The eventual purchase of Evolve by Smart last week marks the end of commercial involvement in master trusts by trade unions. Evolve (the funder of BlueSky and Crystal master trusts) was owned by Unite and Select (the Scottish Joint Industrial Board) but that ownership has now passed.
That passing marks the end of twenty five years of union attempts to shape the development of defined contribution pensions , beginning with JMU’s “proto stakeholder plan”, through the TUC’s Prudential Stakeholder plan , peripheral participation in People’s Pension ( Jeannie Drake of the CWU is still a Trustee) and NOW pensions (Terry Monk was a trustee).
But, and I say this with sadness and a tip of the hat to Bryn Davies, the influence that Unions have had on the development of pensions in the past quarter of the century has been nugatory.
The Trade Union Movement and UK pensions
The Trade Union Movement was founded on collectivism and collectivism was expressed by the defined benefit pension scheme which aimed to provide solidarity across the generations. In most cases it did and continues to do so, the LGPS and public sector pensions continue to provide workplace funded pensions to millions, the legacy of corporate DB is still vital to millions more. The Trade Union movement helped create and maintain these schemes , most union pension schemes remain open to new accrual and unions have been vital to the creation of the collective DC pension at Royal Mail.
These successes have not been mirrored in the development of DC pensions. Unions argue that the concept of a DC pension has yet to be delivered and will only do so when they offer savers the right to a wage for life.
So despite of 9.5m new savers joining workplace since the advent of auto-enrolment, union voices have been all but silent about their development. Where they have been vocal has been in calling for a curb on charges and on abuse of savers through bad practice. But on more structural matters, such as what even HMRC admitted to be the injustice of the net pay anomaly, they were all but silent.Almost all, but Nest People’s and Legal &General’s master trusts required contributions to be paid over using the net pay system that denied those auto-enrolled low-earners, a 25% saving in their contributions.
Whether through lack of engagement or internal politics, the failure of the unions to properly engage with the net pay debate has meant millions of those who it should be representing, have lost out.
I understand that in the final days of Evolve Pensions, Unite held up the sale by failing to fill posts needed to sign off the deal. A sorry state of affairs.
Sad to say, the Trade Union Movement is no longer a trenchant voice in the pensions most of us pay into. All too often it has found itself trying to make money out of pensions rather than protecting its members.
The Unions and the Labour Movement’s involvement in pensions
The last Labour (shadow) minister who understood the entirety of the UK pension landscape was Gregg McClymont and since he lost his seat , eight years ago, we have seen the Conservative Party dominating pension policy as the party in power. Jack Dromey was a fine man but he was too little heard in parliament on pensions and since his passing, we have heard little from Labour on DC pensions other than moaning about charges and changes to the LTA. Stephen Timms is an admirable WPC chair (as was Frank Field before him) but Labour’s campaigning force on pensions is now confined to the House of Lords
The Mansion House Reforms have drawn little or no comment. It is as if Labour are prepared to put up with any amount of political interference in pensions because they no longer play in that space. There is little more coming out of the Liberal or Scottish National Parties.
This absence of political debate about matters that effect all of us is worrying. I suggest it comes from the Trade Union Movement’s low level of engagement with pensions and that this comes from a disillusionment that goes back to its failure to directly influence the debate through the organised distribution of DC pensions. The entire left of centre policy thinking on pensions is flabby and deflated. Only over DB and CDC rights are the Unions (UCU , CWU and Unison) showing much energy
The failure of unions to organise DC pensions
The sale of Evolve marks the end of Unite’s plan to offer DC pensions to its membership. But Evolve was (as mentioned above) only the last in a long line of distribution failures.
In the early years of Blair’s first Government, the unions fully expected to be central to the distribution of the stakeholder pension but this didn’t happen. Sales of their stakeholder pension were embarrassingly low. People did not look to their union to organise their finances, they looked to their employers and employers had little interest in making stakeholder pensions a success. Many employers ignored the rules and those who offered stakeholder pensions saw little take up. Only where there was reasonable funding from the employer were stakeholder pensions successful, and then only for a limited time. The onerous guarantees imposed on them made them too expensive and they were superseded by group personal pensions and master trusts.
Attempts by unions to get participation on the boards of master trusts have failed. The member nominated trustee on DC boards is as rare as hen’s teeth, confined to a few large corporate schemes where board structures replicate DB schemes. The only IGC that has offered a member nominated appointment has been Royal London. Meanwhile , the power and authority of the FCA’s consumer panel continues to wane as genuine consumerists such as Mick Mcateer are replaced by voices we never hear (Jonny Timpson being the exception). Consumer advocacy for pensions is now confined to journalists (and bloggers).
This is a bad state of affairs, we need unions to play a part in the important debates going on in the public and private sector pensions. Terry Pullinger is I understand unwell, his voice is missed, but where are the new union spokespeople? Where is the commitment and participation to shape the debate on these new pseudo-pensions we’re all saving into?