Do YOU have a fantasy amendment for the Pension Schemes Bill? Send in your thoughts!

We are entering a fallow period for work and you may be looking for something meaningful to do between now and Monday January 5th when we start again in earnest.

The last pension act followed considerable public disorder, the photo below was taken in 2021 before it moved from Bill to Act. We are not getting such action today but there may be strong feelings lurking and looking for the expression of opinion (attributed or anonymised)

I am looking for your views on how we can move forward to a Pension Schemes Act in the first part of the year.

We are at the final stage of amendment of the Pension Schemes Bill which we were  given by Torsten Bell and the DWP in the summer. It is now going through the last stages of reading with the Lords and Ros Altmann , who has tabled amendments herself, has asked those who read my blogs to feed through it their proposals. In her words

I am also happy to consider any amendments you think could be helpful for the Pension Schemes Bill that you or your star contributors might think are important to improve the measures

I am looking for your amendments for consideration by mail to henry@agewage.com. Alternatively I am happy to publish your opinions of the Bill (read on)

If you need to remind yourself of the Bill, here is what parliamentarians got as explanation six months ago.

You can download it here

 

I put Ros’s request out to some commentators and got this late in the day on December 31st. You may have a guess at the author, you may want to express your opinions as this contributor did or put forward a viewpoint to be “considered”. I will do my best to edit and pass it on. If you know Ros Altmann, you can of course by-pass this blog and me as an intermediary. I am of course happy to publish any opinion that has some merit , whether I agree or not – this is an example as a challenge!

My comments, but at a high level (feel free to paraphrase as you want; some good, some total CRAP):

1. LGPS proposal seems sensible – specialize investments vs administration

2. Surplus proposal seems reasonable – if companies bear the risk, why not enjoy the surplus (with some buffers in case they screw up in the future)?

3. Value for Money – right idea, terrible execution

   1. In DC, not about returns – about real retirement income
   2. Idiotic claim about long-term investments offering greater value – no basis for such a claim as the future is unknowable and individuals bear the risk if this is wrong

4. Scale – up to a point

   1. There is a broad consensus that scale leads to economies and efficiencies, as well as enabling greater expertise and diversification in investments.  (why “consensus” and not hard data?) – see my paper on US pension funds. There is no correlation between size and skill – https://papers.ssrn.com/abstract=5891382. Same with my study on NL pensions.
   2. 10bn and 25 bn seem to be pulled out of someone’s rear end.

5. Terrible IDEA – “The Bill introduces a measure to allow the Government to set percentage targets for asset allocation in core defaults offered by DC providers!!”

   1. Is this Russia or China? “This is designed to be used if the industry fails adequately to diversify its investments into private markets, for example by failing to meet voluntary commitments. “

6. Issue SeLFIES instead as that make the dashboard, VFM, regulation much simpler in DC (and potentially also improves hedging/surplus management in DB)

7. Rest is boring…

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