The last 7 days have had me listening for 3 hours to a former executive and the current Chair of TPR and I find myself deflated. Here is a former TPR worker on my comments about David Fairs last Friday.
I’d suggested we might do better with artificial intelligence, a feeble response to his demand that I lay out what I’d do with Brighton. He had continued “Why didn’t he say that? Or indeed you?” . He followed up with a knock out blow which has got me thinking as I watched Liverpool get humiliated by Plymouth Argyll. These are the words that landed the blow.
What is needed, as Torsten said, is the right analysis and then razor-sharp solutions.Vague statements get nowhere.I do agree that getting the objectives straight is vital too, assuming someone has something to do.But I doubt the problems of the UK are at the door of regulators, or even mainly so.
Sarah Smart went to the Pensions Regulator with every intention of changing it. She has brought about diversity , got a decent CEO in and done what she can to change TPR but she hasn’t gone as far as she would like and I had hoped.
But the people who are at TPR are not bad, indeed they are working to precisely the strategy that underpins TPR. This blog does not blame TPR people for its position, it blames the pension industry for getting it there. Some are arguing we need to dismantle the regulatory framework which like Bruegel’s Tower is in a mess.
Andy Haldane’s view of Regulation is not specific to TPR – it’s published in the FT this weekend and it’s fun. He suggests that we might pay regard to the Trump approach to regulation.
The instincts of the new US administration are to raze the regulatory tower to the ground and only then to build back on a needs-must (or needs-Musk) basis. By design, this scorched-earth approach delivers a system shift in culture and practice. It eliminates the deadweight costs of regulatory overshoot at the risk of undershoot.
I had facetiously suggested that we could use common sense and artificial intelligence to replace financial regulation. It was the kind of nonsense that comes from someone not fully involved with the business of regulation. Haldane has worked in the Bank of England and knows more than I.
What are my razor-sharp solutions? I don’t have them.
But this is where we can call upon the thinking of Torsten Bell and get his wit sharpened with the thinking of those who read this blog and make such great comment.
Whether it be the razor sharp analysis of TPR’s publications of DB funding (Keating and Clacher) or the speech from John Hamilton at Melton Mowbray there is analysis out there and my correspondent is one to tell us what can be done and when.
Here I believe we need to help the Pensions Minister. We cannot change things by institution, we must be a wish to do things differently. Sarah could not change things because she had no help from outside, she needed it from DWP and Treasury and those organisations needed there to be help from the pensions industry.
We cannot expect change to come from another Government institution of change. As Haldane points out
to believe the solution to regulatory proliferation is to create a new regulatory agency is gravity-defying logic.
Right now the pensions industry is waking up to the fact that it has been in the grip of de-risking and the low dependency that has become the aim of most DB pensions. Although schemes are reporting better funding levels , they actually have less money to meet the payments they are due to make. Sooner or later, it will occur to the pensions industry that they are worse off for having sold up in October 2022. While some schemes in LGPS are closing in on or at 200%, the private schemes, who have frozen in terms of money promised, have seen little celebration for the success of better funding.
The reality of DC is that it is not promising a replacement of DB promises, it is not offering a defined benefit (unless you count an annuity a pension).
We need a change of attitude that sees pensions lauded as superior to pension freedom, the investment of both accumulation and decumulation funds and the belief that running DB on (or even reopening it) is preferable to closure.
This was the world I am old enough to remember, a world that persisted through the second half of the 20th century.
We do need to find razor-sharp solutions to the problems that have dragged back pensions over the 20 years of the Pension Regulator’s existence. These solutions do not come from pulling down the regulatory Tower of Babel, they come from beyond Babel. We need to cleanse what we are doing and deliver through the Pensions Minister a new way for TPR to work.
TPR is full of good people, it needs a new way forward and that needs come from us.