As many pension experts like Nick Sherry, @henryhtapper and others have argued this direction of travel for DB and DC is one way.
For my part, as an interested observer, it seems inevitable that we will soon have professional trustees, proper performance league tables & more 2/
— Guy Opperman (@GuyOpperman) November 9, 2023
To me, it is significant to me that the former pension minister, now a senior minister in the DWP, chose to break social media silence on pensions , a couple of days after the King’s Speech had delivered a blank on the Mansion House Reforms.
It is also significant that Guy Opperman chose to talk of consolidation, both in terms of DB schemes and DC schemes, as the one way street down which pensions will progress. Nick Sherry has told the DWP that – speaking as a former Australian Minister, I have told the DWP that – from a rather less elevated platform!
As I’m fingered in the tweet, I will take this as encouragement to press on. I do think that consolidation of DB and DC schemes will lead to better outcomes for society , for business and for savers. Better long-term investment strategies relieve pressure on employers and ensure better pensions for those who save in the workplace.
That’s the big picture, not getting a pensions bill, is a speed-bump , not a road-block. The direction of travel remains the same.
Should hope transfer to the Autumn Statement?
Many people who I’m speaking to , feel that there is a rabbit in the Treasury Hutch who will appear on 22nd to the delight of those who believe in the Mansion House Reforms.
We have seen such rabbits before and they usually arrive as tax-reforms. Tax does indeed drive behavior, whether it comes as a levy or a raid on income or capital. Reducing tax in one area can lead to changes in behavior, particularly from corporates who pay for tax-advice and can manage their businesses around the breaks.
But the capacity for the Government to give tax-breaks at this point in the fiscal cycle is limited as is his willingness to impose further taxation on those who don’t show the right behaviors. We have already seen a proposal from the DWP to increase the pension levy which amounts to a tax on occupational schemes that do not consolidate/
In short , I do not expect a rabbit from the Autumn Statement, though I suspect that the Treasury are dreaming up changes in how productive finance can be delivered through better products.
I hope I am wrong, but I do not hope for much from the Autumn Statement. I suspect we will have to make the best of what we have and adopt our own Plan B – unless we are directed to a better by the current pensions minister.
The FT continue to ask the big question
Guy Opperman and the DWP clearly feel the pension industry can press on and consolidate without the legislative infrastructure fully in place.
Can pensions work to a Plan B where it has to find ways round the wreckage of part constructed frameworks and codes?
I suspect it can. But it will need to be robust in its behaviors. The partial legislation for CDC, the dead end of the DB funding code and the good intentions of the VFM assessment framework give lawyers arguments for doing nothing. But the policy makers in Caxton Street and their bosses are not now redundant, Plan B for me is to make the best of what we’ve got , confident at least that the intent is still in place.