Baroness Bennett, Stedman-Scott and Altmann – getting things done
Every year occupational pensions schemes are required to publish reports that nobody reads. Clearly this is unsatisfactory and we could go two ways
- Stop writing the reports (would anyone notice?)
- Write reports that people got to see (and wanted to read again).
This long Easter weekend, I assembled all the reports I’d read from the IGCs (and one of two GAA reports). These are now listed here.
As far as I know, this is the only consolidated service available to the Independent Governance Committees of insurance companies and I’m glad this year that so many of them volunteered their reports (or if delayed – told me why).
I care for my IGC, because if I do not use it, I lose it. IGCs exist for us, they keep insurance companies and SIPP platforms on their toes, they bring down charges, improve performance and mean that we get more money at retirement.
But I mention in my report that I am not providing the same service for occupational pension schemes and this is why.
Light at the end of the tunnel
According to the Pensions Regulator, there are There are around 29,000 Defined Contribution occupational schemes of which 24,000 are open to contributions, There is no public list of them, though tPR know who they are.
They should all be producing an annual chair’s statement, a statement of investment principles and an implementation plan. And these documents should be available electronically to members.
I have no idea how many of these documents are produced and suspect that by various exemptions, many schemes get by with producing nothing much more than a boiler plate.
But a good proportion of these 29,000 schemes do report and the 38 master trusts that now dominate this landscape are now authorised and must report to a much higher standard.
My experience of reading master trust reports is that make IGC reports read like the adventures of Huckleberry Finn. They are dull. My guess is that because nobody reads them, no one bothers with the writing of them, and they have fallen into the slough of despond .
In my report on IGC’s I wrote that
while it is quite easy to track down IGC reporting, master trusts are much harder to keep tabs on. IGCs publish reports in a roughly four week window (late March to late April) while master trusts publish chair statements unannounced and throughout the year.
I would like to find a way to report on the big commercial master trusts as I do the IGC reports and it may be that the pensions regulator helps me by getting the master trusts to publish around a certain data – as IGCs do.”
But – on a boring morning of lockdown I found some light at the end of the reporting tunnel.
First I read an amendment by Ros Altmann, the upshot of which is as follows
This amendment would place a reporting duty on the Pensions Regulator to publish statements of investment principles (SIPs) under section 35 of the Pensions Act 1995. The amendment would place a requirement on the Pensions Regulator to create a SIP repository, accessible to the public through its website, so that all scheme members could check their scheme’s investment strategy
Then I read the debate around the amendment with contributions from Lady Hayman, Lord Flight and Baroness Bennett and concluded that the Lords were determined that Statement of Investment Principles should not only contain the trustees’ position on climate change, but should be readily available to members who could hold them to account on it.
I was particularly impress by the Government’s response to the debate (found in 156G) in which the DWP spokesperson in the Lords – Baroness Stedman-Scott says
We believe a central repository has a part to play in that, but Amendment 28 does not take into account the growing concentration of the vast majority of members in a small number of schemes. Of more than 5,000 defined benefit schemes, the largest 200 schemes have more than 60% of members. Of more than 3,000 defined contribution schemes, the largest 150 have more than 96% of members. For these members, their own scheme’s website or public pages are the natural places to look for investment information, not a corner of the Pensions Regulator’s website.
And then – to make the morning really worthwhile , I read a letter from the same Baroness Stedman-Scot This letter – which is published and available to read on the link above contains two highly encouraging sections
and even better
This sounds boring – why am I excited?
I am making it my business to put people in touch with the money they save for their retirement.
There are three reasons I get excited.
- It is the money that will pay them (in part) a wage in later age- outcomes are important
- While the money is invested, it should be invested responsibly, it’s our money, we should have some insight and some control on what’s going on.
- If we are to hold people who manager our money to account, we need to know the value we are getting for our money.
The DWP are now saying that 0f more than 5,000 defined benefit schemes, the largest 200 schemes have more than 60% of members. Of more than 3,000 defined contribution schemes, the largest 150 have more than 96% of members.
For these members, their own scheme’s website or public pages are the natural places to look for investment information, not a corner of the Pensions Regulator’s website.
If we have a central repository for SIPs , we can look at how our scheme is doing relative to other schemes and – just as we can do with the IGC reports – we can compare and contrast how schemes are doing. This means that trustees will get read and they’ll be subject to the same scrutiny on their statements as IGCs.
I believe that we are moving into a new era of data sharing which begins now with better ESG and VFM reporting and ends with a full-on pensions dashboard.
These steps, announced by Baroness Stedman-Scott, suggest that we are moving in the right direction. It took Ros Altmann to get the amendment on the table and thank goodness she did.
Now it is up to people like me to show Government that there is demand for a central depository, not just for SIPs and their implementation reports – but for Chair Statements too!
I don’t want to see trustee reporting become box-ticking – I want the Chair Statement and SIP as the focus of DC pension governance