Mr. Hunt – pensions cannot push against a closed door.

According to The Telegraph, Hunt suggested that defined contribution (DC) schemes in particular will provide the “biggest opportunities to unlock investment into high growth British industries”.

Although in post some months , we had yet to hear Jeremy Hunt join the voices of his processor and previous prime minister but two, in calling for pensions to come to the economy’s rescue. That changed this week when he broke cover through the Daily Telegraph – who weren’t impressed. Philip Pilkington ran a headline..

Jeremy Hunt is playing fund manager with our pensions – and he’s terrible at it

His Regulators are his problem

The article  was published in a week when the Regulatory Reform Group (RRG) in parliament called for greater regulatory accountability. While Hunt points at us ,they (and this blog)  point at his regulators who are the chief cause of unproductive pensions (at least in terms of building back the economy).

One of my regular correspondents wrote to me yesterday about the RRG proposals

Sometimes you wonder if it’s worth all the bother (and rants)….

But I’m absolutely convinced our collective and consistent messaging on the Blogs (and the representations we’ve all made to WPC / Mr Timms) are having an impact.

I do not think there is anything more important to be achieved.  I do think getting the TPR on a leash (or disbanded or refocused to having a mandate to increase and protect member pensions) is critical for the future of this country.  And that is not an understatement.

It also verges on criminal neglect for the actuarial profession not to price-in (ie with a proper discount rate) the concentration risk from so many scheme following the same (gilt driven) approach.  And failing to do so only because their model needs a base risk-free assumption (even when the instrument – UK govt debt – is far from risk free).

And it denudes our nation of its investment capital.

I’ve had heads of major consultancies and independent trustees privately admit to me recently that the only thing they know is LDI and so they need to keep on with leveraged LDI because they are not trained to do anything else and it’s only the way they can see to recover some of the £500bn (not admitted loss)!


If Jeremy Hunt wants to know why UK pensions no longer invest in the UK , he need look no further than the Pension Regulator’s fixation with de-risking. And I would look beyond LDI to the current rush to buy-out.

Any hope that corporate DB plans would embrace productive capital was dashed when it became clear that the direction of travel for our great DB plans was the insurance industry. Instead of encouraging the ongoing management of DB plans through consolidating master-trusts, the DWP funding regulations and TPR’s proposed funding code make the economics of keeping schemes open unfeasible. Pension schemes that buy-out with insurers  will see their assets managed under the stringent rules of Solvency II which allows precious little scope for patient and productive investment of their assets.

Which means that the watchwords for DB pension schemes are now “liquidity” and “matching assets”,  “matching” being – matching what insurers want, not matching the needs of Jeremy Hunt and the nation’s finances.

And what of the superfunds? We were told in 2018 when we responded to the DWP’s consultation on their future, that we were contributing to the development of an alternative to insurance. Superfunds were supposed to provide trustees looking for more than an insurer would offer with a better deal for members by investing in the productive capital Jeremy Hunt is so desirous we do with our DC Schemes.

To date, the Government has still to provide a response to those who submitted responses in 2018. The blockage has been created by insurers crying foul that their entitlement to swallow up our pensions might be threatened.

No master trusts, no superfunds and precious little by way of CDC. Since 2018 the Government has been committed to a third way of providing people with pensions, a way that does not call for schemes or pots to close but for capital to remain in the sweet spot where productive capital can dominate.

The yellow box is the box where all the assets could be. But instead of using the yellow box, the Government has – through the CDC regulations and the CDC code, seen zero applications for CDC beyond Royal Mail’s. The rules, once again strangle Jeremy’s golden yellow goose.

All that’s left is DC

Andrew Blair – DWP

A third thing happened this week. Andrew Blair, one of the most politically astute civil servants in the DWP – who has been private secretary to three Pension Ministers in a year has a new job.

After serving as the Private Secretary to 3 different Ministers for Pensions, through securing the extension of Automatic Enrolment, the LDI crisis, the State Pension Age Review and much more I have decided what I really need is…

…more pensions!

I am delighted to share that I have been promoted to Head of Automatic Enrolment and Nest Policy at the Department for Work and Pensions (DWP)!

“Automatic and Nest policy” is a new one on me but presumably he will be in charge of ensuring that all the money that is coming out of payroll into Nest and elsewhere, provides value not just to savers but to the country.

Nest currently owes the taxpayer getting on for £1bn , while the tax-relief on auto-enrolment contributions is a major ticket item for the Treasury (and probably the reason we haven’t seen much movement on the 2017 AE reforms.

This looks like a significant job of work for a young man – I suspect that Andrew has the energy and political judgement to get things done – the appointment is a positive – for us and for Jeremy Hunt.

A new broom for DC?

Andrew Blair’s appointment coincides with Jeremy Hunt’s conversation with the Daily Telegraph. Hunt wanst the DC schemes our contributions fund to deliver higher returns by investing in illiquid private market investments in Britain which reflate our unproductive economy.

There is nothing new in this, it is simply a repeat of what Sunak and Johnson have said . The economics of workplace pensions do not make them the place to start (unless you have levers on the funds as the DWP may feel they have with their loan to Nest). Firms who have to compete for new business through consultancies that only care about price will not put their prices up to accommodate private market investments.

The VFM consultation goes some way to requiring value to be considered through outcomes but the VFM framework will not be operating within this parliament.

With so much taxpayer money invested in pensions, it is extraordinary that so little is happening. Consolidation continues slowly but the proportion of our workplace defaults invested in the UK, let alone patiently, is still tiny.

A new way of regulation is needed

To make a substantial difference to the way our pensions are invested, the Government must take immediate action on how it regulates pensions. Laws must be less prescriptive and regulators must look to reopen pensions and not herd them to insurers, CDC must be given a proper chance and DC pensions must embrace value by being appraised as pensions and not cheap savings schemes.

Right now, Jeremy Hunt should be reading the Regulatory Reform Group’s proposals, talking with the Work and Pensions and the Regulatory and Industry Committees and speaking with the people who matter in pensions.

We cannot push against a closed door.




About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Mr. Hunt – pensions cannot push against a closed door.

  1. Dr Robin Rowles says:

    So, presumeably, the MPs Pension Fund (sic) is doing what Mr Hunt suggests…

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