UK Proposes Default Drawdown Options for Retirees

Parliamentary recommendation aimed at protecting the ‘less engaged.’

A UK Parliament committee has proposed that the National Employment Savings Trust (NEST), a government-backed defined contribution pension established to support automatic enrollment, provide a “default decumulation pathway” to protect less-engaged participants entering retirement.

In the final report of its inquiry into pension freedom and choice, the Work and Pensions Committee has called for a simple package of measures to create better informed, more engaged pensions savers.  The committee said that a default impartial guidance appointment just before participants access their pensions as they retire would result in better consumer outcomes.

“Far too many people are currently taking vital decisions in the dark, putting them at greater risk of suffering irrevocable financial detriment through scams or choices contrary to their interests,” said the report. “As ever greater numbers of auto-enrolled savers approach retirements during which they will rely on defined contribution pots for retirement income, the need to boost engagement with pension guidance will grow increasingly acute.”

In its recommendations, the committee said the government should allow NEST to provide decumulation products beginning a year from now, including a new default drawdown pathway that would allow participants to move their money wherever they wanted.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

“Every pension provider offering drawdown must,  by  April  2019,  offer a default  de-cumulation  pathway suitable  for  their  core  customer  group,” said the committee, “subject  to  oversight  by existing independent  governance  committees, and  subject  to  the  same  0.75%  charge cap already in place for accumulation in automatic enrolment.”

The committee also recommended a single, publicly hosted pensions dashboard that covers state, defined contribution, and defined benefit pensions, which would be funded by the industry levy, and in place by April 2019. It said that the multiple dashboards currently planned, and hosted by “self-interested providers,” would only “add complexity to a problem crying out for simplicity.”

It said that competition between pension providers over the presentation of the required information risks countering competition in the pensions market.

“Instead, government should mandate all pension providers to provide the necessary information to the single pensions dashboard, hosted by the new single financial guidance body,” said the committee. It added that single page pension passports increase consumer engagement with pensions options, and that pension providers should therefore be required to issue them. 

“Automatic enrolment has been a runaway success, bringing millions of people on board in saving for their retirement,” said Frank Field, chair of the committee, in a release. “We want to expand that success story so that everyone, no matter how they are saving, has a simple, suitable, default pension option, with a low, capped fee.”

Tags: , , ,

Soros Changes Tune on Cryptocurrency

Rockefellers, Rothschilds also reportedly join crypto party.

Believe it or not, George Soros is planning to invest in cryptocurrency.

Bloomberg reports that Adam Fisher, head of macro investing at Soros’ $26 billion New York-based Soros Fund Management, had become authorized to trade crypto within the past few months.

This  is a complete about face from January’s World Economic Forum in Davos, where the billionaire was against cryptocurrencies, writing the class off as a “typical bubble” as well as denouncing Bitcoin as a currency. During his speech, he dismissed the digital asset class due to its high volatility — arguably the key reason why institutional investors such as Warren Buffett and JP Morgan’s Jamie Dimon and most of the general public do not engage in cryptocurrency trades.

“A currency is supposed to be a stable store of value. And a currency that can fluctuate 25% in a day can’t be used, for instance, to pay wages because wages could drop 25% in a day,” he said.

For more stories like this, sign up for the CIO Alert newsletter.

However, hedge funds, asset management firms such as TOBAM, and Wall Street banks such as Morgan Stanley and Goldman Sachs have expressed varying levels of interest in digital currencies.

Soros has not yet decided to pull the trigger, nor has he decided which digital asset or assets to bet on, or how much of an investment he will make. An example of the potential impact of Soros’ wager would be last year, when the billionaire’s hedge fund became the third-largest shareholder in Overstock.com, snatching an 8.99% stake in the online retailer.

Following a Q4 ICO partnership with tZero, Argon, and RenGen, Overstock shares bolted to an all-time high of $86.90 in January. After the recent sell-off, Overstock currently sits at $35.80.

The cryptocurrency world did not seem fazed by the news as crypto-leaders Bitcoin, Ethereum, Litecoin, and Ripple repeated recent trends of teasing a bull run over the weekend before dropping harshly on Monday. Should Soros take the plunge, it could not only potentially open the floodgates for institutional investors, but also reverse the 2018 crypto-correction.

Soros is not the only large-scale investor with crypto interests, as the Rockefellers and the Rothschilds have also reportedly begun to wade in the crypto waters. RT reported Monday that Rockefeller venture capital arm Venrock had signed a partnership with cryptocurrency investment fund Coinfund, while the Rothschilds had invested in Bitcoin for the first time in December via the Grayscale Bitcoin Trust.

Tags: , ,

«