The first step is to make people trust the brand, but he accepts it has to go a lot further than that. In the end, Nest is only a word, and will only gain real meaning when the service it represents is delivered.
“We know we’ve got to produce a product that works but I’m not going to say we did the wrong thing by producing a brand that’s consistent with the product values we’ve got to create.”
It is just as well that being under such close scrutiny is enjoyable for Jones, as one of the primary criticisms of PADA’s development has been a focus on minuatiae while the important issues remain largely unresolved, notably in the areas of asset allocation, decumulation, administration and communication.
Jones is only too well aware of the difficulty of communicating with the membership, but he’s not going to try to make pensions exciting, because that isn’t what people want to hear. When it comes to delivering information, he thinks statutory money purchase illustrations (SMPIs) alone will make little headway in a largely disinterested membership. As a result, an approach that delivers little and often may have a greater impact, providing the central theme remains consistent.
“The core ambition is that workplace pensions or savings becomes normal,” says Jones. “Why is it normal to do it? Because it’s sensible. Why is it sensible to do it? Because you’re going to have a long life ahead of you and the state isn’t going to meet your aspirations in retirement, it’s a minimum. If you want to meet your aspirations then you’ve got to do more. And, that’s it; the beginning, middle and end of the conversation.”
The investment process remains a conundrum, despite Fawcett being at the helm. Jones anticipates 90% of members will not make an investment decision and will fall into the default option, and so this is where the majority of PADA’s time and energy is being focused.
“There will be a lot of people who will default and will be largely passive. Our goal for the design of the default – though I’m not sure what we will call it yet – is that if you actually sat down to make a choice, it’s what you’d choose,” he says.
