David Fairs

David Fairs is on this week’s VFM podcast and like Sarah Smart he arrived with an agenda that related to pensions, this meant talking about the pension funding question that he’d wrestled with while at the Pensions Regulator and moved on to why trustees lacked diversity and TPR has failed to do much about bringing back investment to pensions , relying instead on employers to pay huge amounts into schemes.

David has views on what “balance” means between protecting the Pensions Regulator’s attitude over the past 20 years and how to appease a crazy Government intent on setting money that has been tax-advantaged, with work to make Britain grow.

We got a quick opaque insight into the views of Sarah Smart which clearly weren’t quite the same as others at TPR. But that took us dangerously close to talking about pensions, what people get and how they’re paid for.

We moved quickly onwards so that we could have a good gossip about Donald Trump, air crashes , Gaza and Amazon and net zero targets.

David Fairs tried to drag the conversation back to what we do – TCFD, and the failure of the regulators (including TPR) to do thins quickly, although agreeing this was a good thing to do.

I think I heard a new discussion point.

“You can’t invest in AI because it is energy eating, so you don’t invest in AI while not quite investing in anything else sticking your DC in “buckets” which do something to show you are going in the right direction”.

So we are in the usual lack of purpose as TCFD is considered an overdose of compliance, an exercise that stops trustees doing anything.

Putting aside the lecturing on “net or nearly” zero, we are no nearer to doing anything about understanding how we can grow and at the same time reduce emissions. Perhaps we should all continue (as I do) investing DC money in growth trackers with names like “Future World” which claim to be doing relatively good things. The conversation ended up with me as confused as I’d ever been.

Then came an attempt to congratulate Nest doing something about getting its “savers” investing in real things that might increase the rate of growth in the UK. Actually, Nest’s mega move is indicative of big schemes actually doing things that might threaten the livings of thousands of lawyers, consultants, trustees and auditors, all of whom aren’t really important (when a £49 bn scheme is buying at £5bn a shot).

Consolidation may benefit an overstaffed market as it tries to become efficient, but if you are in your twenties or thirties and want to make your living in pensions, then David Fairs is well worth listening to. Do we really want pension schemes spending money being pension schemes or should they let their sponsors do what they do and consolidate?

The conversation moved on about whether People’s Pension is a trust or a fiduciary management organisation. People’s doesn’t need trustees because it has made its mind up it is an investment house (if you believe the Toby Nangle report last week). Of course the missing bit is about reasserting the pension responsibility that Trustees thought they had. If there is no pension responsibility at People’s (or Nest) then make them fiduciary management organisations (says everyone).

If you are down to 5-8 large schemes, then do you need more than the PRA (who cares about pensions, or financial conduct?).  If those schemes no longer paying pensions, are they anything more than financial institutions “whose investment strategy matters” (David Fairs)? Why wouldn’t you look at these mega funds (don’t call them pensions) they have anything differentiates them from banks? The Bank of England (PRA) is the obvious regulator of mega funds as described in this podcast.

After an hour, we have David explaining to us how he became an actuary with KPMG, headed up the sales practice of their actuarial department. He nearly got turned away when he joined TPR because he didn’t have his passport when he turned up. He didn’t have to do time sheets when there, he found it hard when he returned to consultancy. You can sense how hard by the fact that working for LCP wasn’t mentioned once on the podcast. Amid the plethora of jobs he has, I worried and went back to Linked in. He still works at LCP

The podcast is supposed to be about VFM and David Fairs makes a good point. The comparability measure is necessary but in a different way. VFM needs to be designed for the world of £25bn to £50bn DC plans when it comes to measuring investment companies (not pensions). Perhaps we should put VFM in the hands of the PRA and Bank of England?

We remain, after a nicely time-trimmed one hour twenty two minutes, none the wiser about what this new VFM measure should change to . Next week the Podcast will be influenced by the ABI conference the hosts are going to, now we really are talking about putting pensions to bed!