Inflation stalks the halls of the PLSA conference.


The PLSA’s Edinburgh conference is for a second time happening in the midst of turmoil. Yesterday’s event started with a montage of footage beginning in March 2020 when the event last took place and taking us to today reminding us how the pandemic has changed much in the way we work and the way we view institutions such as the NHS and the apparatus of Government. The 2020 conference was also notable for the presence of Guy Opperman who delivered a powerful speech on the need to adopt TCFD reporting and take climate change seriously.

This year’s conference has no Pension Minister but the import of that speech has been realised. TCFD reporting was one of the themes of yesterday as was the issue of ESG which has become mainstream in investments. Much as we may worry about greenwashing, there is no doubt that the pensions industry has responded responsibly to the challenge set it.

But the 2022 investment conference is being stalked by a threat that while it is not viral , has the potential to bring misery in great measure and like Covid it threatens the poor and vulnerable most. The threat is inflation – I have written about it in my last blog. As with Covid in 2020, the impact of the threat has yet to be fully realised but those who were asking questions – were asking questions about how inflation would change the financial and economic landscape of the months and years ahead.

Like Covid, inflation is considered to be a spike with a long tail. How fat the spike , how thick the tail has been argued by many conference speakers but it is ever present in conversation and in the sessions (which have mainly been discursive).

And by a strange coincidence, the conference will end today coincidental with a major Government announcement, this one will not be about lockdown but about the remedial measures the Chancellor is likely to put in place to combat the impending fuel poverty which without inflation will best the majority of pensioners

Inflation is an issue for DC too!

For this conference, the impact of inflation has so far been considered an issue for defined benefit schemes. One speaker late in the day told the hall that inflation had come as a welcome boost to funded schemes, a statement that was met with some disgruntlement among delegates with a flood of questions around how financial economics interacted with real world finances.

The issues of how those with pension pots in drawdown are likely to cope with the spike or a fat tail of inflation at 3-4% has not been addressed. Indeed I was told by one speaker that this conference cannot deal with retail issues.

Here again the similarities with discussions in 2020 are obvious. Then Covid was being discussed in terms of its economic impact, within days it had become a threat to the operation of all aspects of  pension operations, including the institutional investment function.

The PLSA has now acknowledged that it is there for DB and DC schemes but it is still giving the impression that the “pension” in its title concerns the money in DB while the “savings” are in DC – and are yet to be considered as pensions. This will need to change as more “pension savers” arrive at “destination retirement” with a pot – but not much help in how to spend it.

Recent work from the IFS suggests that what people spend in retirement is based on similar consumption patterns to when they were in work. There is a lot of good thinking about how consumers can ride out the current market storm and pay themselves enough to meet the coming spike in bills.

Adrian Boulding’s wisdom enlightens the DC investment debate

This kind of thinking needs to become mainstream in investment circles if the PLSA’s investment conference is properly engage with the real issues of DC pensions and DC pensioners.

My thoughts on day one of the conference can be summed up the phrase “plus ça change plus c’est la même chose”. The risks that hit us are unexpected and seem unmanageable. Covid and inflation have dominated successive conferences and usurped the agenda of each – to a degree.

Organisations such as the PLSA, meet annually to understand what its membership think and worry about and set an agenda for change in the year ahead. My impression is that this conference will be remembered for the agenda that imposed itself upon it, rather than the agenda it set itself. That is no bad thing.

Thanks to the PLSA for helping me be at its conference – we’ve come a long way!

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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