Yesterday, as a guest of CWU’s Deputy General Secretary , Terry Pullinger, I spent a morning at the Westminster City Forum’s conference on Next Steps for UK Pension Funds.
The Conference dealt with the regulation of DB pensions, consolidation and the future of CDC.
This may sound pretty thin gruel but much of the morning was lively. David Fairs, speaking in his new post as Policy Director at the Pensions Regulator, challenged the audience to think of a world where the Pensions Regulator decided the strategy of pension schemes (as well as determining how that strategy was implemented). It was (I hope) a tongue in cheek challenge, designed to get us thinking of the implications of putting his organisation in charge of DB’s future. It solicited a typically robust response both from within and without the room.
Or indeed advisors. Just a benevolent overseer who knows everything and will keep us all safe.
— Mike Harrison (@HigherEdActuary) September 13, 2018
Having spent the last 25 years at KPMG, Fairs knows all too well the danger of giving any party too much say in the running of DB pensions. I was surprised that so many of the room appeared to agree with his hypothesis that we could give tPR fiduciary control.
So much for tPR scope creep – what of the DWP?
We were given an entertaining interchange between DWP’s Julian Barker and Liberal Peer Archie Kirkwood. which consisted of Kirkwood deferring to Jeannie Drake on all technical matters and Barker reassuring the audience, that (subject to the Lords behaving themselves) we would see the legislative timetable fulfilled so that the key items (DB white paper , CDC and various other matters) appearing in next year’s Queen Speech.
Kirkwood kept the show on the road with some robust chairmanship of a number of disparate voices – including the exuberant Andy Agethangelou. At one point the conference seemed to be heading for some positive conclusions but no sooner had the debate switched to “what could go right” but it veered back to how we could cut members benefits. The first part of the morning – having started well, concluded on a minor chord. The suggestion hung in the air – flatulated by Michael Johnson, that CDC could be used to dismantle what remains of open DB pensions in the UK.
As one senior civil servant remarked to me “we appear to have snatched defeat from the jaws of victory”.
A truly awful second half
I returned to the conference, after a busy 20 minutes “networking” , with some hope of some second half goals for CDC. I got nothing of the kind. Instead I got a dreary presentation from Dutch Professor Hans Van Meerten which explained how CDC had gone wrong in Holland. Sadly the audience seemed unable to understand Van Meerten’s message that the same need not happen in the UK and it was obvious that the audience were now ready for blood.
They got it from Michael Johnson. I have rarely heard a more objectionable presentation than that given by this economist and so called thinker. Johnson seems tied to the mantra of Thatcher. Driving him is his obsession with the cost of the state pensions and the desire to dumb all pensions down to the lowest common denominator. CDC, in his book is a means of deflating DB.
Because he has made his money in the City, he now feels independent. Because he works for Thatcher and Joseph’s think-tank, he considers his views carry weight.
They do. They carry weight because they are aligned entirely with the interests of the financial services industry for whom he is a flag-bearer. He speaks for the destructive force of neo-liberal economics that has no regard for anything but the pursuit of wealth for the few at the expense of the many.
Royal Mail as a case study?
Jon Millidge and Terry Pullinger were introduced to the conference as presenting a “case study”. Royal Mail is not a case study, it is the main event.
Earlier in the week I had chaired a joyous fringe meeting at the TUC conference where Pullinger had shown us how pensions could be returned to the people who wanted their “wage for life”.
Pullinger and the Royal Mail’s Millidge found their words falling on deaf ears.
The audience, picking up on Van Meerten’s warnings, assumed that what had happened in the UK would happen here. This despite every speaker making it clear that CDC in the UK was a variant of DC not of DB.
Questions to the panel that followed the case study included suggestions that unfunded state pensions should be funded (to show how unaffordable such folly would be). The audience luxuriated in the comfort of Michael Johnson’s oratory and decided that consigning ordinary people to auto-enrolment DC pensions was perfectly acceptable, so long as they could continue to spend morning’s doing nothing but listening to Johnson confirming their a priori right to all the money.
Staggering arrogance of an over-indulged pension elite.
By the end of the second half , I had concluded that there is no point in Royal Mail and CWU spending time talking to “the pensions industry”. The force for good that their proposition is, should not be sullied by exposure to Michael Johnson or what he stands for.
I was deeply ashamed to be part of an audience which, for the most part, had no interest in restoring public confidence in pensions. Indeed, I think that what I saw in the room was the heart of the problem, the scabrous self-indulgence of a self-perpetuating pensions oligarchy who have created themselves the title of “experts” – but who are nothing of the kind.