Today’s edition of Pensions News (PN) is, uncharacteristically, being delivered to you on a Thursday. More precisely, it is arriving on Thursday 24 May or, to put the point differently, the day before the General Data Protection Regulation (GDPR) comes into force, the metaphorical roof falls in and nobody can ever send an email to anyone again unless the “someone” has agreed to receive it.
PN promises to move away from that slightly facetious generalisation later on however he hopes that the somewhat misleading statement set out above has at least secured your, the reader’s, attention.
If you, the reader, have reverted to living in a pre-industrial society, you may be wondering about the significance or the impact of the GDPR which, as indicated, comes into effect from Friday 25 May 2018. This means that, depending on how you react to most updates, including this one, today’s edition of PN may be the last edition that gets delivered to you.
Like virtually everyone he knows, PN has been receiving numerous unsolicited emails over the last few weeks. The unsolicited emails have tended to come from the various businesses trying to get PN to subscribe to something or sell him something. They are now sending more (or at least different) emails because, according to the businesses in question, they would miss PN if they were unable to send him any more messages. The messages themselves have concerned PN because he does not remember buying or subscribing to anything from or in respect of most of the businesses who have written to him. This begs two questions in PN’s mind: (1) as to whether the businesses would miss him as much as they say they would – or at all; and (2) whether they needed to tell him that they wouldn’t be able to send him anything unless he “opted in” in the first place.
In relation to the first point, PN has felt that, for most of the senders, it would be merciful to put them out of their misery by not opting in. This course of inaction made PN think about point (2) and the necessity, on the part of the businesses in question, of sending him an email at all asking him to “opt in”. PN’s scepticism on this point increased when, over the weekend of 19/20 May, he read an article written by Mr Barney Thompson in the Financial Times (FT). Mr Thompson’s article demonstrated that, when it comes to interpreting certain aspects of the GDPR, there seems to be little consensus amongst English data protection specialists.
A number of businesses, including pension consultancies offering free updates, appear to have taken the view that unless a reader agrees to receive (let’s say) further updates or marketing material, he or she cannot be sent any more. According to the FT article, “email marketing is covered by a separate piece of legislation – derived from a 16 year old EU directive on electronic privacy – rather than GDPR. Provided regular messages include an “unsubscribe” option, there is unlikely to be any need to contact the customer at all”. The article went on to quote other data protection experts who argued that by emailing one’s regular contacts asking them to opt in, one was creating a problem (rather than addressing one) which could be potentially damaging to the business. The argument goes that GDPR seems unclear in some areas because data protection experts seem not to agree on the best way to deal with (for instance) emails sent for marketing purposes. By placing a cautious interpretation on the law and, in effect, creating a rule, one may be creating a problem (i.e. a problem that is in the self-imposed rule rather than “just” the law). It follows that, if one asks for an individual’s consent to receive future correspondence and then fails to get it, one’s self-imposed rule means that one has prohibited oneself from sending further emails. PN should state at this point that he subscribes to his employer’s cautious interpretation – although the lack of consensus on the law has interested him.
Lack of consensus is a theme when it comes to what we have been calling the “pension freedoms” introduced in April 2015. By way of a short reminder: in 2015, the Government introduced so-called “pension freedoms”. Essentially and generally, before April 2015, where one’s pension arrangements had been made through a money purchase or defined contribution (DC) pension scheme or arrangement, one used to be required to use the fund one had built up to purchase an annuity at retirement. This requirement was dropped (for various reasons which PN need not go into here) so that individuals are now able to take their benefits in other ways including as cash provided (a) their (personal – usually) pension plan allows it (b) they are at least 55 years old (c) they pay tax on 75% of the value of their benefits (one remains entitled to take 25% tax free) and (d) they spend the proceeds on a yellow Lamborghini.
(Quiz question: one of the above provisos is incorrect. Guess which one.)
As PN has previously reported, freedom to do what one wants with one’s pension also means that one is free to make a complete mess of things. Certain unscrupulous individuals are aware of this and have, predictably, been keen to “assist” individuals in making what can most diplomatically be described as a poor investment choice. PN has reported on examples of such mismanagement in the past. Perhaps the most recent example of vulnerable individuals being pushed towards an unwise decision occurred late in 2017 and earlier this year when it turned out that many members of what was the British Steel Pension Scheme (BSPS) had been advised to transfer the value of their BSPS benefits to arrangements which were entirely unsuitable for them. The victims of this poor advice may have made a mess of their retirements however they were positively encouraged to do so by a minority of advisers who ought to have had some integrity and who ought to have behaved like the majority of the IFA profession by giving sensible, relevant advice.
PN was concerned to read (in the same edition of the FT that Mr Thompson wrote in) that the number of individuals who have taken their benefits from relatively secure schemes and decided to move them to relatively risky DC plans has increased of late. According to Ms Josephine Cumbo, the value of transfers from “traditional” (meaning fast dying out in this context) occupational pension schemes such as (but not only) the BSPS, to riskier (from a member’s point of view) DC schemes has increased from £7.9bn in 2016 to £20.8bn in 2017. In addition, the number of transfers increased from 61,000 in 2016 to 92,000 in 2017. Whichever way one looks at these statistics, the increase is significant and it has, according to the FT, caused alarm within the pensions sector. As with GDPR, there is little consensus as to whether pension freedom is a good idea. Many supporters apply the generic argument that freedom is a good thing and, though PN is inclined to agree in a broad sense, as soon as the detail of pension freedom is gone into, a strong case emerges for more regulation of that so-called freedom. The solution seems to PN not to be to pass the obligation on to the member who is then supposed to take financial advice. As we have seen through the BSPS experience, sometimes, the financial advice is not just poor, it is based on a cynical disregard for the individual’s interests with the individual left with the problem.
You, the reader, have the freedom to opt not to receive PN in the future. You always had the freedom not to read it. So; if you thought that you might like to read PN again, type “1” and hit “send”. If you thought this article didn’t have enough jokes about Jose Mourinho in it, press “2” and hit “send”. If you thought this article had too much technical detail in it, dial 123 and ask to speak to Mr Frank Field MP.
PN hopes there will be a next time...........