It is interesting to hear comments on the Pension UK Conference from Nico Aspinall and Darren Philp  I was aware that Nico was at the Conference but unaware of “the fringe” that Darren was at.

To me, the Conference was about understanding where private pensions are heading and I suspect that I learned more about that than I expected. I am not sure that the world of the Exhibition and of the fringe isn’t more about alcohol and coffee than about taking forward pensions. There was a lot of serious discussion in the plenaries, the theatre and the Charter auditoriums.

There were subjects of some importance that weren’t considered  important – such as the destination of schemes buying in and then buying out. Superfunds got little airing , the insurers were very present and I suspect are commercially key to the event. This was about getting the Pension Schemes Bill enacted and implemented as per the Roadmap. It was about the scope of the Pension Commission II.

It managed to stay away from tax for the most part and it stayed away from Pension UK’s call to mandate contributions to 12%. Instead of that kind of mandation, there was a lot of argument about the backstop and its impact on trustees. The one bit of news politically was a consultation on trusteeships which I suspect the Pension Minister is clear about the income (although he says he isn’t).

DC, DB or just “pensions”?

There appears to be some difference from new (DC) and old (DB) thinking, marked by age. Old people are interested in DB and young with DC, it’s mentioned on the podcast and got me thinking that the two are becoming one as savings become pensions and DB pensions move into a degree of surplus that makes them capable of easing the shortfall among those building pots rather than accruing pensions.

Part of this may be about more contributions, though I doubt many employers want to increase regular contributions right now. More likely we may see the seeding of CDC schemes either between employers (churches, retailers, transport firms) or by mighty and ambitious employers setting up their own CDC schemes or by a migration to multi-employer master trusts with CDC decumulation. I do see a few DB schemes finding ways to include DC savers by transfers in; I have discussed this with Peter Cameron-Brown and I hope that UKAS will accommodate DC pots in its DB scheme ( with its surplus as a buffer).

I also see the public sector making this kind of consolidation available to joiners of their funded (LGPS + BOE, MP’s and others I have yet to find) and unfunded (Civil Service , NHS , Teachers etc). There can and should be development of software to compare the value of keeping DC pots intact or folding them into the DB schemes that pay CPI increasing pensions. This looks like an area for Targeted Support that I learned will be with us by March next year.

One of the key themes of the Conference was “implementation”, I think the FCA in particular, but also TPR’s innovation team, need to make sure that it happens. What I mean by “it” is the creation of a single perception of retirement saving as saving for a pension with the concept of opting out of pensions being a deliberate act rather than a failure to do anything with the pot.

I hope that 2030 means a point where most people are able to use a dashboard to find and get the pension value (roughly) of their pensions (if they are not already in payment).

I hope that employers who employ people see pensions as a “vocation”  (Torsten Bell’s word) will be plugging into CDC decumulation master trusts or ambitious flex and fix. I hope that the more ambitious employers will be looking at their own CDC schemes or multi- employer schemes which can allow members to move from one section to another (bus-drivers are a good example of employees moving from one employer to another (as routes move from one to another).

In short, I see the funding of our retirement as a DC operation and the proper payment of pensions as an act of responsibility critical to an assessment of VFM with organisations that partner others to do this , being considered savings operations. They will be what “DC pensions” are today but they will be diminished if they do not offer a regular income till death in a responsible (and authorised) way. In short I see in five or ten years time, the concept of “accumulation” as secondary to “pension” as the job of commercial and mutual operations.

As for DB, it will either be unfunded (but a receptacle for DC pots for those joining them) or multi-employer (USS, LGPS and Railways) or courageously staying open such as UKAS and other super-vocational employers such as unions.

CDC is just DC to employers and DC is DB without guarantees to employees. By 2030 people should be thinking of their savings of pension and the main issues will be the value they get for their money and the certainty of their future lifetime income.  I hope that people will start thinking of their retirement savings as an addition to their state pension or the other way round (if pension rich).

Pensions UK were smart to drop PLSA. Going forward , we will be talking a lot more about the payment of pensions and a lot less about the saving process. DB v CDC v DC will became a discussion about VFM and that will be Pensions VFM.

A VFM podcast on exhibitions, fringes and gossip

I hope that my limited interaction with the VFM podcast can go two ways. Here is this week’s episode, a mere 50 minutes with Arsenal making an appearance to the end but for the most part considering the commercial future of conferences, Pension UK’s in particular.

You can listen to Nico and Darren’s discussion of the gossip , including the spat between Webb and Bell , focussing on Bell’s use of “chillax”.