A business-friendly Pension Green Paper

I went to a  talk yesterday  from the CBI’s Carolyn Fairbairn. It was a lot more optimistic on business prospects than I’d expected (having heard her gnashing her teeth following the referendum). To be fair, she was saying then that business is more resilient than commentators suggest and so it has turned out. Well so far!

I asked her about the pensions that CBI members sponsor, I thought she’d talk of them as a threat but she referred to the recent Green Paper as an opportunity. I saw her just after publishing yesterday’s blog which welcomed the guarded support of a more growth orientated investment strategy through superfunds and the adoption of discount rates that rewarded the risk of taking equity and infrastructure into the pension’s investment mix.

Though there’s a lot of fustian in the paper, I get the impression that there are those in Government who see pensions as less of a threat to economic recovery than as an opportunity to support and accelerate it. Carolyn mentioned a review being conducted by the Treasury into the investment of pension funds. We shouldn’t forget that (despite the 1998 loss of dividend tax-relief), pensions are still highly tax-subsidised.

The tax-subsidy is from the Treasury, but if it is subsidising pension funds to invest in Treasury Bonds and other non-productive assets, the point of those reliefs is lost. The Government has shown through years of quantitative easing, that it’s quite capable of doing this itself!

A welcome caution on extra regulation

The CBI should also be rejoicing that the paper is not calling for more powers for the Regulator to block business deals through “compulsory clearance”. The Green Paper justifies this position in terms of the security and sustainability themes that it’s built around (pensions that block deals risk tipping sponsors into solvency and schemes into the PPF).

But the bigger picture is that the Government is not buying the Frank Field inspired hysteria about BHS. Let’s face facts, BHS was a rubbish business, sold for a pound to a spiv. The Spiv lost a rubbish business that was doing no-one any good. The pension scheme will go into the PPF (with or without a bung from BHS’ former owners), most shop-workers will get a marginally worse pension, some execs will lose more – but this is not a pensions or economic disaster.

We have to move on, while sympathising with those who have been affected. BHS cannot be used as the stick to punish employers who are worthily paying not just their pension subs, but the subs of the PPF too!

A welcome curtailment of PPF “scope creep”.

The CBI should be wary of scope creep from the PPF. Though I have praised the PPF on my blog, I am moving away from my earlier premise that it can act as a sovereign wealth fund for all pensions ills.

The CBI ought to be jolly pleased that the PPF won’t be in charge of the proposed Superfunds into which smaller and larger pension schemes can invest for growth. I’ve no problem putting the CBI in charge of the strategy of this fund – or at least Eddy Truell and other business entrepreneurs. The PPF is not an insurance fund, it is a defensively minded managed fund aiming for self-sufficiency asap. The PPF is culturally a million miles from the concept of growth within the mind-set of Nigel Wilson or Stephen Kelly or the other CEOs who will lead us through the tough years ahead.

The PPF is a national treasure (house) and should stay that way. I fear it has pretentions to privatise itself. Over our dead body!


Businesses need money and deals, the Green Paper supports business.

I’ve come in for some criticism for supporting the Green Paper, not least from my friend Con Keating. I see it as a progressive attempt to open doors, Con (and others) see it as a lost opportunity.

The Government needs pension money to keep the current economic surge going, it does not need further investment in gilts.

The paper supports growth assets and that means investment in the UK economy.

This may sound obvious, but it is the opposite of what is happening. The de-risking agenda- evidencing itself in everything from the passion for “buy-out” to the lock-down of LDI has been anti-growth. For ten years  we have lived with this “pension austerity”, now – Narnia-like, our pension policy is showing green shoots of growth.

We may want the snows of austerity to melt overnight, but that is not going to happen. We should be thanking that they’re melting at all. That’s why I am pleased with the Green Paper, it is green – it isn’t white!

Can the TUC and the CBI be as one on this?

Carolyn Fairbairn pointed out that relations between the CBI and TUC were much approved and hinted that this might be because the TUC, like the CBI is enjoying its first ever female Director General. Frances O’Grady and Carolyn Fairbairn are not far apart in many things, not least their refusal to recognise glass ceilings.

I hope that both the TUC and the CBI will see the Green Paper in the wider context of being good for business and for jobs. I had hoped that the Green Paper would offer hopes for people who currently are relying on Pension Freedoms. Maybe I should re-phrase that as “struggling with pension freedoms”.

The CBI can reach out to ordinary people by supporting moves for collective DC arrangements within its membership. This plays to the TUC agenda.

The TUC can reach out to the CBI by supporting the growth agenda of the Green Paper and the creation of superfunds which can help grow our economy domestically and on the global stage.


I hope that Con and I can also settle our differences!

For now it’s the women that matter – long may it stay that way!


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to A business-friendly Pension Green Paper

  1. Phil Castle says:

    Very good. I wish I could write something so sensible and eloquent on (nearly) a daily basis.

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