There are three organisations that have taken on retirement savings.
The first is the Association of British Insurers ~(ABI). It advertises in the underground passages that link the various parts of Westminster, it provides a vision of risk-free retirement finance,
The second is the Investment Association (IA) whose members manages invest the money that comes their way. They can afford to have a low profile, they need to do nothing but sit with their aprons open.
The third is the Pension and Lifetime Savings Association who have recently decided that Lifetime Savings are rather easier to promote than pensions and have become chums with the ABI and IA as their traditional members have outsourced their pensions to insurers and investment managers.
What we have seen in lobbying for better retirement income has changed radically since the early 1990s when I started going to NAPF events. NAPF was the name of the PLSA and stood for National Association of Pension Funds. It stood for providing pensions from pension funds and its main job was to make pensions popular. This was not an easy thing to do. The NAPF had to stand up against Maxwell and the Mirror Paper’s larceny of member’s pension rights, there were many smaller schemes and from the problems defined pensions arose changes that would force the NAPF to give up on the aim of providing pensions from those who were in retirement to those who were joining companies which provided pensionable pay.
The political landscape has changed but not the political pensions politicians and bureaucrats get. If you are a member of the House of Parliament you build up a pension not a pot to buy a pension with. The same goes if you work for the Bank of England and of course the much wider employment provided by Government sponsorship. There has been a lot of argument about the unfairness of people working for Government getting pensions and those working for employers who once set up pensions for people (but who now set up schemes that provide pensions).
I watched a television program last night. It showed a rugby club sponsored by Charles Stanley up against a rugby club sponsored by Mattioli Woods. Both manage money in pension pots. I think there was some mention of Harlequin and Leicester but my interest was in the packed Twickenham full of people doing very nicely out of Wealth Management, either through working for pension managers or having enough wealth to have it managed.
I looked and I thought “something must change” because rugby is now owned by wealth management just like pensions and though the game yesterday was spectacular, it was affordable only to those who can fork out to watch Premier Rugby Manages. Rugby Union is now a sport for those who can afford it – like wealth management.
Meanwhile there is a strong and vibrant society in this country where people are getting on with life without interference by the de-riskers at the ABI or the return-sappers at the IA and wealth managers. These people congregate in societies that progress with mutual aims. I am talking about societies of people who take financial advice from Martin Lewis and who see working for employers who offer pensions.
We have many employers who would like to return to offering defined pension based on the length of time and the quality of work of those who choose to join the pension schemes.
I know of great people who still believe that change can be achieved. I think of Terry Pullinger and Jon Millidge at the CWU and Royal Mail. I think of the scheme they helped set up with the help of certain consultants. They decided upon changes and they are the reason that postal workers continue to accrue a pension.
Those who have had the chance to follow in these great people’s tracks have failed in their job. Instead of creating pension schemes that paid what they could , they have determined that rules (regulations) are so tough that not one employer has followed. It has been 7 years since Royal Mail made its intentions clear.
What we need is a new vision for pensions. I have never known what I was going to be paid next year but I know that the companies that paid into my pension fund will honour the promise for a pension. But I stopped accruing pension 20 years ago when I was 43. Those who are younger than me and not benefiting from a DB pension, do not have any pension promise, only a pot of money from which they have to determine a rate of drawdown of when to buy an annuity (at not particularly desirable rates).
When I joined the NAPF in 1992 , I was delighted to see it fighting for pensions, keeping the investment managers and insurers at a distance. More than 30 years later, the PLSA is funded by insurers and investment associations and any sense of standing up for members seems to come second to the needs of providers and DC fund sponsors to have risk managed. The Chair of the PLSA works for an insurer- Aviva.
I will not be liked for calling for change, one of my friends likened me to St Stephen and sent me this great video. But I am not alone, many people who read and comment on the need for change, will wonder just how we can get back to mutual endeavour for pensions for all rather than the world of “risk free” wealth for the luck few.
I am not aiming to be a pension politician. I aim to follow Christ alongside those shepherds and behind the wise men! I don’t want to be stoned like St Stephen or crucified by my Lord, but I’d like to be a disciple of the Christian view of care for the elderly and think that we can do something to improve our pension culture rather than give in to wealth management for all. Come on PLSA – get back on track.
The move to dc is a profound mistake as can be seen from this NIRS study in the US – DB pensions are far more efficient than DC. It is worth also reading the two prior studies in that series
https://www.nirsonline.org/reports/betterbang3/
The big take-away for the UK is that those schemes not constrained by the UK’s insane valuation standards, such as the LGPS and government should emphatically offer DB not DC.
If only I had my brains organised as they used to be, I’d comment more- thanks for the spirit!
Thanks for that link.
A similar UK conclusion can be found in LCP’s analysis of CDC versus DC. https://www.lcp.com/en/media-centre/press-releases/lcp-research-highlights-that-the-expected-benefits-of-a-cdc-scheme-could-be-50-better-than-dc-schemes
DB should be even more efficient than CDC as the administration costs are not ultimately borne by the Members.
Agreed – attending its annual very expensive jamboree (in Liverpool in 2024) I realised the PLSA should be renamed the “Pensions Industry Trade Association” – with the cost being ultimately met by the members of occupational pension schemes. PLSA is no longer championing efficient ways of providing retirement income.
How do Joe Dombrowski and/or Emma Douglas respond to such comments, please?
A deafening silence so far, as per usual.
To be fair, they are doing their job, I am keen to challenge the organisation, not the individuals (who are personal friends). I made a bit yesterday and so did my family on Henry’s Friend Newbury 14.20 – 7/2/. . 33/1 for the Grand National- I am not an investment adviser.
I would like to point out that Joe and Emma are good friends and I hope they’ll take this in the Christmas spirit.
‘Doing their job’ LOL.
Ms Douglas’s paid job has been to scoop up pension ‘savers’ for Aviva, partly by using her profile and contacts at PLSA, you could say? There’s a breathtaking conflict of interest and it’s a farce that an actual trustee or trustee chair is not the Chair of the NAPF ( PLSA ).
And Jo sounds like a disciple for the de-risking industry. Remember – when you de-risk a scheme, you de-risk and over funding it so it can be handed to an insurer, who then re-risks it to strip out the over funding. Thats the business model. Job done.
It’s interesting to compare the NAPF (as it then was) Council in 1925
see https://www.plsa.co.uk/portals/0/Images/Assets/History/Report-and-list-of-members-1925-opt.jpg
with today.
100 years ago the Council was made up of Treasurers, Secretaries and Accountants who were either also Trustees or worked alongside fiduciaries.
As PensionsOldie says above, it’s become a trade association which admits trustees to its events “for free” so that their business members can promote/sell their services.
No doubt schemes still contribute to the PLSA’s coffers, but whether it’s value for money or not is moot.
If these channels are dead ends then you might change to address your solutions to the departments that do make a difference. My limited experience of advising two Chancellors of the Exchequer on their personal circumstances would favour one department:-
Concentrate on the Treasury.
Some insights can be found in a recent book by (Sir) Paul Collier
Left Behind: A New Economics for Neglected Places
Collier’s critique of economic modelling is tremendously insightful: ‘Instead of single-discipline models that give precise answers that are badly wrong, we need integrated models that confess to imprecision but are roughly right’.
It’s clear that the most egalitarian and efficient model for delivering pensions to working people is through (multi-employer) DB. But that leaves little room for the insurers and puts delivery expectations on the investment advisers / managers (ie they run the risk of under performing and getting fired). Hence the whole regulatory shift in the UK the last 2 decades has been to remove power from Trustees, shifting profit for scale and without responsibility to the asset managers and insurers. A very good job done by the IA and the ABI lobbies.
The actual role of the NAPF should have been as the counter balance, modifying for modern business models the system for the delivery of pensions to working people – and NOT as implementors of the resulting (savings themed) policies driven by the powerful financial services lobbies?