Muted response from employers to Lord Mayor’s ‘value pledge’
AgeWage and Pension PlayPen are pleased to put a sticky note at the bottom of the big board that the Lord Mayor showed at the sexy Merchant Taylor’s Hall.
Just saying that we weren’t asked but if we had been, we’d have liked someone investing in up as a scale up. We’ve got a job to do, to get some value for money into pensions and we don’t mean “pots”.
The Corporate Adviser – the one above – tells you that the firms getting some free publicity want their employees to pay more in charges. We were told that paying more would pay off with higher pots like we were in some duck race where our duck would come out the other side of the bridge ahead of the cheap duck.
I wanted to get up in the posh hall we were in and remind people what it’s like to face not having any money coming in from work and having to live off a pot. The expensive rubber duck looks like this
Well you can see where I am coming, there is a lot of sexy hall here and a lot of sexy slides full of logos of the kind of companies who talk about pensions a lot.
The sticky note that AgeWage and Pension PlayPen pin is the one that asks that instead of giving your favorite PLSA PENSIONS UK customers a big up, can the Corporation of London recognise that most companies haven’t any interest in the kind of things that CISI are interested in because they are running their businesses. The companies who chose not to sign up to the deal – to pay more for something that is likely to give a bigger pot – were not (I bet) in the hall. This is a crazy farce of pension vanity that I’m afraid is a sideshow. People are still being sold what the previous mayor to King – Mayor Mainelli,- the biggest lie in finance – the DC pension.
Engagement – what?
This rubbish vanity is rivalled elsewhere on the social site – Linked in. This time it is Quietroom with the concept of attention deficit
People do not need Targeted support to cure their attention deficit, they should be left alone to have a pension and not be confused by drawdown and other craziness.
Of course, like the clever people who know that paying more for investments can mean more wealth, so the communicators want us to point out they can improve drawdown by encouraging people to pay attention to the management of cashflows.
Can we stop this non-stop vanity?
I cannot open linked in without people talking about pensions as if they were pots of wealth to be drawn down with the help of Targeted Support from some financial services provider or another.
This is the vanity of the DC “pension” industry, they are obsessed by everything except paying pensions.
Muted responses from millions of employers round the country who never speak to the Strategic Engagement and Operations Director of the City of London Corporation who is concerned we are not paying enough in charges.
From a man who’s linked in profile tells us “I help people ‘get’ their pension” but wants to help them to a drawdown (what’s that?).
Muted responses from millions of employers who have been paying into workplace pensions only to be told their staff have pension attention deficit because they haven’t learned to do “drawdown”.
The CISI event in Merchant Taylors’ Hall was a disappointment, starting with the quality of the sound produced by the PA system. We were treated to a six person panel discussion, which lacked any difference of view – it was in other words a collection of six sales pitches for the Mansion House Accord. There was no discussion of the merits or drawbacks of private rather than public investment – indeed ‘productive investment’ again went undefined. Nor was there any discussion of the relative attractiveness on investment in the UK rather than elsewhere. We were again exhorted to invest to scale up young businesses rather than sell out successful innovative businesses. It was recognised that the UK is good at originating and financing innovative start-ups, but no discussion ensued as to why we might want to scale these up rather than sell them at prices we cannot realise in the home markets and move on the the next innovation where we have a relative competitive advantage.
John Kay’s speech ran through the materials discussed in his last book, from a few years ago – basically entrepreneurial businesses had capital-light balance sheets. Then the corporation no longer owned the building housing its shops, distribution centres or even its manufacturing. Apple and Amazon were held up as prime exemplars. But the world has changed, or at least the business strategies of the ‘tech’ companies. They are now spending vast sums of capital expenditure (capex) on AI, Data Centers and all. Indeed this expenditure has been a significant factor driving growth in the US economy over the past five years. Apple figures in the top 1% of US companies by capex; Amazon plans to spend $100 billion in the coming year.
It appears that the ‘tech’ giants are now building very substantial barriers to competition from smaller newer ventures. The building of corporate moats is a time honoured strategy of large incumbent businesses, and deserve attention from the competition authorities. At least so far, we have not seen large scale ‘buy-it to close it’ strategies, as far as I can see.
Thanks to this reader of the blog!
Yes – it does feel perverse that companies that have abrogated their responsibilities for the pensions for their employees by moving from DB to DC should now be signing a pledge to seek to control how their employee’s pensions pots are managed. If they are serious about how their contributions (and their employees’ contributions) are managed they should regain control of the pension funds by reopening defined benefit accrual.
In a DB pension scheme the employer has a statutory right to be consulted on how the pension fund is invested and a direct interest in securing the best possible long term investment return to reduce the “balance of cost” of he defined pension promise. What is more it is the employer, not the member, that bears the administration costs in a DB scheme and is in a much stronger position to challenge the unproductive administration costs, whether statutory or voluntary, that support the gilded halls of the City of London.
If you look at the signatories to the pledge, by my reckoning, two thirds of them have a business interest in the provision of administration services to pension funds!
Thanks Oldie!