The danger of economists out of work (Kay and King on pensions)

In this blog, I give a personal reaction to the Conference held at WTW’s London offices yesterday, organised by John Kay and the CISI. Although I found it a depressing event , it will inspire me to work harder and not to retire into the luxury of the pension I now receive.

A report on Risk and uncertainty in the pension world

For the best part of five hours, a group of economists and other theoreticians bombarded an audience of 125 long-suffering delegates with a view of pensions that left me exhausted , depressed and uninspired. I am sorry to say, I rarely  felt I had a vision of a better pension system, instead I saw the rage of a group of people, led by John Kay and Mervyn King who’s views – however you may react to them – talk to yesterday and not tomorrow.

The format of the event didn’t help with too many speakers squeezed in and audience debate squeezed out. A-list celebs came and went with reports that the key-note speakers at the end had a “hard-stop”.

And it didn’t help that the audience had to sit uncomfortably through a very pointed attack on a financial economist not in the room. There is real jeopardy in taking cheap shots , especially if you haven’t got social media to back you up. The snarling bitchiness of academia was a lurking presence throughout.

So much for the negatives, there was much to take away and I will focus on that.

The positives

The Conference was sub-titled “Correcting the biggest avoidable UK public policy failure of recent decades”, which suggested that an alternative to the collapse in UK private pensions would be on show.

Occasionally it was; Derek Benstead and Jackie Grant celebrated the correction of USS which is now back as it was as a pension scheme, despite the carnage the pension disputes have wreaked.

I enjoyed Michael Tory’s explanation of why he lives in the UK and the hope he has of a pension system of the future. He conjured up the entrepreneurial spirit of James Dyason and Jim Radcliffe as products of British culture that pensions could have funded (but didn’t). Tory is Canadian as is Keith Ambachtsheer.  their positive vision for the future was based on the pioneering work of Peter Drucker in the 1970s and offered an alternative to the bleak views on display elsewhere.

The irrational exuberance of the pension community ( on show at last week’s PLSA event) was as overstated as the pension austerity that spawned LDI, the DB funding code and deficit reduction programmes overstated fictional under-funding in the 2010s. This was explained by Con Keating and Iain Clacher. Surely , if there is a lesson to be learned , it is that pension funding is more predictable and less to be feared than mark to market accounting would have us believe. A return to the “flow” model – dismissed by Geoffrey Whittington, looked preferable to the boom or bust valuations that have created such value destruction.

The positives for pensions sound like they are happening in Whitehall and Brighton. But they are happening because the level-headed practitioners and those who use data not theory , have shown that taking a view on funded pensions , works.

Moving forward with purpose

Erica Thompson, Harriet Agnew and Jackie Grant were rare women on the podium yesterday. For the main part we heard from pensioners who seemed to be enjoying handsome pensions. Put young and talented women into the frame and we have a different perspective.

It is true that , financially at least. the boomers are a lucky generation and with a pension gender gap, it is the male boomer who has most to thank the UK pension system as was.

But that does not mean that another generation cannot move pension forwards with purpose.

I suspect that the next generation of Dysons and Ratcliffes are busy at their work, creating enterprises that will support a future generation of workers and ultimately pensioners. They cannot be denied access to what Frank Field this century called “Britain’s Economic Miracle” – our funded pension system.

Depressing as I found this event, it will spur me on. At 61 – it is not too late for me to give up on pensions.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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8 Responses to The danger of economists out of work (Kay and King on pensions)

  1. Byron McKeeby says:

    Sorry to read this.

    Prior to going you did write

    “The CISI is running an event [on] Wednesday (25th October) which has the most extraordinary agenda and a magnificent speaker line-up that I doubt will be equaled this year.”

    A former colleague, who may or may not have been among the 125 or so in the audience, shared this view ahead of the conference:

    “…. the pension industry is populated by mathematicians (strong on numbers, modelling and reporting outputs), but short on business people, entrepreneurs and creatives – the dreamers and visionaries (and not saying they are a good or wise thing) who are needed to provide more diversity of thought.”

    It’s interesting that you felt the younger female speakers rather than the already well-superannuated present provided at least some of that diversity of thought yesterday.

    • henry tapper says:

      Byron, I’m really sorry not to have found the event worked better. The organisers had done brilliantly to secure such a great stage and cast.

      One of the things lacking was that interaction with the audience that is so vital.

      But most of all, we need a Keith Ambachtsheer to reset out pensions. We know things have gone badly wrong but we need a James Dyson or a Jim Radcliffe.

      Apologies for the typos

  2. John Mather says:

    Very valuable comment Byron.
    I would add the observation based on just 50 years of advising end users on THER pension provision.
    There are just three types of people:
    1. The few that make things happen
    2. Those who watch people make it happen
    3. and then there are the overwhelming majority that didn’t know anything happened.
    We need more of category one and less voyeurs pontificating but offering no solutions.

    • jnamdoc says:

      Is there a 4th even larger category in the UK, John? Those who (cleverly, some might say) take it for what is, and figure out how to get their share from whatever the system presents. Unfortunately we can’t stop that – it’s human nature. Thats where Govt has a role play on system design

  3. John Hamilton says:

    I think because of your great energy for change and clear impatience at the rate of change, you’re venting that frustration in the wrong place, and in doing so you risk doing what was an event blessed with brilliant contributors a great dis-service.

    The CISI did an outstanding job in securing contributions from great and venerable thinkers including the likes of Lord King, SirJohn Kay, Keith Ambachtsteer, and Michael Troy’s session at the end was (depressingly) powerful, clear and a call for action that cannot and must not be ignored. That they all gave of their time and experienced wisdom to this event really was an indication of the perilous situation our economy finds itself.

    I attended and my view was that collectively, it provided a brilliant forensic analysis as to the numerous often unconnected and unintended events and reasons from the last 20 years that have led to this generation of regulators and consultants having destroyed the once thriving UK DB pension system, and have denuded an economy of the means and the spoils of productive capital. Any evidenced based assessment can only but come to the same conclusion.

    It was clear from the evidence presented that the creation and subsequent impact of TPR was absolutely pivotal in the destruction wrought upon the pension outcomes of working people, the elimination of our pension ‘system’ (being replaced with products and pots, but not a system to deliver a fair and dignified aged income) and the moribund performance of the UK economy.

    For those of us (including yourself Henry) who have for many years been voicing concerns about the erosive impact on our pension system and our economy, I agree much of what was said yesterday could have felt like ‘old hat’. Pensions is a long game. Politics is a short one. So we can’t let ourselves become frustrated. The prize is too great, too important, for all the generations that follow.

    In time (and sorry I don’t have the quotes used yesterday – travelling, using my iPhone), but time provides the illuminating evidence, and the consequences ultimately must be addressed.

    The Drucker book on sustainable pension systems should become compulsory reading for all (Ministers) involved in pensions. That we have done everything to the opposite to what it set out, is a damning indictment of the obvious absence of long term Ministerial oversight (Steve Webb’s late absence from the podium, noted), and does help to explain the mess we’ve created.

    Two absolutely fundamental take-aways from the Conference:
    1. It’s absurd that we have a Pension Regulator that does not have a remit to improve pension outcomes or to promote a pension system. The PPF does not need the TPR to protect it! Change the remit ASAP.
    2. The Agency issue in UK pensions is chronic. Too many consultants view it as a market to feed off. At which they do very well. Any consolidation must be to protect / enhance members’ interest, and not to harvest the pool of schemes to make them all the easier for the Industry to feed off.

    And finally, as even the Dutch are now showing, and as the Canadians have been doing for 30 years, collecting pension provisions (not pots!) are not dead. But we need the great thinkers and policy makers to produce a system that is not dependent or priced upon a single employer covenant, fit for this century, not the last,

    So, I fully agree with your call to action, but not on your assessment of the Conference. We know what the issue is and there is a clear and now growing understanding of what is needed to fix it. Changing regulatory direction and overreach takes time (no one can be blamed), but it is coming and it must come.

    The UK is (still) uniquely blessed with a rich cohort of trustees and advisers passionately invested in seeking solutions to provide a dignified age wage in retirement for working people.
    An invested system which treats and aligns pensions within the overall economic system is critical, and still within our grasp. I agree with you – lots to do!

  4. Byron McKeeby says:

    The Peter Drucker book was originally published in 1976 as The Unseen Revolution. It was updated in 1995 as The Pensions Revolution.

    I’m not sure I’d agree its message was about sustainable pensions. As I read it (in the 1970s) it was more about the socialisation of business ownership through engaged institutional shareholding.

    It’s hard to see much of Drucker’s vision in practice today when I read in this week’s Schumpeter column in The Economist (“How much is too much?”) that only 4% of S&P 500 companies failed to win majority support in “say on pay” shareholder votes in 2022.

    This despite a 2019 general survey that 86% thought company bosses were overpaid and a more recent survey by PwC that one in two company directors themselves thought executives were overpaid.

    American CEO pay is “so stratospheric we have become numb to it” says a spokeswoman for the Council of Institutional Investors, representing pension funds and other asset managers.

    • John Hamilton says:

      Yes, understood on the investor / ownership relationship aspects and second order aspects, which haven’t played out as Drucker suggested. But as Keith Ambachtsteer explained in what they did for the Ontario Teachers scheme, the scheme design (scale, minimise agency risk, direct ownership, governance etc) was directly influenced, almost a straight lift, from Drucker.

  5. Bryn Davies says:

    Drucker’s book – I have a copy – makes the error of confusing ownership with control. As was pointed out when it was first published, it’s a profoundly conservative vision predicting an inevitable conflict between young and old, working class and poor. For a much better take on the relevance and potential of pension scheme from that period read Rifkin & Barber’s “The North Will Rise Again”.

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