It was a shame Steve Webb wasn’t at last night’s excellent witness seminar on “Thatcher’s Pensions reforms”. He would have made an able replacement for Norman Fowler who has been in bed all week with a Lergi (get well soon).
Webb would have worked well as Fowler’s double. For Fowler sounds an expert in political manipulation, post-event rationalisation but most of all – at getting things done. For Mark Weinberg, read Phil Loney, for the hapless actuaries, read the hapless actuaries.
What happened following the deliberations of the various witnesses who appeared at the Institute and Faculty of Actuaries last night mirrored what happened following the Government’s announcement in 1983. The Government announced then that we’d be abolishing SERPS, moving to a single state pension, undermine occupational pensions and bringing in a compulsory low-contribution DB scheme to pick up the slack.
Following the panel discussion last night we had a good old bun-fight with Bryn Davies arguing the pure actuarial case for the retention of a state based top-up pension , me playing wide boys r us and David Robbins and Michael Klimes opined about their sense of deja vu. It helped that not only were we the audience watching history – we were history!
Important lessons
The chaps who’d reunited on stage 30 years after the event were the mandarins of their age. One old duffer, who used to run Phoenix, proudly told me that he didn’t do email and that only four people knew his email address and he wasn’t one of them. It is easy to dismiss these people today as irrelevant, but it was their integrity that came through, the youngsters on stage were in their seventies while the above mentioned Marshall Field was pushing 90 (or so he told me).
As well as the obvious similarities between the Thatcher pension reforms and the Osborne pension reform was the clash between ideology and pragmatism. Mark (Lord) Weinberg, we learnt, had been drafted on to the committee to get things done. He had behind him what Adam Ridley referred to as “energetic salesmen” – I was one. Fowler and he got on famously because Weinberg could make things happen. We did.
On the other side of the argument, the purist actuaries (Stephen Lines at their head) arguing for the efficient delivery of Barbara Castle’s 1978 vision of a state earnings related second pension. Of course the actuaries lost, the financial hooliganism that followed the introduction of contracting-out following it’s introduction in 1987 was mirrored by the same hooliganism in transferring people out of good occupational pension schemes.
Ironically those who contracted out all those years ago are now able to earn back those years lost to SERPS and claim a full state pension with their personal pension swag bag full of pension freedom. Those who took CETVs were allowed back into occupational pensions and are probably taking transfers again today. The first incarnations of today’s FCA arrived in 1987 as FIMBRA and LAUTRO and they’ve been busy chasing shadows ever since. As an unregulated individual in the early 80’s , I behaved in the same way as I did in the late eighties (and I’m not proud of it).
The lessons to be learned from last night are not about the great progress we have made but that the fundamental drivers of the financial services industry , of occupational pensions, of the actuarial profession and of Big Government have changed very little. Marshall Field and Adam Ridley and Norman Field and Chris Daykin and Nicholas Montagu and Hugh Pemberton thank you very much. Thanks too to Gregg McClymont for being a really good chair.
If you are interested in this stuff out of curiosity, you can read the short briefing from the Bristol University research team here. If you are seriously interested in this stuff , there’s a longer paper here. The latter paper was emailed to the panellists, to remind them what they’d been up to. Of course it never got to Marshall Field but it didn’t matter, he remembered everything as if it was today.
Today’s the same as it ever was. Except this morning I have the urbane perspectives of the panel to remind me not to take myself or what I do – too seriously. That may be the reason for the wry smile that sits permanently on Steve Webb’s lips.
Henry
They say that you learn from history so that you don’t make the same mistakes again, fat chance!
How on earth can faith be restored in pensions when the only DBs that seem to be sustainable are those funded by the tax payer.
Is it not time to admit that they are not gold plated and should we be concerned if there is a stampede to the exit.
Radical action is required if we are to keep the good and avoid the abuse. Only permitting transfers where the benefit exceeds National Average wage might be a start. The transfer might also only apply to the excess over the NAW
Confidence is not helped by the observations today
https://www.professionaladviser.com/professional-adviser/news/3022481/ftse-350-final-salary-schemes-will-cease-by-2027?im_edp=gmail.com&im_company=BOOTH%20WEALTH%20MANAGEMENT%20LTD&utm_medium=email
Was there any financial hooliganism involved in the abolition of the dividend tax credit? It certainly hastened the demise of occupational DB schemes. But ever since Maxwell the fundamental problem of lack of confidence in occupational DB schemes remains. Even the PPF doesn’t guarantee the accrued benefits and will that still be around when the time comes? Until we can have some future certainty a transfer value is a bird in the hand.
It is indeed a bird in the hand, but some birds can bite the hand that feeds
It was indeed an interesting evening. But we must credit Stewart Lyon as leading the purist actuaries. He was right of course.
Stewart Lyon – I’m going to look into this chap