TUC Pensions Conference 2023: "Pensions in a Cost of Living Crisis"

Yesterday I returned to Congress House, the TUC headquarters for its annual pension conference. This event involves union officers, pension trustees and activists with expert presentations/Q&A and workshops. It was great to be back in person at long last. I am a UNISON appointed employee member of a LGPS Pension Board and the Local Government trade union appointee to the London CIV. 

The theme this year had to be "Pensions in a Cost of Living Crisis". Below is based on my tweets during the day. Not a comprehensive report on all the presentations since I was trying to pull together and send to my employer a pay claim while listening. 

I was lucky to be picked by panel chairs to ask a number of questions. I was sitting in the front (as normal) and wearing my lucky blue checked shirt. 

Great to be back at

@The_TUC

for its #pensions conference. Open by new General secretary

@nowak_paul

& 1st keynote speaker David Pitt-Watson (good to see again)

@theRSAorg

 

David speaking persuasively on the case for #CollectiveDefindedContribution #pensions. DB best - since employer guarantees, but DC annuities worse since invest in low return gilts. #CDC 30% better DC. (Or even #CollectiveDefinedContribution #CDC. I will post more on CDC.

Now important panel on improving trustee diversity & inclusion Chair Janice Turner

@bectu

, Westminster LGPS,

@unisontheunion

@unisonglr

Chris Smith & Zoe Burdo from

@LCP

(thanks for the name check Chris)

Keynote speaker Shadow DWP secretary

@JonAshworth

MP speaks about proud record on #pensions by

@UKLabour

& unions but now must undo when in power years of #tory pension failure

Labour’s priorities for pensions: Economic growth underpinning a growing state pension Support for older people who want to stay in work Expanding auto-enrolment

My question to

@JonAshworth

would

@UKLabour

reconsider role of #DB pensions? My #LGPS is now 123% funded. Lots of colleagues here in Private DB have had their funds closed unnecessary. Also, do you share concerns about employers breaking #tupe & #pension promises?

He asked for clarification & yes to concern about employers breaking pension promises

Panel on Extending working lives. #TUCpension23 being addressed by

@unisontheunion

National Officer Teresa Donegan on #unisoncollage & member learning.

Final Panel: Big ideas to fix the pension system Chair by former Labour pension minister

@greggmcclymont

now with trade union owned

@IFM_Investors

Gregg McClymont

@greggmcclymont

·

Mar 1

Replying to

@grayee

and

@IFM_Investors

The ideas - state annuity, state pension as property right, public asset manager - certainly lived up to the ‘think big ideas’ challenge

Since this was the TUC, of course, the event had to finish with some "beer and sandwiches" (well, crisps and nuts). At which I was given a great compliment by the legendly pension figure, Con Keating "I see you are still causing trouble John".

Rethinking the Economics of Pensions (and "A Day in the Life of a Financial Advisor")

On Thursday last week I went to the first day of the "Rethinking Pensions"conference in London. The ever so quiet and retiring, Con Keating (Brighton Rock) was the Chair. He started off the conference in his own unique style, by reminiscing about an event he had recently attended with the Lord Mayoress of London, during which she had asked him "what should the City of London do to make sure its financial services industry is sustainable?". Con replied by saying "Stop Stealing Money?" He said he did not expect to be invited back.

Robin Ellison from Pinsent Masons was the first speaker and he spoke on how the regulation of the financial services is bad. It is too bureaucratic, complex and very expensive to investors and companies.  We have a perfectly good legal system and if someone thinks they have been ripped off they should make a complaint to the courts, like they do in many other countries.

He doesn't think they add value and the £500 million annual cost of UK regulation  probably costs companies who are being regulated 10 times this amount. It has been estimated that the yield in Defined Benefit schemes is reduced by 2.3% by such regulation. He also believes that MPs should be forced to only pass laws on stuff they understand.

In a question to him I said that in the past bad practices were widespread from top to bottom and he had not recognised the scale of the problem and also the high bar on proving dishonesty that we have in this country?  That is why we need regulation. Robin said he was not convinced and the law could be enforced more effectively by the courts than by regulators.

Despite describing himself as an "arch Tory Capitalist" Robin said he did think that some things have to be done collectively. He believes that the proposals regarding annuities in the yesterdays budget are flawed. The Australian model shows that people will just take out their money and run. 

(see the excellent American YouTube above on "A Day in the Life of a Financial Adviser" which Robin showed during his presentation. It is tongue in cheek but shows the basic lack of understanding about financial affairs and also the widespread mistrust many people have of the financial services industry. I will post on other speakers from Day 1 as and when. I missed the 2nd day which is  a shame and I hope someone else will blog on it).

Another day, another reason why the ABI is a self serving cartel ripping off UK pensioners

Check out Con Keating's brilliant rebuttal on Henry Tapper's blog of the latest attempt by the greedy cartel also known as the Association of British Insurers (ABI) to justify the ripping off of British pensioners.

I am amazed that otherwise decent and respectable insurance companies soil their reputation in this way. Their lust for excess profits from their rip off charges in the DC pension business mean they defend the indefensible and attack new better value ideas such as "Collective Defined Contributions schemes".

You are forced to conclude that the senior managers of insurance companies are far more concerned with their inflated pay and bonuses than the interests of their poor (in the true sense of the word) policy holders. 

Personally, I hope a future Labour Government will break up this cartel and separate the insurance and pension industries. There are clear conflicts of interest.

Hat tip Newham's own Nigel Stanley at TUC Touchstone

Defined Benefit Valuations: Hilary Salt from First Actuarial - TUC Pension Trustee Conference 2013

The 2nd speaker on the TUC "Defined Benefit valuations" session after Con Keating was Hilary Salt, from First Actuarial.

Hilary asked what was the purpose of a pension scheme? Answer: to pay the right amount of money at the right time.

Assets are needed to make sure that the right amount of money is available to pay the pensions as they are needed. Other issues such as
Liability-driven investments (LDI) have no impact on the amount of pension and are a distraction.

The argument that you need assets to pay for the last man (or women) still in the scheme is self defeating.

You should focus on future income streams. Valuations should be periodic checks but you need to play the ball from where it is and look forward, not look back.

Valuations are used for the wrong things. Expensive "Buy outs" by of schemes by insurance companies are irrelevant since the Pension Protection Fund (PPF). 

Accounting valuation funding is too short term, buy outs are irrelevant, "Flight plans" or "Glide paths" just move assets into bonds to reduce risk and import the inefficiencies of Defined Contribution (DC) schemes into DB.

Hilary had a Q&A after the presentation with Con chaired by Nicola Smith from the TUC. I asked them the question "What should we DB pension trustees should do next about the "scare mongering" about deficits that we have heard about".

Con said we should be prepared to challenge our actuaries. They do not use true and fair value. While Hilary said we must be ready to challenge the Regulator over valuations.  It can't be right that its okay if the reason that no one loses a pension is because they never had the chance to have a pension in the first place.  (Think about this)

Usual health warning that my hurried notes on these presentations on my Blackberry may not be an verbatim acount.

PS It was good to see Jimmy Nolan, former trade union trustee from the Liverpool Docks pension scheme at the conference ask a question. For as long as I have been going to TUC pension conferences, Jimmy has always been there. 

"Valuation is a Dark Art" Con Keating at TUC Pension Trustee conference 2013

Picture of Con Keating, Head of Research at Brighton Rock making our heads hurt at the TUC Pension trustee conference last month.

Many people nowadays say defined benefit pension pension schemes are "dead".  They are unaffordable, volatile, people are living longer etc. 

Con travels to South Korea as a consultant to set up brand new Company DB schemes despite the Koreans having amongst the highest life expectancy in the world. 

In a nutshell Con makes the argument that the way we measure DB pension investment values and liabilities is just absolutely wrong and schemes have been closed down left, right and centre for no real good reason whatsoever. We should instead measure on a "fair value" approach.

Instead of outdated,  unstable and irrelevant "mark to market" valuation you should be more concerned with cash flows and the ability of the pension scheme to pay its actual liabilities not what it might cost in 60 years hence.

Where next for Pensions Policy? TUC conference 28 Nov 2013

This should be a very good conference for all member nominated pension trustees and representatives. Make sure you ask your scheme to pay for the £50 cost. Should be lively with Con Keating speaking.

"With automatic enrolment finally underway, and plans in place for a single-tier state pension designed to provide a solid platform for private pensions saving, what will be the next phase of pensions reform in the UK? The government’s ‘defined ambition’ agenda outlines one possible vision for pensions policy, including options for introducing risk-sharing into defined contribution provision. But what does the future hold for defined benefit pensions? Is the DB funding model sustainable? Is the role of pension funds as institutional investors more important than ever?

This conference will explore these issues and help trustees navigate the regulatory, investment and stewardship issues that they face.

As you have attended the TUC Member Trustee conference in the past you know that this event is also a valuable networking opportunity to meet fellow trustees, trade unionists and pensions and investment experts to share information and experience.

Speakers include:

·       Steve Webb MP Minister of State for Pensions

·       Gregg McClymont MP Shadow Pensions Minister

·       Frances O'Grady TUC General Secretary

·       Con Keating Brighton Rock Group

·       Sarah Smart SmartCats Consulting

·       Andrew Vaughan Association of Consulting Actuaries

Workshops:

Defined Ambition – white knight or red herring?
De-risking – questions for trustees
Stewardship – taking action
Defined contribution – the governance gap – morning only
Local Government Pension Scheme – investment governance afternoon only

Date: Tuesday 26 November 2013          Venue: Congress House, London WC1B 3LS

To register for the conference go to:  www.tucmembertrustee.eventbrite.com