My friend Derek Benstead – a medicine for my recovery
Robert Shrimsley follows on from an article by Mary McDonald which explores how pension schemes could invest in UK defence (rather than let the Treasury cupboard run empty).
If the re-arming of Britain is truly the mission it should be, Labour will be forced to address which priorities to downgrade. Is it the net zero decarbonisation targets, which already face significant political backlash? Which clean energy investments will be diverted? Supporters will argue that achieving energy independence is now even more urgent but the already stretching 2030 target is likely to slip further.Which infrastructure projects will wither for lack of funds? What about those new towns envisaged by deputy prime minister Angela Rayner? Which public services will be further cut or see improvements delayed? The UK must also look at its own resilience planning and perhaps the subsidy processes that allowed it to lose an AstraZeneca vaccine plant. Labour needs to start this conversation with both itself and the country.There is still too much business as usual; too much wishing and deflecting. Preparing for a world without US security guarantees is now a primary mission and British politics must catch up with the implications of that reality.
You can read the article by Mary (in part) on my blog, my “shares” are run out , so much interest are the Pension Minister’s utterances getting. The Minister did infact do two speeches on Wednesday morning. The first was at Eversheds and the second at the Mansion House, Eversheds were involved in both – phew!
I managed not to be invited to both and to be thrown out of one , accused of being “press”! Make your own mind up.
An experienced and (by me) respected, mentioned that at last we have a view of pensions that isn’t dominated by “de-risking” our diminishing capacity to make a difference. To me “de-risking” has become an aspiration to be irrelevant. I wasn’t entering financial services in 1983 to be an irrelevance, I hoped that selling insurance would lead to me getting a proper job doing good things for my fellow man (and woman), right now I’d phrase the genders differently!
The point is that Britain is, after screwing up its economy by getting pensions wrong for a quarter of a century, got hit in the chest by COVID. We are now discovering that we haven’t got the money to reflate our defence budget and grow the economy without getting money out of pension savings.
In my view, “pensions” don’t stop when you retire, that’s when they start paying back after a career of saving. But we’ve created a vision around the small-minded views of a few accountants who have tried to shut me and a few others up.
Now we need to return pensions to what it was meant to be. Here is my favorite diagram, created for me by Derek Benstead when I had to speak to a huge theatre full of Cambridge lecturers about the need for USS not to become a DC plan.
I love the asterisk, we are doing nothing different with CDC than DB, other than reserving against risks we can’t consider.
We have a Pension Protection Fund that is insuring those risks and I am not quite sure how many insurances we are using to keep people safe. CDC doesn’t get PPF, DB does. CDC uses all its money to invest, DB insures too many ways. DC offers savers no insurance but glidepath – how pathetic is that!
If the Government wants to do something sensible with pensions, it should stop this over-insurance for pensions and under-pensioning for savings. We should move to a pension system where we invest in the UK to make UK powerful enough to meet our expectations of later life’s finances. That – as far as it’s been explained , is the Evershed fiduciary argument.
2025 means putting mandation on investing in UK growth. It means a new way of looking at pension investment with growth rather than de-risking turned up on the fiduciary dial.
We may need a pension tariff – exchange controls to stop almost all our capital investing overseas; we must get tough. This is a time of war and this is a call for pensions to go to war and get things done. We must get Great again.
