“We are” says Michelle Cracknell, the Chief Executive of The Pensions Advisory Service (TPAS), “for the first time in my lifetime, reaching a consistent approach to pensions in Britain”. Cracknell has been in her job a little under a year but she is clearly enthusiastic both about her role at present and especially about the possible opportunity for TPAS to deliver the guidance announced in March 2014 Budget. She also relishes the public service aspect of the job, which provides her and her staff with high levels of job satisfaction.
Early Days
Michelle Cracknell was born into a Royal Air Force family and like many Armed Forces children she was sent to Boarding School – Christ’s Hospital in her case a school where pupils’ fees are assessed according to family income which, she says, results in a social and cultural diversity that is unusual and very special. Cracknell thinks that this background not only set some important values in place but also gave her a “dogged determination” to succeed. After school, she went to Imperial College where she studied Civil Engineering but instead of pursuing an engineering career she decided to go into the Financial Services sector. She joined the independent advisory consultancy “Advisory and Brokerage Services Ltd (A&B)” which specialised in the high net worth private client sector - as well as having a substantial corporate client portfolio. Cracknell’s pensions involvement was both with individuals’ personal pensions and also with small corporate schemes. She recalls the first rumblings of corporate concern about the cost and obligations of Defined Benefit pension schemes surfacing at the time around 1990 when Government signalled an intention to require DB schemes to index-link pensions in payment. Many small schemes were closed by sponsors in response to this “threat” (a threat which became a reality in 1997).
Working for a “Provider”
When A&B was acquired by AEGON in 2002 Cracknell stayed and became part of this much larger company for whom she worked for five years. Then, in 2007, she moved away from pensions, temporarily as it turned out, when she joined Skandia (part of Old Mutual Wealth) as Director of Strategy – just in time for the Global Financial Crisis! It was Cracknell’s first experience of working for a “provider” and in challenging times. She readily accepted that she was not an expert in investment but says that “…you didn’t really need to be an investment expert to work on the company’s strategy”. She had responsibility for the company’s strategy for the post Retail Distribution Review landscape , which included the disposal of the non-core business Bankhall to Sesame as well as other restructuring projects.
Pensions Consulting
In 2010 Cracknell decided to leave Skandia and become a management consultant with Bluerock. She says that the ongoing trend towards the closure of DB schemes, the planned introduction of Auto-enrolment, the Government’s “Retail Distribution Review” affected firms across the value chain and presented opportunities for her to consult and advise. I asked whether she detected a declining enthusiasm on the part of employers to make pension arrangements for their staff. She said that there was some of this but that this was countered by the realisation that with age discrimination legislation coming into force unless employees felt confident about their personal financial circumstances on retirement they may well stay in their jobs – which was very often not the ideal outcome for the business!
The attractions of TPAS
In 2013 Cracknell was informally approached about the position of Chief Executive of TPAS. Initially unsure she took soundings and did research on an organisation about which, she admits, she previously knew little! The more she learned about TPAS the more she came to the view that it could offer her a big opportunity to work in an area where she could genuinely be a force for good. Above all, the independence of TPAS was the key and its mandate to serve the public, directly and professionally. Cracknell was not a “shoe-in” for the job which she had by now decided she really did want! Competitive interviews were held and there was a month of nail biting before she was advised that she had been appointed!
A Stimulating Work Environment
If altruism was the driver for Cracknell to become the boss of TPAS, the stimulating work environment was soon to confirm to her that she had made a good choice. There are twenty skilled people on the “Helpline” answering queries and helping callers on a wide diversity of pensions related matters. There is a huge volunteer back up with no fewer than 370 volunteers across the country (two thirds of whom are still in fulltime work as lawyers, actuaries etc.) TPAS is not a consumer body and has no conflicts of interest. So when there is a pensions dispute to be resolved (one of their key roles) they can and do offer genuinely independent advice. With a budget of around £3.8 million TPAS is a modest charge on the general Pensions Scheme levy. Following the 2014 Budget, the Service’s role may well expand.
Surviving the “War on Quangos”
For TPAS to be credible as a service at a time when there has been a “war on Quangos” they must not only offer timely and professional advice but do so in a cost effective and sympathetic way. With 80,000 cases dealt with last year (that’s about £40 a case) there is certainly value for money. And with all the front line staff trained in counselling skills (with help from The Samaritans) there is plenty of sensitivity as well. Immediately following the Chancellor’s recent Budget, the number of cases being handled every day by TPAS tripled – and this is almost certainly the precursor of a greatly expanded role for TPAS. In the Budget, the Chancellor announced that there would be “Guidance” provided to those retiring with Defined Contribution pots now that an Annuity purchase is not mandatory. The Treasury Select Committee followed this by saying that this guidance must be “demonstrably impartial” – which may preclude Financial Service providers from providing the guidance. This is a huge opportunity for TPAS who, along with the Money Advice Service (MAS) and the Citizens Advice Bureau, are in the prime position to be the approved providers of advice.
Expanding TPAS to provide Guidance for all
Michael Cracknell is enthusiastic about the joined-up approach to Pensions which has emerged in recent times – single tier State pension and private pension reform - and she sees Guidance as being a crucial addition to this coherent approach. She is confident that TPAS is the right body to provide a guidance service who TPAS will need at least to double its resources to meet the demand. Cracknell says “Savers must know all the options that could be right for them - and every case is subtly different. TPAS has the experience and the skill set to do this and its independence is well established.” The workplace savings waters are choppy at times and there are sharks around (the scams of “Pensions Liberation” are something that TPAS frequently warns callers about). One Pensions commentator called TPAS “Britain’s best kept financial secret” and that is something that Michelle Cracknell seeks to change. She wants TPAS to be better promoted and better known – the more guidance they are called upon to give, the better. It looks likely that with the Government’s commitment to Guidance this is sure to happen.
Paddy Briggs
This article first appeared in the July/August edition of “Pensions Age”
23rd June 2014
