Case study – the pertinent question on DB funding.

For this story, I spoke to an 86yr-old who worries everyday about how his wife, 9 yrs younger, will cope financially if he dies before her. He receives NO inflation rises on 90% of his PPF pension. His wife, if she survives, will inherit half his pension. https://t.co/m2iAATc7Hm

— Josephine Cumbo (@JosephineCumbo) May 17, 2022

There are limits to what an FT journalist can do, they do not have access as I do to unlimited digital space and must compress key information into tightly written articles published to tight deadlines. I have the luxury of working in my own time, my own space and I do not have to research my sources as Jo Cumbo does. There is a world of difference in my amateur ramblings and what Jo writes in the FT.

So let me publish Jo’s micro-blog on what I wrote around her article on the inadequacy of inflation protection in 140,000 people’s PPF compensation.

Comprehensive piece Henry but poor regulation of funding – and pension dumping via pre-packs – arguably contributed to many members landing in the PPF, and being worse off for life. Is there a moral responsibility on former employers / current Govt to address this?

— Josephine Cumbo (@JosephineCumbo) May 17, 2022

I will leave Jo’s big question hanging. Though some of the comments on the blog show just how live an issue this is becoming.

Jo’s little story is that the cost of living is going up so much faster than pensioner’s means to cope with it, that pensioner poverty will doubtless increase. But behind it is a bigger story,  that pensions have been managed with an eye on de-riskment rather than enrichment for two decades. Many have swapped their pension increases for a mess of potage through shallow PIE schemes that have exchanged inflation protection for “sexy-cash”.  Steve Webb was right to rail at the architects of these “exercises”.

Instead of taking advantages of the longest bull run in growth assets in memory, DB schemes looked to lock-down into self-sufficiency from sponsors and in preparation for sell-off to insurers. Many have already handed over the keys and in so doing, have handed over their capacity to deliver any discretionary increases to pensioners. Many more have, as Jo points out, seen members jettisoned into the Government’s lifeboat PPF as part of insolvency pre-packs that see the sinking ship of the sponsor, right itself and continue to trade (free of pension liabilities) as a “phoenix”.

The miserable DB funding code proposed by the Pension Regulator in 2019 is still not in place and looks like returning for another consultation recognising that “de-risking” is not in the interests of pensioners or deferred pensioners and is the product of abstract theories by financial economists who know the price of everything and the value of nothing.

Jo’s second pertinent question is about whose interests  regulations protect. There is no better case study than USS.

Case study – Jane Hutton’s case taken to the employment tribunal.

Jo Cumbo is fighting the bigger fight and she is also standing up for those who refuse to be silenced by gagging orders. She is currently the only journalist covering the wretched case of Jane Hutton who is claiming unfair dismissal for speaking out against USS as an USS Trustee over the proposed de-risking of Britain’s largest funding DB scheme.

In her attempts to report on this case , she is being thwarted by USS who are using vast legal resource to protect themselves from scrutiny. The public is not allowed to see documents used in court digitally but are having to go to a small room in the offices of lawyers Symonds & Symonds to view them in hard copy. The public is not allowed to photograph these documents.

The big question of the trial is whether Jane Hutton had a higher duty to act as she saw right as a trustee or to obey the rules of her contract with USS.

Laddie: “This was not some accidental overisght”

Hutton: “I think it reflects very badly on me. I will leave it to let the tribnual to make up its mind as to whther this was a foolish mistake or deliverate. they will decide.”

— Josephine Cumbo (@JosephineCumbo) May 17, 2022

Which brings us back to the point of what Jo , Jane and anyone with a conviction that does not align itself with the “received idea” reaches. That point is that publishing the information that the public cannot see is constrained by the use of law, money and a system that is set up to intimidate contrarianism. Jane Hutton is a contrarian, whether she was foolish or deliberately rebellious is indeed a matter for the tribunal.

The next few days will see whether the 32 page “note” prepared for the court by USS’ defence will prevail or whether the tribunal will side with a maverick who felt she couldn’t but speak her mind. So far the omens do not look good…

Judge Snelson has agreed with Laddie and the trial notes will not be made electronically available. Instead they will be made accessible to the public at the London office of Simmons & Simmons. Laddie notes that anyone viewing the documents should not take copies.

— Josephine Cumbo (@JosephineCumbo) May 17, 2022

Free reporting of unrestricted information is critical to pension transparency. The efforts of USS’ legal defence so far have been to make that reporting as hard as possible.

Let’s hope that good comes out of this, though right now it is hard to see how this can happen.

One thing we know, that is that Jo Cumbo will be going the extra mile to ensure that as much of the truth behind the dispute is reported as can be. She will continue to ask the questions we wish we had.