How far we’ve come from ministers reading out statements at pension conferences with no questions flanked at entry and exit by flunkies. Yesterday we had an open- shirted Pensions Minister delivering , seemingly without notes and within the intimacy of a Zoom call.
To a large degree, this is down to the social confidence of Guy Opperman, a man who has been living life to the full. As the Minister recalled the crashing fall that ended his career as a national hunt jockey, I was thinking of the events of the summer, of the losses he and his wife Flora suffered and of the determination of the man to get off the floor and come back fighting.
As the PLSA’s Nigel Peaple pointed out, Opperman is now pushing Steve Webb in post longevity and if he gets his time to the end of this parliamentary term, he may get not one but two pension acts to his name. Certainly , his talk of a second pensions bill in 2021 grabbed the headlines when he spoke to the PLSA conference yesterday (March 14th).
The Bill of today -safer, better, greener
The Minister’s emphasis was on the pension dashboard and on the delivery of data to ordinary people in digital format. He pointedly mentioned parallels to open banking, focused on putting pensions on the devices we use everyday and stayed clear of questions about what the dashboard would allow people to do.
But he gave us a sideways view of what he hopes the dashboard can display by calling the new simpler statements, the paper version of the dashboard. If this is the case then we await with interest the consultation response due any moment , on what will go on these statements. What goes on the statements – by implication – is what should be going on the dashboard.
Small pot problems
Opperman quoted NOW pensions telling statistics that small pots are likely to rise in number from 8 to 27m over the next 15 years. The estimable Mr Boulding (who appeared later in the day) has stirred up the Minister’s interest in international comparators (Australia) and I wouldn’t be at all surprised to see some legislation on the way in the Pension Schemes Bill II, when that appears.
Big scheme solutions
It was no surprise to hear the Minister state that he was unashamedly on the side of making big schemes bigger and making small schemes sing for their survival (if you can sing a VFM assessment).
The TCFD proposals, the introduction of “less liquids” and the VFM improvements from economies of scale are all loaded on big schemes. AgeWage research suggests that he is right to consider “big” > £100m, we find Value for Money can be found in smaller schemes but that the likelihood of getting it is a lot higher with bigger schemes (our measure of VfM is +50 on our scoring system)
CDC – more to come
Despite fighting hard for its inclusion in the Bill, the Minister is not quite on the CDC agenda, he struggled to remember the bit about master trusts (section 47 Minister) and he repeated the usual platitudes about employers lining up to follow the Royal Mail.
CDC is an unexploded time-bomb that could change DB and DC in ways that no-one in Government really wants to talk about. The Pension Schemes Bill is lighting the touch paper but who knows whether the fuse will fizzle out or the CDC time-bomb will blow old certainties to pieces.
Pension scams – awareness not lockdown.
With Stephen Timms hard at it in the WPSC and an all party committee formed by the TTF, there is plenty of parliamentary action on scams. The emphasis was on helping savers “spot and avoid” and not on putting pensions in lockdown. Yes Minister.
Opperman is clearly proud of himself for getting Superfunds in play. Whatever the deal he did with the Treasury (and I suspect that a lot of this campaigning for illiquids was part of it), he has pulled off a coup with his temporary legislation.
For the first and only time on the Zoom, the Minister read a pre-prepared statement on superfunds and it was only here that he reverted to the kind of banal platitudes and civil service jargon that we have had to endure from time immemorial.
Climate change – the defining issue of our time and for pensions
Having to do a little commercial break for superfunds was not going to stop the Minister who launched into hyperbole on Britain’s pre-eminence in terms of financial disclosures.
He brought to our attention the correspondence between him and the late head honcho at the FCA – Chris Woollard that Derek Scott has posted in the comments of this blog. I will publish the two letters in question which do indeed show that the lion can lie down with the lamb. I will publish these letter on this blog.
All this in the context of what the Minister climactically christened “a new industrial revolution”!
And so on
Showing a remarkable range of interests, the final section of the Zoom paid homage to Aviva and Nest – for ESG upgrading their defaults (L&G’s news arrived too late).
There was a short commercial for the Sidecar Savings project which is apparently taking organisations like BT by storm.
The DB section of the Pension Schemes Bill was given a hospital pass to Charles Counsell , who will be speaking later in the week (though the Minister referenced a constructive meeting with Open Schemes earlier in the month which bodes well for the Bowles Amendment.
Finally there was a tip of the hat to the mid life MOT (again led by Aviva) and the usual thanks and back-slapping all round for surviving the first wave of the pandemic.
What was not said
The Pensions Minister has power over the State Pension and has control over retirement ages. Nothing was said about either – nor about WASPI.
Nothing was said about tax – all questions were referred to the Treasury and no mention was made of the net pay anomaly.
Questions about increases to AE contribution rates were parked in the post pandemic siding (though this did not stop the PLSA running an AE session almost exclusively on increasing contributions to AE).
Getting Britain match-fit for the future.
Whether he is kicked by his horse or by personal loss, the Pensions Minister is nothing if not resilient. He has survived four years and is the same jolly fellow who arrived in the job early in 2017.
He shows no sign of giving up in 2021 and all the signs are that he will continue on his way. We know what he cares about – a digital economy – combatting climate change and financial inclusion.
At a recent meeting he asked a group of us to not bring him problems but oven-ready solutions. I guess the ministerial door is open and this speech was an invitation to a new Zoom-assisted form of open Government. Yes Minister.
“The TCDF proposals ….”
Not surprised you’re a wee bit dyslexic on this one, Henry. TCFD isn’t an easy mouthful.
The TCFD recommendations published in 2017 run to some 66 pages. I suspect very, very few trustees will have read all of them, or even a summary of them. In April, one of the leading UK consultants on ESG matters (he/she must remain nameless, however) wrote this to me when I enquired about the Pensions Climate Risk Industry Group (PCRIG) consultation launched on 12 March 2020:
“Regarding the TCFD, their flagship recommendations paper is indeed 2-3 years old. Most of their work since then has been encouraging uptake of the recommendations [by translating them into Spanish, Portuguese, etc. it seems to me] although they are working on a number of updates (due this year, I believe, [but there’s still no sign of them in mid-October]). The recommendations aren’t tailored to UK pension schemes in any way, so I wouldn’t recommend looking at them in detail. Instead please take a look at …. PCRIG’s interpretation of them for pension trustees …..”
PCRIG was only formed in 2019. A Google search reveals no website, and I believe we may have been one of the very few boards of trustees even to be aware of their 2020 consultation.
That larger DB trustees are being asked to report TCFD from 2021, before UK fund managers may be required to report to their clients from 2022, still seems to me cart before the (race)horse by Mr Opperman’s over-reaching department. And whether overseas fund managers will report to similar standards, and from when, remains to be seen.
My other gripe is that these days the single largest holding for nearly all DB pension schemes will be issues by UK Government’s Debt Management Office, ie gilts. Promises that UK Government will do TCFD reporting are so far limited to CDC (formerly the Commonwealth Development Corporation) and UK Export Finance. Few DB trustees may have heard of either of these, and are even less likely to be investing with them. (I did once try to arrange a CDC loan from London for a bus company in East Africa at the beginning of the 1990s, at a time when one of the leading SRI services, of which I was also a subscriber – yes, my personal ESG credentials go back a long way – preferred British companies not to do any business with despotic politicians. I think they meant the ones in East Africa, not politicians closer to home.)
But it’s great business for the pensions consultants who want to do the ESG analysis for their put upon clients. It was no surprise to me that ESG consultants made contact within hours of Thérèse Coffey announcing DWP’s TCFD consultation in Glasgow on 26 August 2020. The consultants were eagerly offering their services to us and following up with summaries and more detailed papers on the disclosure projects they clearly want to sell to us.
From our members? Not a dicky-bird.