Steve Webb – “what is the Government trying to do?”

Speaking with considerable modesty, Steve Webb addressed the Pension PlayPen the morning after the night of the Mansion House Speech.  Although not at the event in person, he was there in spirit , referenced by Jeremy Hunt in his speech for Webb’s help in putting together the package of reforms.

Any thought that Webb would be the Treasury’s flunky, were dispelled in the opening minutes of his conversation with the 70 or so of us on the call. He admitted to coming to the meeting unprepared, he had not read all of the “torrent of announcements” from the DWP that morning. He invited us, rather than entering the weeds  – to step back and aks “what is the Government trying to do?”

He likened Government as obsessed by the child with the shiny toy who comes into the playground and is the envy of all. The big picture is that bigger is always better – Australia and Canada are currently driving Government pension policy, especially DC pension policy.

Jo Cumbo added some meat to that bone.

Reforms are aspirational , benefits speculative

There are in fact 10 policy and consultation  papers published by the DWP which can be accessed from this link

On top of these 10 is a further paper explaining how the Chancellor came to the number in the red box.

There are 10 papers ranging from calls for input to consultation outcomes, published yesterday

Webb identified these reforms as delivering “aspirational” not actual benefits and compared this Government’s “nudge” to the Labour party’s mandatory approach

He took by way of example the £50bn increment in DC allocation to venture capital. This  assumes a 5% share of a trillion pound market DC market by 2030 (the current market size  is £500bn). Webb pointed out that £50bn is an aspiration not a policy.


He concluded that the Government has taxed as much as it can , borrowed as much as it can and pensions all that is left for them to go for.

Back to the future

Cleverly, these reforms build on the work of previous conservative Governments to give the impression of a plan coming together. Webb pointed out that little is new

The primary regulatory framework for superfunds is in response to a 2018 consultation

The proposals for auto-enrolment are in response to an even older (2017) review.

The plans to widen CDC to become available to smaller employers and to individuals with mature DC pots (decumulation only) , builds on existing primary legislation.

Small pots will be dealt with using a clearing house which will assign them (via a carousel) to one of five chosen master trust consolidators. The cut-off pot size for auto-consolidation will be £1,000. Webb thought this number should be £20,000, asking

How many £700 pots does it take to boil a kettle?

Getting DC there

There were consultations Webb did not cover, I sense that his interests are primarily in the mechanics of pensions rather than the more abstract notions of value resulting from investment forecasts.

While I could understand him ducking LGPS reform, it was surprising that he did not talk about the VFM Framework, which is aiming to root out the worst performing workplace pensions that are becoming a menace to the public and to auto-enrolment

The VFM framework is the Government’s chosen way of “getting there”, when it comes to scale, investment strategy and long term value.

Reforming DB

Despite one of Jeremy Hunt’s golden rules being to preserve the security and diversity of the gilts market by not messing with defined benefit schemes, the DWP are anxious to get DB money into the same productive finance pools as DC (and CDC).

Webb’s employer, LCP, have put forward a proposal for DB schemes to pay a “super-levy” which would allow them to take more investment risk in return for paying an insurance levy to the PPF who would guarantee full benefits were paid if the investment strategy went wrong. Of course this would mean selling some gilts to buy some more productive capital but if the alternative is for DB assets to be swapped for insurance policies with no gilt backing, this kind of makes sense.

Webb looked super smug here, suggesting that LCP may have found a sweet spot for the Government and the industry. He pointed to the recent report from the Tony Blair Institute which called for 4500 small DB schemes to be consolidated into the PPF and asked why stop there?

With the reinstatement of superfunds , complimenting a paper on the role of the PPF as an investor in productive finance, Webb clearly sees DB as anything but in run-off.

A great session

For those who were present and could participate in the conversation, this was an hour well spent. For those who could not make it, the video is at the top of the page. For those who want to come to future coffee mornings, please register at ,

That speech!

You can watch the Chancellor of the Exchequer deliver his Mansion House Scheme here

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Steve Webb – “what is the Government trying to do?”

  1. John Mather says:

    A thinly disguised raid on pension funds by Government who seem to be adopting the Thame Water business plan. As you say

    ” Reforms are aspirational, benefits speculative”

    Paid for by the poor

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