A big thank you to Imperial College Business School for making this a public lecture, It brought 140 people together, encouraged some sharp debate in the chat room and gave a platform to John Ralfe to explain the con trick he suspects Royal Mail and its unions are pulling on the 140,ooo postal workers due to join its Collective Pension Plan in a few months time.
As John pointed out, there was nothing new in his arguments which he has widely circulated in articles over the past three years. They focus on supposed unfairness in the scheme design which mean that older savers will get more than younger savers in terms of pension and transfer values. I don’t want to argue against his points but I do question what the point of the lecture ended up being.
This was also the central question in the discussion between John and Professor David Miles, Imperial College Business School who (expertly) chaired the session.
If John considers the Royal Mail CPP a con, does he consider CDC as a means of risk sharing a con – or is he simply concerned about specific design features?
The conspiracy theory that RMCPP is a con, needs to establish a motive as to who benefits from the years of hard work that has gone into making the CDC solution happen,
What has happened at Royal Mail is that unions, employer and members have voted to accept risk sharing and the solution designed for the Royal Mail is considered right by all the key stakeholders. It is also being supported by Government who have legislated to allow the RM CPP much greater legislative security than if they had set the scheme up under the vague provisions of the 2014 Pensions Act.
It is hard to attribute a negative motive to such a consensus. John hinted at an actuarial conspiracy between Aon, WTW and First Actuarial but CDC hardly looks a money-spinner for consultancies awash with pension work.
If the point of the lecture was to expose RMCPP as a con, then I suggest it did not move the dial, I suspect that those who attended left with the views they brought to the meeting which were either pro or against John’s pre-stated position.
But you will soon be able to judge for yourself, as the Brevan Howard Centre have recorded the event and the link is at the bottom of this article.
Nothing that CDC can do that DC can’t do
But if the point of the lecture was to prove a wider point, to use John’s assertion “there is nothing that CDC can do that DC cannot do”, then we really should be looking at both and asking what DC is currently doing.
We have a lot of data on what DC is doing , most importantly the FCA’s retirement income market data.
DC is providing people with choices at retirement which people appear to be struggling to take. The one general conclusion that can be taken from people’s use of pension freedoms is that they want to strip out their tax-free-cash and bank it. Beyond that , people are following their own pathways, some drawing down, some deliberately rolling money up and many waiting for someone to give them a definitive course of action – or at least a default.
What DC can do, is build up the money to purchase a pension. What it cannot do, is provide that pension to purchase. When we get to retirement we have to tread our own pathway, there is no common road.
This point was not acknowledged by John Ralfe who appeared to think that because he has no problem deciding what he wants, others will be the same. This form of myopia is very dangerous, especially among pedagogues.
I had an unusual insight into John Ralfe’s attitude to his audience prior to the meeting started. I turned my Zoom on 15 minutes before the start and went to make myself a cup of tea.
To my surprise, my computer accessed a conversation between John Ralfe and the technical team discussing technology which included the following
“you see that box there, that’s Henry Tapper, he’s an absolute lunatic, on no account let him ask a question”.
The voice was John Ralfe’s and it was followed quickly by someone telling him that everyone whose name John could see, could hear what he was saying.
I am sure we have all done silly things on Zoom so I forgive John Ralfe his gaff. But I don’t forgive him his instruction to suppress questions from “absolute lunatics” of which there were many in the audience. They included Kevin Wesbroom, Mark Rowlinson and Bernard Casey, all of whom asked questions that John wouldn’t answer as they didn’t feed him the opportunity to say what he wanted to say.
Worst of all, John Ralfe made every attempt to over ride the Chair during the discussion so that he didn’t have to answer the very important questions Professor David Miles was asking him. Very rightly, Miles told him that he had spoken for a long time (over 40 slides) and that it was time he did some listening.
That was good advice.
Imperial College Business School has kindly shared the recording of the talk