In days of yore, English courts would hire a “fool” , to prick the conscience of a king. Lear’s fool is a good example, Feste is the melancholic fool who haunt’s Ilyria in Twelfth night, pictured above is Bottom , the donkey in Midsummer Night’s Dream.   They are wise and foolish in equal measure, normalising the bizarre events they see as commentators.  I am bound to the PLSA to play  the “fool”.

In days of yore, I sat outside PLSA events , creating a fringe in lobbies and coffee shops. This proved awkward as the people who spent time with me were wanted in the exhibition hall and I wasn’t wanted at all. Eventually, we agreed that it was better to have me in the Conference and I was granted a press pass.

I take my role as the PLSA’s fool very seriously. I am going to Edinburgh for three days to prick the conscience of the conference and normalise the bizarre proceedings of the court. But nobody should take the fool too seriously, lest they catch his melancholia and go mad like Lear.

This year’s conference

Carol Young, me and Fiona Bruce debating LDI in October 2022

In 2022, as the LDI episode unravelled, the PLSA met in Manchester, my job was to ask the dumb questions that are still left unanswered. The contrarian view does not need to make you popular, but it needs to be said. That’s why you employ a fool.

I am a little disappointed by this year’s agenda which is , as ever. a compromise between what trustees and employers want to hear and what the event sponsors (primarily asset managers and insurers) want to be heard.

But a bland agenda does not mean a bland event. The voice of the fool will be the voice of the member and will be heard!

Where is the member’s voice getting heard?

A recent session at BP saw 1400 members collectively asking 9 questions of BP’s management BP’s pension executive. You can read their meticulous record of what was said here

I would like the debate about member’s rights to a share of the surplus in their defined benefit pension scheme debated in Edinburgh. I expect it will be, but not in the conference halls.

I would also like the voice of millions of DC savers who are baffled by how their pensions fell by up to 30% in 2022 (and have yet to recover). These are the people who invested in bonds to protect their savings only to find their savings wiped by interest rate rises that intuitively should have benefited them. Their questions don’t get much discussed at conferences.

I would like answers to further questions that may not be “investment” issues for DB schemes but are very much investment issues for “lifetime savers”.

“Why is there still no pensions dashboard?”

“Does the PLSA community consider itself deficient in progressing key consumer issues such as the consolidation of their pension pots?”

Then there’s the question of affordability.  Judging from this year’s agenda, the cost of living crisis is no longer with us. This is not how those struggling to pay their mortgages/rent, meet their utility demands and avoid the food banks see it.

The incessant demands of the pension industry for saving “higher for longer” through “dope AE” call into question some fundamental questions about household economics.

In a new world where it is members who take the risks , not just in terms of outcomes , but in terms of inputs (where else is a pension system principally funded by member contributions), why are the decisions on adequacy a matter for asset managers and insurers? Where are the consumer voices , questioning VFM and demanding that members get more from what they have , rather more from what they don’t have.

Pensions and Lifetime Savings

When the NAPF became the PLSA (an event recounted on a recent VFM podcast featuring Joanne Segars), delegates went into the auditorium thinking they were at a pensions conference and emerged to find their conference rebranded “lifetime savings”.  This was nerve wracking for the then NAPF/PLSA CEO but perplexing for people who’d arrived to hear about pensions and found their world had changed.

This problem has persisted ever since. DB is a pension product, DC a savings product and though workplace pensions are DC, they are still seen by most of those who save into them as granting “lifetime income”.

Successive conference pay lip service to the nastiest hardest problem in finance, without really getting beyond it being a problem, Bill Sharpe’s famous phrase about turning pots to pensions , has become a justification for inaction rather than a challenge for innovation.

So don’t expect to hear much at the PLSA investment conference about pensions from lifetime savings!

ESG

We invest in pensions for a purpose, the primary purpose being to provide people with a lifetime income.  But if the lifetime income is paid to people who find their homes flooded, who can no longer go skiing for lack of snow or who find their towns and cities overrun by refugees from parts of the planet that are no longer inhabitable, having a big fat pension pot may seem secondary to the misery of unrealised expectations. I hope I an not trivialising the argument for making our money matter.

At a more parochial level, if our pensions are paid at the expense of people being kicked out of their flats because their pension schemes have been promised high yields from funds investing in ground-rents, then our pensions are anti-social. If the fool is going to attend ESG sessions, it is to point out that for all our efforts to get TCFD done, if investment strategies are causing misery to pensioners and future pensioners, they are not satisfying the S in ESG.

The job of the fool is to put the view of the people outside of Court and to pronounce on the world as he or she sees it (it does not surprise me we have no female fools though I will be pursuing this matter as part of the D&I agenda).

Playing the fool

There is yet a space for a fool at Court, I will be that fool and commentate on what I see through my own eyes and with my own voice. I am beholden to no-one but my sponsors, the PLSA who have made the pass available to me to be at the event.

Without a contrarian voice, not only would the event be more boring, it would be less worthwhile.  We know the risks attached to herding and I’m pleased to say that there will be many people in the halls of the PLSA who will have taken decisions based on what they thought right, not what their consultants or regulators thought “correct”, “appropriate” and “suitable”.