The IFS’ Pension Review may not be the second pensions commission but it is likely to span two Governments and is the nearest thing we will have in the next five years to a comprehensive reappraisal on how we organize the nation’s retirement finances.
The Institute of Fiscal Studies is starting out and Carl Emmerson, one of the drivers of this project, will be explaining to members of Pension PlayPen the work it intends to do and the impact the IFS expects the report to have.
This is yet another humdinger of a session which you should not miss. Do not block 10.30am out of your diary next week for any other reason than to listen to Carl!
Its important that the pension community – all of us involved with the endeavour to provide an age related living wage for the elderly – are engaged with this and giving clear messages to the Policy makes on what is required to remove the current obstacles against pension schemes investing in and supporting the economy.
I’ve recently latched onto the phase the “DB Pension ecosystem” . For too long it has been parasitic, simply looking to feed off of the economy, seeking its income stream via gilts (which really are just “taxation” of future generations). Of course everyone knows that for the system to remain viable the ecosystem needs to be symbiotic – with the pension investments part of a positive feedback loop, supporting and driving forward the economy.
I attended an investment conference yesterday hosted by one of our major internationally recognised investment houses, and was greatly enthused about the creativity being talked about and explored for investment in long term renewals and ‘alternatives’- such as windfarms, solar farms, hydrogen energy etc; many of which were being structured to offer long term low volatility type returns, often with strong inflation protection. The UK really does have some real brilliant talent in the investment arena.
It was disappointing (but of no surprise to those us knowledgeable with and shackled by the DB Regulatory environment) that on a show of hands of the ‘institutional investors” not a single one – not one – was able to say that they had any investments in these “alternatives” (other than one LGPS fund, not subject to the Funding Code restraints). Of course many pension funds do invest in these long terms assets, but the sad things is they tend to be the non-UK funds. We continue to give away our best opportunities in new technologies.
We need this to change, and quickly. One, to free up and provide the critical investment capital ( i refuse to use the word “risk” capital – that is for the actuaries) required to drive forward and to be at the leading edge of these new technologies, and secondly to allow the benefits of ownership to be owned by UK schemes / UK Plc, supporting our economy and paying the pensions.
We need a total and urgent re-think of the DB Funding code. It must support investment in our futures, and allow Pensions Schemes to play a shared and leading part in investing.
IFS Review will not include any of these “out of scope” issues:
Unfunded public pensions subject to the generous SCAPE discount rates
Social care costs in later life
How DB and DC pensions are invested.
This is from Carl Emmerson of IFS on today’s Pensions Playpen webinar.
So IFS are ducking a lot of the big issues it seems to me.
Running commentary! At what point does a mandated investment become a tax and thus a matter for “fiscal studies”?
Mandated investments seem to me a tool of fiscal policy, so organisations like IFS should address them, not duck them.