Rowanmoor's Mark Lisle: A hangover you don’t deserve

I had the pleasure of accompanying my teenage son and one of his pals to see Bowling for Soup recently.

For those unfamiliar with B4S, they are a Texan pop-punk band (Wikipedia's definition, not mine) with a very loyal and enthusiastic following (judging by the frenzy that accompanied their highly entertaining set).

Now, having been a teenager myself when punk burst on to the music scene in the late Seventies, I would not characterise Bowling for Soup as punk, yet pop conjures up an entirely different image and I can see the need for a sub-genre label. Cultural commentators would tell us that punk was more about attitude and state of mind, than a Mohican and a strategically placed safety pin; indeed, to quote Jello Biafra, "punk means thinking for yourself".

I repaid the compliment and took the lads to see Motörhead, supported by The Damned. Bewarted, black-clad bass playing behemoth Lemmy always begins his set with the rallying cry: "We are Motörhead and we play rock and roll".

For those who would characterise Motörhead as heavy metal, this may come as a surprise. The Damned are also a contradiction; famed for having the first punk single in "New Rose", they have flirted with the more popular end of the spectrum (particularly guitarist Captain Sensible's foray into musical theatre) and are often cited as a bridge between punk, metal, and goth.

If you have never been a devotee of this avenue of popular culture, you will probably have a pre-conceived notion, or image, attached to all these labels. Despite the differences, the common denominator between the two gigs was the vibrant, moshing, slam-dancing maelstrom of energy created by the crowd; the latter, average age 40, the former, 18.

People enjoyed the atmosphere and occasion as much as the music (for to survive as long as these bands they have to be accomplished musicians and good at what they do). And tastes have a habit of changing.

There was a time when one of the contributing factors in the decision to pursue a particular career was the promise of not only a final salary pension on retirement, but a good one, where one only had to work, in some instances, for twenty years to maximise benefits for retirement.

Bit by bit, as the projected cost of providing benefits was seen to increase, more 80ths schemes appeared and more deductions from pensionable salary were made. The booming returns of the Eighties brought a legacy of underfunding, with shortfalls in funds being experienced in the more turbulent Noughties. The upshot of the flight away from final salary provision is that, far from seeking out employment with the promise of defined benefits, those in once deemed secure pension environments are displaying a once unthinkable trend.

The contradiction we are starting to experience in advising on pensions is the appetite for securing defined benefit funds in a personal pension pot. Fears regarding the solvency of major blue-chip pension funds leaves the adviser in a particularly difficult position.

In an environment where we are still mindful of the pensions misselling issues of the Nineties, and the recent FSA thematic focus upon pension switching, how should we approach the matter of justifying the once unthinkable; the eschewing of defined pension benefits? I venture to suggest the approach must come from the perspective that to know your client is the ultimate foundation of the advisory relationship.

By all means use transfer analysis as a tool, but do not be hoist by one's own petard, to quote the bard. The critical yield of a fund cannot be the be all and end all. Knowing that if only the actuaries had been able to make the figures stack up will be scant consolation for a client keen to consolidate his pot, who cannot find an adviser confident enough to recommend a transfer, who then finds his final salary scheme has gone belly up.

By all means make the client aware, and accepting of, the prospects for achieving the requisite growth to secure equivalent funding; a tall order if the critical yield needed to achieve parity is high. But steer clear of a universal catch-all yield ceiling above which transfers will not be entertained, as this cannot be seen in isolation to be treating the customer fairly.

There are degrees of light and shade in all subjects, and it is the contrast that defines the picture. There is room for a wide variety of interpretation in any genre. But what must not be lost in the picture is the focus. We cannot close our perspective to the point where our position prevents us from enjoying the benefit of seeing the light.

Mark Lisle is Compliance Manager at Rowanmoor Pensions