From May/June Engaged Investor John Gray of the Association of Member Nominated Trustees (AMNT) on the battle to keep defined benefit alive.
The inaugural AGM of the Association of Member Nominated Trustees (AMNT) was held last month in Pension Corporation’s headquarters. Over 40 MNTs attended (out of 150 members recruited so far) who safeguard between them over £50bn of pension assets. What really enthused me about this meeting was the work group I attended on defined benefit (DB) schemes. After so much negative and misinformed mudslinging at DB schemes in recent years, it was a real tonic to be in a room full of people who were genuinely positive and supportive about DB.
Yes, things need to change. Yes, we need to look again at structural problems caused by inappropriate accounting standards and unnecessary regulation. Yes, it is “bleeding obvious” that schemes should merge whenever practical and cut costs. However the message should be shouted out loudly and clearly at every opportunity that DB schemes are still affordable and can offer massive benefits to both employer and employees. They should, in my view, be the bedrock of everyone’s pension’s provision. While trust-based defined contribution (DC) schemes have an important role to play, the vast majority of ordinary working people are desperate to seek financial certainty in their old age. Employers need to not only offer a package that will attract and retain staff but they also have a duty to try and ensure that their staff do not end their lives in poverty.
We cannot let the huge mistakes made decades ago in the funding and actuarial assumptions of DB schemes distract us from the little said facts that future contribution projections in DB schemes have barely altered from traditional assumptions. With some necessary updating they are as affordable now as they have ever been.
I was the only public sector representative in the group and the others were from the private sector. They were very concerned at the obnoxious and incredibly misleading so-called “gold plating” attacks made by some on public sector DB schemes. There are still millions of private sector employees in DB schemes and all these attacks on public schemes do is to undermine decent pension provision in the private sector and encourage a race to the gutter.
"The message should be shouted out loudly and clearly at every opportunaity that DB schemes are still affordable"
When I reported back to the main meeting on our workshop I was pleased that it agreed that such is the importance of the defined benefit schemes that there should be a dedicated Working Group (which I will Chair) on not just defending DB schemes but battling for DB.We will be championing and promoting what use to be considered not so long ago as the “Crown Jewels” of the British occupational pension provision. www.amnt.org