A room full of people, an exhibition hall packed with stands and people getting on with meeting up. This is how the NAPF conferences used to be. The feelgood factor is vak at th PLSA Annual Conference 2023 and the main event , the rostum of speakers, did not disappoint either.
Who would have thought we’d be discussing the re-opening of DB schemes in the UK after two decades of funding shortfalls. But a big swing to surplus over past 18 months has got the #PLSAannual2023 delegates discussing whether DB should be revived. pic.twitter.com/SLCNHFjvq8
— Josephine Cumbo (@JosephineCumbo) October 17, 2023
Innovation over regulation.
The big thing that’s changed over the past twelve months is “confidence”. Delegates quietly whisper that the house is built on sand or at least an over-inflated liability discount rate. But the noise is about finding ways to pay people pensions not pots.
People now want to talk about CDC, they are interested in ideas about scheme pensions and opportunity over risk. Travelling up on the train, I sat next to Ian McKinlay. He wants to replace his “risk register” with an “opportunity register”, telling me that if he’d been able to spend the past ten years investing – rather than locking down liabilities, the world would have been a better place.
I’m tempted to pull out a sheath of blogs written about the First Actuarial Best Estimates Index which has argued for the past 10 years that the threat to the PPF of insolvent schemes has largely been imaginary. Talking of the PPF, I see its CEO, Oliver Morley has moved to MaPS, he needs more to do with his ample talent. The PPF is in safe hands as he leaves it.
Apart from fringe meetings calling on DB schemes to reopen (many have never closed), we had a number of very good sessions for us delegates
Noreena Hertz delivered a fiery session that focussed on Generation K, those born between 1997 and 2007. I am so far away from Generation K that I didn’t recognise who K is (answers in comments please). The point is that these K’s are special as they have been deprived the usual social intercourse of teenagers by Covid and by home working, Apparently some university teachers are offering help with interpreting facial expressions to youngsters who’ve forgotten how to smile. I seem to remember needing such help myself. Here are my Special K heroes, Joy Division. I suspect that the latest joyless generation are as angst filled as any other but the talk went down well, Cheer up kids, it may never happen
The Pension Policy Landscape was mapped for us by the four heads of PLSA’s policy streams, DB, DC, master trusts and LGPS. Weirdly , LGPS rather stole the show through the lively and articulate Neil Mason who just wanted to get on with paying people pensions. With due respect to Laura Myers and Zoe Alexander, the DC agenda could do with a little of Neil’s energy. I asked if we could achieve innovation with regulation, this is not the same question as whether regulation stifles innovation.
In my opinion, much of what DC wants to do, consolidation , solving the small pots problem , turning pots to pensions and investing for a better Britain, can be achieved without more regulation. Government can facilitate rather than legislate. I was pleased to see Jo Cumbo’s article yesterday about progress that is being made making the Compact happen
Innovation not regulation
Former Goldman Sachs ace Jim O’Neill recently wrote in the Spectator, specifically about pensions
Ultimately, our policymakers need to use the regulatory environment to alter the risk/reward decision. Since the financial crisis, investors have been rewarded for investing in low-risk assets, which has led to a never-ending love affair with investing in gilts. We need to encourage them to take more long-term risk, in the interest of greater long-term rewards for their end customers.
The showpiece session of the afternoon sawy TPR Chair Sarah Smart, Gregg McClymont Steve Webb and Chris Curry delivering an upbeat session that most definitely focussed on better pensions for more people.
There is a big theme developing about member’s right to choose their pension with Andrew Warwick-Thompson speaking for those who would have people have pensions done for them. The balance between personal empowerment and collective provision is still precarious.
One thing everyone was agreed on , was the need for AE rates to hit 12% by 2035
“if we don’t believe we can get this by 2035, we might as well all go home” – said Webb
I’m not sure that everyone in the room agreed but this was a very different room to what I sat in last year, where the concern was to find enough to sell to keep the pension schemes afloat. There have been casualties in both DB and DC (and let us not forget that £600bn of assets have been lost to pensions in 2022), but there is not much crying and the spilt milk seems to have been replaced by different liquids.
The brief of the session was to talk of 2035, I hope by 2035 I’ll still be enjoying conferences like this.
Finally a talk about the future
— Henry Tapper (@henryhtapper) October 17, 2023
Chat GPT arrived at the PLSA, through Rahaf Harfoush who embarrassed most of us with a talk on how AI is filling an emotional and amorous vacuum.
I’d like to think that we can use our natural intelligence to set that right over the next two days.