This is a blog about the economic utility of pension management. It’s written because the first thing that hit me this morning was this almost confessional comment from George Norval, Group Pensions Manager at Berensden.
Is the DB Pensions Manager a dying breed due to industry trends?
My average peer is 15-20 years my Senior… it seems that “Pensions Management” is becoming stagnant as Large Employers bet on “age” rather than what an individual bring to the table . “Age” aka years in the industry don’t always get the job done, if you always do what you always have done you will always get the same outcomes… passion, drive, a can do attitude, rolling up your sleeves at times, charisma and great relationships gets the job done…. is it time the Industry look past “age” and more about added value and the dynamic new blood can bring to even bigger PLC’s out there, so much talent out there get put on the back burner when they are the real movers and shakers (MORE than capable to manage large and complex Scheme very well) that will reinvigorate much needed energy into our Industry … the top end loop seem to have become stale … just my two pence worth; not a criticism …more so an observation… having worked for major corporations over my 20 year career I’ve “seen” most prob. more in my career than my Avg. Peer yet my “age profile” may not reference that … is it time for new perspective in our Industry?
I live with a Pensions Manager, who became Pension Director at what was then Britain’s largest pension scheme (BT) when she was 32. I remember meeting her with her colleague who was 20 years her senior – but her subordinate. I made the double mistake of assuming he was the boss because he was older and male. I have not been allowed to forget that!
Stella joined BT in 1997. Would BT appoint a 32 year old woman with only a consultancy background today? I suspect not. Would a 32 year old consultant put herself forward for the job – very unlikely. The fact is that DB pension management has atrophied as DB pension schemes have atrophied. Take a look at this diagram
What happens when you close collective benefit schemes is that pension managers become risk managers rather than benefit managers; that’s because pensions are seen in terms of liability management and not of reward.
The economic utility of pension management is at a stage of the cycle that so devalues the role of a pensions management that no millennial but a supreme optimist, would want to do the job – with a hope of making a career out of it.
Hope for the pension minded!
Last Wednesday I had a drink with Jon Millidge, the Reward Director of Royal Mail. With him was RM’s DB pension manager, Douglas Hamilton. Speaking with them I heard the phrase “what’s happening at Royal Mail is bl**dy brilliant”. What they were referring to wasn’t the state of RM’s share price, challenging the existential threat of Amazon and the internet or even staying strike free. What was being referred to was the pension scheme.
For the first time in a decade, I hear a Reward Director refer to an open collective scheme as “brilliant”.
The enthusiasm with which Royal Mail’s senior management have taken to CDC is something to behold. They talk of it as a way of rewarding posties who have given there careers for relatively low wages but a decent wage in retirement. That equation seemed busted and the CWU and other unions were prepared to go on strike to keep it in place.
That Royal Mail and their 140,000+ workforce are looking at pensions positively says a lot – not just for its pensions management but its unions and for the far-sighted attitude that led to them challenging the conventional wisdom and re-establishing a collective pension scheme – albeit without guarantees.
This week – let’s hope they get their reward
This week is when we hope that the anticipated DWP consultation on CDC will get itself over the line. There have been many headwinds, many created by the pension industry concerned that CDC challenges their consensus. That consensus has led to posts like the one I started this blog with.
The dynamic new blood will return to pensions when pensions return to doing what they say on the packet. A pension is a reward granted to someone out of a lifetime of earnings – some of which is re-allocated to a wage in retirement.
A pension is not a big pot of money which can be drawn down with absolute freedom. Good as a big pot of money is – it is not a pension!
Pensions management is just that, the allocation of capital to paying people a wage for life. I hope that on Tuesday November 6th, we will hear how the pensions industry moves from the “closed scheme problem” to a new bright future. If I didn’t believe that this could be the case, I wouldn’t have been a Friend of CDC all this time! Hopefully George and the many dynamic would-be pension managers that he talks of, will be rewarded by a pension option that focusses on benefits rather than risk.