I am very pleased that Con Keating and Iain Clacher’s recent article has got so much attention , both in terms of readers and in terms of social media comment.
Though I am one of those who thinks the Pension Regulator is going through the motions on its DB consultation, I am happy to be proved wrong. If Guy Opperman wants to look at an alternative to the wasteful system of valuations and complex de-risking strategies that characterize DB funding, then he should seriously consider the Keating alternative.
To do so would be to challenge massive vested interests within the funds and consultancy businesses that make up a big chunk of the pension industry so I very much doubt anyone will dig out the many fine essays that Con and others have published in Long Finance longfinance.net/media/document
‘He that ears to hear’.
As a 15 year old I bought one of the first 5000 copies of the Clash’s eponymous first album, it came with a sticker which you posted to the record company and you then got a bonus EP sent you in the post. One of the tracks was the band in conversation with an NME journalist. Strummer is asked why nobody can hear the words and he replies that his singing is like the Jamaican toasters, only meant to be heard by those who have ears to listen (Joe knew his scripture).
I always sided with the journalist as the Clash didn’t put their words on the inner sleeve (till later) and I didn’t know what Joe was going on about in songs like White Riot. But I got there in the end and I can say much the same about Con Keating’s arguments. They take some studying but you get there in the end.
This is principally to explain a tweet from the very wonderful @highereducationactuary (Aka Mike Harrison) who features regularly on this blog and a very good answer from Mark Rowlinson, a former colleague whose company and insights I miss a lot.
There is of course another way to promote your views on twitter. Here John Ralfe seeks to make fun of Con Keating by publishing an unflattering photo of Con and a flattering photo of himself. This does not make for constructive debate.
(I am often criticized for my rejection of John Ralfe’s arguments and conduct and this is why).
Challenging the received idea.
That there is a debate on how we fund our pension obligations going forward is to a very large extent down to contrarians like Con Keating. Which reminds me that the biblical quote ( Matthew 11:15; Mark 4:9, 23) that headlines this blog and has been referenced with respect to Joe Strummer is that while we all have ears, fewer have ‘ears to hear’.
Another of my friends commented to me (after reading Con’s piece)
The issue of should we protect older people or open up the economy has huge parallels to the DB and DC dichotomy. On covid we started by protecting the members at risk. DB like. Threw money at it. Now we need to pull back, remove most of the prudence, get employers back to making money. Let’s hope we don’t go too far though and do the pensions equivalent madness and throw all the risks on to pensioners. Not looking good though.
He went on to ask if I agreed with Con.
Do I agree with Con?
In as far as I am capable , I agree with Con. But for me to say that I fully understand the deep simplicity of Con’s arguments, I would say that I can only partially agree. My ears are a bit bunged up and I suffer from a low understanding of the maths.
My inability to properly argue Con’s case is not the same as my denying its validity. I agree with Mark Rowlinson’s comment, which I take as a kind characterization of my admitted limitations!
No secrets which is why Henry offering to put in touch. Up to them if they want to write more details to share publicly but both have written numerous pieces in the past.
— Mark Rowlinson (@markjrowlinson) May 28, 2020
Con Keating has never ducked a debate and always answers genuine questions. I am keen to give him a platform (as Professional Pensions had) and there is something about the immediacy of a blog that can ignite this debate.
I’m pleased to see that Mark went on to explain his position on Con Keating’s thinking and in interceding , couch the argument in a language that Mike can understand and articulate.
My challenge to the Pension Regulator
I may have rather clumsily dismissed the forthcoming DB consultation as a distraction from getting on with fixing DB pensions by force majeure (something the Treasury may have to do).
If the Pensions Regulator thinks there is time to consult, then it should not consult for the sake of validating its pre-existing position but consult on all options, including Con Keating and Iain Clacher’s proposal.
My challenge is also to Guy Opperman, who as Pensions Minister has responsibility for keeping DB funding within the remit of the DWP. If the DWP are not to lose DB pensions to finance (with the potential consequences of brutalizing pensioners), then radical arguments need to be included in the discussion.
I sit in on a number of conversations between trustees and consultants about upcoming valuations (mainly at LCP 11ses). At yesterday’s event, someone attempted to bring up Con’s article. That someone has gone on to write a comment on my blog.
Con Keating’s response is entirely in line with my thinking
My challenge to the Pensions Regulator, (who has been openly challenging me back) is to open his ears (for he has ears to listen).