I blame willy wagtail
Having moaned yesterday that I couldn’t find it – today I’m moaning that now I have, I shouldn’t have bothered!
I don’t want to intrude into private grief but that’s what the DWP’s consultation following its publication of the DB White Paper is becoming. It’s a long-drawn-out inquest into the failure of a very few pension schemes to meet their obligations and what more could have been done to prevent their demise.
Or – for politicians and senior civil servants – another round in the pass- the-parcel blame game.
Specifically
The Department for Work and Pensions has launched a consultation on proposals to improve the regulator’s powers and increase DB member protections. Here are the key sets out proposals to improve the Pensions Regulator’s powers so that they can be more proactive and get involved earlier when employers make changes which could affect the pension scheme.
It also includes proposals to help the regulator obtain the right information about a scheme; in particular, the consultation is asking the following questions:
Improving the regulator’s and trustees’ role in scrutinising corporate transactions
The regulator would like views on:
- How the notifiable events framework could be made clearer and more effective; whether the right events are captured especially in more complex scenarios, ensuring that the Regulator is notified of appropriate events at the right time;
- How the new ‘declaration of intent’ should be designed and implemented so that employers engage appropriately with the trustees, and that trustees and the Regulator are provided with meaningful information without putting undue burdens on businesses; and
- How this should be enforced.
Improving the sanctions regime to deter wrongdoing in most cases, and punish it when necessary
The regulator would like views on:
- What behaviours and actions (or inaction), and in what circumstances, should attract sanctions;
- What type of sanctions are appropriate in these different scenarios (e.g. fines up to the existing maximum, fines with a new higher maximum, or criminal sanctions).
Improving the regulator’s existing powers to issue Contribution Notices and Financial Support Directions
In particular, the DWP would like views on where it should make improvements to the regulator’s current powers to make it more efficient to compel related companies to provide financial support to a scheme, and requiring companies to compensate a scheme if they have caused loss or detriment to the scheme. They would also like views on how this should be enforced.
Who waggles the willy
This private grief is between the DWP ,tPR and DWP Select. Frankly it is of little interest to the general public. It is a matter of internal wrangling over who waggles the willy in cases where things are going wrong.
If this is the most important matter facing DB schemes today, then it’s certainly not got the attention it requires. But I suspect it will get more than enough attention- from those close to Government, and very little attention ,from the rest of us.
In my view it is not a matter for public debate, but for internal consultation between the powers that be. We elect you to parliament, you appoint the senior civil servants and you set up your Select Committee’s. We pay you to govern – so for Gawd’s sake govern!
You are paid to waggle your willy or whatever.
More pressing issues?
Leaving aside the impertinent questions of the consultation, we – the ordinary people on the other side of the argument would like to see some consultations on
- How we organise the way we spend all the money we’re building up in workplace pensions
- How we protect the monies in DB schemes being exchanged for unsuitable DC plans
- How we keep those good DB plans which want to stay open- open!
- How we get to know what’s good , keep it when we have it – and swap bad for good when we haven’t.
these are the questions I’d hoped our DB White Paper might address, it isn’t and won’t address these issues – it’s chosen to focus on the blame game- and that’s a shame.
What I’ll be doing with the time I allocate to Government matters
I’m off for a bit of Government paid for debate on DC pensions this morning, armed with a copy of the Retirement Outcomes Review (due out in an hour or so).
I’ll probably spend much of the day, scrabbling for a power socket to charge my phone to deal with matter of private import.
I’m not going to get overly excited about NEST Insight or the Outcomes Review but I intend to participate in the debate and take from it what I can. These are issues that I can do something about.
What I can’t I leave to Government – knowing full well that I neither want nor will be able to influence the direction the willy waggles.
The important questions are nos. 3 and 4. For protections for members of DB schemes to be useful, first there have to be members to protect, and there are very few active members of open DB schemes nowadays. There’s absolutely no vision in the white paper for an attractive pension system which employers might be pleased to sponsor. I challenged a DWP official about this, at a seminar to present the White paper. “It’s not about reinvigorating DB” he said. Quite. That’s the problem.
This issue reminds me of the advice given to Alice by the Cheshire Cat. Surely we should have the end in mind before we set out in the journey, as with any journey, it is wise to check along the way that we are on track and to make necessary adjustments.
The dashboard should give us the tools as individuals to monitor progress as well as projections. This process needs adviser input,in the current complex world of pensions, this is because the current algorithms fail the individual and so sustain the adviser for those who can afford the luxury.
Improved modelling would replace or reduce the cost of advice. First though we need to agree on the destination.
State Pension is targeted to deliver around 25% of National average wage and many try to live on this. How much are we aiming to deliver, by targeted tax incentive, to bring this objective up to a living wage?
How we deal with the legacy issues of under providing is a challenge of similar magnitude to funding the NHS.
At the heart of this is the productivity of the Nation, the life blood of productivity is innovation the layerering of regulation kills innovation. We need less regulation, simplified and strong rules to deal with the minority of abusers of the system preying on the vulnerable
Brexit may be the tipping point that ensures our leaders improve their violin playing as the country burns. Time for innovators to respond to the challenge
For me the key question is what should be left to regulators and what to courts. The burden of proof under Civil proceedings is much lower than Criminal, and with the tPR being an arm of the Government, politics comes into play.
The devil, as usual, is in the detail.
Up until now, Regulatory Codes have not had the force of law, and I quote from current Code 03:
“Codes of practice are not statements of the law and there is no penalty for failing to comply with them. It is not necessary for all the provisions of a code of practice to be followed in every circumstance. Any alternative approach to that appearing in the code of practice will nevertheless need to meet the underlying legal requirements and a penalty may be imposed if these requirements are not met. When determining whether the legal requirements have been met, a court or tribunal must take any relevant provisions of a code of practice into account.”
TPR writes its own codes and merely consults on them, ignoring critical comment it does not like. At a stroke, DWP are proposing to let them write law without Parliamentary review.
This does not bode well.