I was not able to go to the Trades Union Conference but I could watch it from afar and did, oddly from Bishopsgate where a separate conference was talking about pension administration. Torsten Bell talked of pension administration and I’ll come to that, I tried to ask his question to pension administrators but to no avail! In short no one’s being very grown up and it will be interesting to see Torsten Bell’s spring statement goes down in Edinburgh next week.
Economy First
The first half of Torsten’s pension statement was introduced as a reminder to union leaders that the pension and the economy are one and the same thing and that there isn’t much growth in our pensions (just as there hasn’t been much growth in the economy). The growth in pensions has come through because of pension credit’s increased take up and that is now levelling off.
The economy is (according to Torsten) now at last moving in the right direction and that is good for pensions and pensions could be being good for the economy. That is of course if the investment in Britain comes from LGPS and the private sector.
Pension Schemes second
As both a DWP and Treasury Minister, economy and pensions are co-joined in Bell’s speech. The economy can deliver more pensions .We did not hear about the state pension but we did hear about the Pensions Commission , due to widen the 55% of people of working age who save into a pension. With a union peer running “PC2”, it is clear that it will be this Government’s legacy to later pension ministers , HMTs and DWPs.
But for now we have the Pension Schemes Bill and the CDC legislation to make for a pension rather than a saving system, There will be “bigger and fewer” pensions and the fractured LGPS is being brought together into a bigger pension with less pools.
Big Pensions can allow for active management of assets , active management being a sign of good governance. Small schemes can’t afford to actively invest. Those who think that VFM is the measure of good may want to erase these statements from their memory but this minister’s view of the future is quite opposite to the investment that has got DC accumulation to where it is today.
As we moved into contentious areas, Torsten was openly questioning what should be done. Surpluses were touched on , so administration which he saw as asking questions of how we manage bereavement and the at retirement decisions of all (but especially those with DC pots).
He pulled out a strange figure of “£29,000” as the potential improvement that could be achieved from better returns. Frankly, VFM does not seem of interest to this minister, in the sense that it is being sold to us by the FCA and TPR and if that number is what VFM means – I will need some convincing! His only compelling statement was that performance was now the employee’s issue (in DC/CDC) rather than the employers (in DB).
There followed some lines clearly fed him by the DWP and not as before from the Treasury
- We will see small pots sorted by 2030 (not much sign of Government help on that so far)
- We will see Pension Dashboards soon (no problems so far, but no promises of delivery to consumers either). As it takes six months from the Minister’s announcement , October 2026 as the earliest , needs an announcement very soon!
- Pensions will be pensions. Although he described pots as more “fungible” and therefore better for the wealthy, he told us that over the past 15 years we’ve forgotten what a DC pension might be.
This led us into his expectation that whole of life CDC would be built this year for multiple employers and that retirement CDC would see legislation soon after the publication of the consultation.
I was not in the room to gauge the mood of the audience though I did get an invitation immediately after the event to the TUC pensions officer to speak on CDC in April, which suggests that the unions got the message that there is life beyond DC.
Bell’s departure from the hall was after the usual moans from frustrated advocates for pre-97 and WASPI rights and an unusually concise question from Bernard Casey on the Bill’s intention on mandation which Torsten Bell retorted
“It won’t be needed”
He emphasised that Mansion House was happening without mandation being used and a backstop is not needed when everyone is in agreement.
Bell is not showing any sign of turning down the volume. He was as full of himself and what he’s doing as ever. That’s what I want from a Minister and a Pensions Minister at that.
Like the Chancellor’s spring statement, Torsten Bell’s message was steady as he goes!
