He’s arguably the most influential pensions opinion-former, lobbyist and commentator of the last two decades. He’s been on text or direct message terms with virtually every pensions minister this century. His contact book is bursting at the seams and the ease of his access to national media – both print and broadcast – has been unparalleled for years. So why is Tom McPhail, until this month Hargreaves Lansdown’s head of pensions policy, throwing this all away to start life afresh with an e-bike and scooter company?
The motivation for his move is perhaps best summed up by his tweet of April 27 when he dropped the news to an unsuspecting twitter audience. “I’m leaving Hargreaves Lansdown. Off to work for @ pureelectricnow cycling, electric bicycles and e-scooters. Bit of a change. Secretly I think maybe I care a bit more about bikes than I do about pensions. Took me until 53 to realise”.
A case of a pensions guru moving on to another plane? Speaking to him three weeks after announcing his departure, McPhail sounds like he has no regrets but is expecting to have to readjust.
“There is genuinely an element of liberation,” he says. “For a couple of years I had been thinking I needed an exit strategy – nothing urgent, but it was there and growing. There is a small part of me thinking it is slightly weird turning my back on 30 years in an industry where I have had a degree of success and prominence, have earned contacts and experience, and then thrown all that away. But I am confident it is the right decision.”
Having pushed the cause of pension investors on behalf of Hargreaves Lansdown for the last few decades, McPhail’s new role will be doing something similar for his new employer, Pure Electric, an e-bike and scooter company.
“I’ve always loved cycling and it is good to be part of a business that is driving feelgood behaviour – it’s good for the environment, for physical and mental health, and it is an emerging sector at a very exciting time. I feel incredibly lucky to find a window to take my set of skills – media and government – and project them 90 degrees into another sector,” he says, adding that he already has a call with the Department for Transport lined up.
There’s more than pure chance to the move – Pure Electric founder Adam Norris was the person who recruited McPhail from Wolverhampton-based IFA Torquil Clark back in 2002.
McPhail has been surprised by the level of response to his departure. “It tickles me that this tweet was my most popular tweet ever. But the response has been overwhelming – people have been writing me letters wishing me well. I’ve been contacted by people I worked with in the 1980s. It makes you realise how many people you meet in this industry,” he says.
But given his profile over the years this is not surprising. “I still have a piece from [IFA trade publication] Professional Adviser from 2011 called ‘The 50 Most Influential People Shaping the Future of Independent Advice’. It had me at number 1, George Osborne at 2, Steve Webb at 5, and Peter Hargreaves at 9,” he recalls with amusement.
McPhail says he benefited from covering the pensions brief through a period of intense turmoil and change, adding that today there is considerably less upheaval in the sector.
“We had Equitable Life, the Turner Commission and auto-enrolment, pensions simplification, the collapse of DB, state pension reform and pension freedoms. The decade up to 2016 was a period of really concentrated activity in the pensions sector, culminating with George Osborne’s attempt to hit pension tax relief and adopt the Lifetime Isa structure,” he says.
“Then the Government won the Scotland referendum and lost the EU referendum. Everything changed since the time when Theresa May got in – it was significantly quieter for pensions. But there is still a huge amount of unfinished business and attention will turn back once we come out of the pandemic and Brexit,” he says.
And will fundamental pension tax relief be one of the first things to get attention? “Yes, I believe it will. You need one of three things – a strong consensus, and if you haven’t got that, political capital or a crisis. That’s what we saw in 2010. Boris has both of these and it is a no- brainer,” he says.
But there is still the problem that defined benefit accounts for the great majority of tax relief, and removing that would create huge conflict with the public sector. Could DC become further detached from DB for tax relief purposes?
“That would make it easier. The Lifetime Isa was the right thing to do – it’s just that Osborne did not have the political capital to make it happen,” he says.
What policy successes would you point to from the last decade? “What Steve Webb did on state pension reform – I know it wasn’t perfect – but to get that through was a big achievement,” he says.
And what about pension freedoms? “I didn’t lobby for it and I didn’t see it coming. But for years we had been pushing on annuities, which were poor value. The Association of British Insurers is in a much better place now. I think we contributed to the pressure to make that happen,” he says.
And what personal successes will he look back at on the policy front?
“Bringing Sipps into the mainstream and knocking down the barriers between protected rights and non-protected rights,” he says.
“My biggest regret however is the unfinished business around auto-enrolment. There is a lot that is good, but look at the disconnect between auto-enrolment and personal finance. The flaw with auto- enrolment is that it is built around passivity and inertia. When I change employer I have to leave my pension, whereas we were pushing for people to be able to take them with them. [Pensions minister] Guy Opperman was supportive but the unions, insurers and employers were against the idea.
“The civil servants said ‘auto-enrolment has just landed, we can’t pile more on just yet’. And some providers would argue that their business model was built on the existing system so it is not fair to change all of that now. We tried chipping away on this one, but without success.
“But the arguments for a pot-follows- member approach are strong. It forces companies to keep looking after customers.” McPhail has been on closer terms than most with pension ministers over the years. “There have been some really good people over the years,” he says.
So what are the McPhail tips for those wanting to get the government to shape regulations in the way they want?
“This is Guy Opperman’s line – ‘don’t ask the government what it can do for you. Tell them what you can do for it, and how you can achieve it,” he says.
“And don’t underestimate the value of consensus. Talk to your opposition, your peers, and don’t be afraid to debate in public. Test your ideas. It’s too easy to hide in your shell. Success is borne of failure, yet so many people who operate in the media are actually nice people, so get out there.”
Responsible investing and environmental, social and governance (ESG) factors are increasingly high profile – his own job move could be seen as an RI switch – so will we see a greater impact in the pensions space any time soon?
“This is a huge opportunity. There is a very substantial latent desire amongst the population, enhanced by the pandemic, to go in this direction – people are enjoying clean air. But they don’t know how to go about doing anything about it.
“There is a poor connection between people’s lives and their money. If this connection can be made then we could see change, although there is so much complexity in the system, it is not straightforward.
“But if someone came up with a simple app that connected people with the business decisions made in boardrooms it could be successful,” he says.
For all the valuable media coverage he has earned over the years – when you consider that some experts estimate coverage in editorial is three times more valuable than advertising, the value of McPhail to Hargreaves has been immense over the years – media appearances have also had their perils.
He was once asked to go on the Today Programme on Radio 4 to talk about pensions, but got connected to the wrong programme and found himself being quizzed on paedophile sentencing live on Radio Lancashire. “The interviewer said ‘do you think 10 years is a sensible sentence for an 80-year-old man like Stuart Hall?’. I did the only thing you can do in that scenario – say nothing.”