My day today is dominated by meetings about governance. I’ll be meeting organisations who want to provide benchmarks for governance, an organisation charged with overseeing the pension pots of millions of us and a regulator who kicked off the shift to 21st DC Governance.
I’m excited and why shouldn’t we all be excited. We have seen the white witch of Narnia – ‘commission’ that held our DC pension governance back for so long, banished.
We have seen 6.1m new entrants into DC pensions through auto-enrolment.
And from both the Pension Regulator and the FCA we have seen a new form of “outcomes based” regulation which focusses on what makes pensions deliver good results, rather than on the supervision of sales of pension products.
A wind of change
With this new wind of change, has come new confidence among those who want change. Several of us have clubbed together, under the leadership of Andy Agethangelou, to form what we call a Transparency task force. Transparency, our watchword means telling things how they are, not how we want them told. Seeing things without any distorting prism from those standing between us and our money.
Actions speak louder
But for all these words, we have yet to see the decisive actions which are needed to start restoring confidence in pensions, encouraging more people to engage, educate and empower themselves to be truly sufficient in retirement.
In April 2017, we have been promised a way of understanding the charges we are actually paying on the retirement savings we make through the workplace. We were promised this two years ago by the DWP but since then work on this subject has been minimal and progress disappointing. We are now less than a year from proposed delivery and already the talk is of delay.
Mifid II and Prips (two obscure and – to pensions- irrelevent pieces of EU legislation) are cited as reasons for delay. The UK – it is argued- should wait until wider European directives are in place and then decide whether to align itself to them.
This is – as Steve Webb has pointed out – no way to run a pension system. Britain already lags our European neighbours in Scandinavia , the Benelux countries and in the power-houses of Germany and France. These countries already benchmark their schemes against sophisticated measures of “value” and “money”.
Britain may pride itself in being a financial services hub, but its pension reputation is in tatters, we are sliding down Mercer’s global league of pension systems as others see watch us fail to rebuild a new pension alternative to defined benefits (for the private sector).
Our reputation is crumbling because those looking in see Britain as somewhere in the grip of vested interests who hang grimly on to the profit-centric vision of pensions as a means by which the pension industry saves and prospers. This vision is not outcome- based, certainly not “member outcome based”. Instead it is a vision of margin maintenance driven by metrics devised in the boardroom.
Until we put the member of the pension schemes first, and the profits of our shareholders second, we are no better than those we criticise for underfunding our DB Schemes.
Governance rides a horse called transparency
So today I will be going out to sell transparency, to those providing benchmarks, to those working on IGCs and Trust Boards and to the regulators. Now is the time for action, now is the time to build a solid system for measuring value for money which people can get their heads round and do something with.
I will not be listening to another round of arguments based on the “too hard” or “one for next year” school of thought. I’ve listened to them for several years now. I am impatient for change and determined to get it. Banning me from conferences, threatening me with legal action and trying to get me fired does not work guys.
Good governance is coming and it’s riding on a great white horse called transparency. This is the time for change, change is going to come.