The insurance lobby have teamed up with Pensions UK and the right wing press to derail the pension schemes bill. They have landed on a Clause 40 which gives any Government the opportunity to demand money is invested for the good of the country.
There is so much to do to get adequate pensions for millions of savers not in public sector pensions and not in funded DB schemes like LGPS, RailPen and USS.
Can we please stop making so much fuss about mandation? Relative to what Royal London and Hymans recently referred to as the State Pension gap (the £12,000 pa people are on average short of) – mandation of investment is a sideshow.
I have to admit that when Rachel Reeves came up with mandation well before the election, I thought there would be trouble here from trouble-makers. I thought right.
Here is what articles in the Times have as their headlines.
Pensions UK gave the lobby trying to wreck the pensions schemes bill nearly an hour to spout this line and I am so sorry that I had to sit through Helen Whatley’s scripted rant.
The Times opens up its most recent rant with an attack on this Government as having it in for workers saving for their retirement.
Plans to force millions of pension savers to invest in high-risk investments will put retirements at risk, the government has been told….
and it goes on
But the pensions industry has warned that having your life savings invested in political vanity projects could cost lower-paid savers dearly while those with gold-plated public sector pensions will not be affected.
I am not the “pensions industry”, even if I work for better pensions every day of the week.
It is wrong , as I told Helen Whately , to see the ABI and Pensions UK lobby position as the position of the pensions industry. What we as a whole want is adequacy for everyone. To suppose that what is going on is a Government trying to hi-jack pensions to get it out of trouble is fantasy. It’s been dreamt up by lobbyists who’d like to derail the use of DB surplus for the country (rather than the shareholders of insurers), It is picking at the detail of CDC which is a way to improve on workplace pensions.
As with DB which the ABI see as a deferred bulk annuity, so DC is to them a kind of deferred annuity using “flex and fix” into retail annuities .
Who is behind all this nonsense?
The trade bodies Pensions UK and ABI have called for Clause 40 to be cut from the legislation entirely. Their spokesperson is Yvonne Braun. Here is her argument
Braun said that while the Association strongly supported investment in the UK, it must always be driven by the savers’ best interests.
“Any power to mandate how pension funds invest, if used, creates a very real risk of artificially inflating demand for certain assets. This is fundamentally against how investing should work and increases the risk of asset bubbles that can deflate or burst, with savers bearing the cost,”
The Times concludes that its readers can only escape the defaults hi-jacked by Labour by opting out. Steve Webb is roped into their argument with his answer to the question
“Can savers avoid it?”
One way to avoid mandation is to opt out of the default scheme on your workplace pension, but this brings its own issues,
said Webb.
“You’ve got to know what you’re doing. OK, you don’t want to be in the fund that the government is controlling, but what do you pick? Do you pick the global equity fund, or the balanced fund, or the sustainable fund?”
Savers may opt to move their money if they feel that a particular fund no longer works for them, but they may end up paying more in fees in the long run.
Steve Webb and Ros Altmann have been quoted in this article. I know both and I know they are not against policies that get growth back into our pensions. Clause 40 is not worth the bother – Steve , Ros and other good people – let us not be captured by the ABI’s opposition.
I am ashamed that we are being allowed to be characterised as a part of the ABI lobby that has become the ABI/Pension UK lobby. I am shocked that sane voices such as Steve Webb’s are being used as part of an article that echoes Helen Whately’s opposition.
Can we please turn our thinking to how we can be on the side of pensioners as well as Pensions UK. Right now , I cannot do both.
