I received an interesting update earlier today on a fringe meeting at the Conservative Party Conference on ‘Can Pensions Save the Planet?’ One of the people talking was Caroline Escott from Railpen, covering some of the important work Railpen has been doing recently on ESG. The event was organised by the PLSA and featured the Minister Guy Opperman and backbench MP Gareth Davies.
Gareth Davies is a former Investment Manager for Columbia Threadneedle. During his speech he suggested that we should find ways of allowing pension funds to take on more risk so they could invest more in illiquid assets. The Minister later “endorsed utterly” Davies’ comments on risk as “one of the defining things going forward.” In answer to a later question, the Minister said: “Putting it bluntly, the Government has to make it easier for pension funds to take more risks.”
These are clearly interesting statements, contrasting with what TPR is doing in their Funding Code consultation (and the government’s explicit support for allowing the regulator to set that direction of travel).
Indeed, Nigel Peaple from the PLSA picked up on this with his closing remarks saying,
“They (TPR) are in the middle of reviewing the DB Funding Code and that has a very big influence on defined benefit pension schemes and the way they invest their assets. It’s very important that the Regulator considers where it will land early next year on this and that it does allow risk to be taken in an appropriate manner, by which I mean more risk… they are not closing down on risk as they are tending to want to treat open and closed schemes in the same way.”
I think it’s great that the PLSA has picked up this message, although sadly the Minister didn’t have a chance to reply directly.
We now expect we’ll be getting the draft Code of Practice from TPR early next year, perhaps around the end of Q1. Will be interesting to see if TPR was listening!