For a second time in a row, a PLSA  Conference will take place at a time of national debate about the impact of pension investment on the economy. The last Conference in October coincided with the BOE’s purchase period of long dated and index-linked gilts. This Conference will occur as our funding of pension promises appears to be being repurposed.

The noises coming out of the Treasury over the past week and reflected in Nausicaa Delfas’ speech last Monday represent a change of position on the management of pensions.

There will be profound ramifications for trustees, sponsors and  investment consultants.

Con Keating foresees a very different world going forward. It will be interesting to see how far this is recognised at the forthcoming investment conference in Edinburgh.

Another comment on a recent blog, this time from Jnamdoc is even more graphic

We cannot ever underestimate the damage that TPR deathstar has inflicted to our economy, systematically stripping our pension schemes of an investment mindset and responsibility, and the costs will be borne for some generations.

And the key word here is ‘responsibility’ – each demographics sector (and as a proxy lets assume DB schemes represent the economic interest of the non-working aged) has a responsibility to support and nurture the others. With improved longevity, the pensioner sector is just too large to freeload expecting a risk-free age-wage. All wages – whether working or age-related – need an invested functioning growing economy, in which all can share in the risks and the rewards.

Because of an utter and complete lack of oversight and/or understanding across successive governments, none of them really noticed or challenged the continual and corrosive powergrab of the TPR, and relied upon the actuarial experts. Actuarial experts can bring skills in complex maths and in hindsight analysis. Not about investing.

TPR only produced data that supported their narrow minded funding approaches, and despite the very very considerable power it wielded over Trustees and the professions, and hence over the investment direction and outcomes of c£1.5 – £2trn of Scheme assets, it operated without any remit or consideration to the broader economic impact. They will say, they were only doing their job.

We all know the dangers of the State seeking to choose winners in innovation and technology, but hitherto we have suffered under the worst possible regime – an unelected deathstar of a quango actively sucking all energy out of the economy. Of course until it is extinguished the deathstar will continue to look to blame others for not understanding including targeting trustees for not being “professional” enough to understand the maths modelling, or not having enough buffers to cover the known unknowns induced by TPR’s unique approach to investing.

TPR must step out of trying to offer Trustees investment guidance. Single solution mandated approaches (statism) doesn’t work. Let the market find and invest in the innovation and to deliver the growth we all need. Trustee board need to be filled with business people, not maths modellers doing the bidding of TPR.

I doubt these two voices will be much heard at the PLSA conference, but I will try to represent this point of view where I can.

Just as LDI took over the October Conference, so I expect the Growth Agenda to take over this.

This blog is restricted to a discussion of DB funding, there is an equally important discussion to be had about the repurposing of DC investment. While the funding of DB schemes is likely to be considered “legacy”, DC “is the future”. These characterisations are of course wrong, most of the pensions arising from our DB system are yet to be paid, there is no system yet to pay pensions from DC pots.

In future, we need to think of DC and DB pensions as one –  certainly in terms of  funding, They will differ in the duration of liabilities but  will eventually have  a common purpose. That purpose is the payment of an income for life which gives people dignity in retirement.