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".

Gregg McClymont MP at NAPF Conference 2014

Labour Shadow Pension Minister Gregg McClymont spoke (with a smile) about the previous speaker Bob Geldof being his "warm up act" this year. 

Gregg has now been coming to the NAPF Conference as Shadow minister for the last 4 years.

He has four key points.

1. There has been successful pension changes and measures which have been delivered with consensus.
2. We all need to deliver on pension promises
3. The Government is currently in the wrong place
4. It may have made decisive policy but not with the necessary checks and balances

His thoughts on these points

1. The new universal flat rate state pension and the successful launch of two million people into auto enrolment  was achieved by consensus.
2. The Government under pressure from the Labour Party and the NAPF have introduced a charge cap and the "disclosure" of transaction costs.

3. Where the Government is in a wrong place, is in the governance of pensions schemes. Where there are not independent trustees, workers are unlikely to see value for money in workplace pensions. Pensions of all types including contract schemes should be governed by independent trustees with an obligation to act in their best interests.

4. Soon many workers will be able to take out all their pensions in a lump sum (after paying a possible massive tax) but what will the guidance look like to stop people being ripped off and the likely take up by individuals is just not known.

Labour priorities are for value for money and to get this we also need to promote the scale of pension funds.  Larger pension schemes are more likely to delivery value for money.

In the Q&A I asked Greg would he agree that independent trusteeship of all pension schemes is also about re-establishing trust in the industry after decades of financial scandals.  People would save more if they were more confident that their money was being looked after by genuine beneficiaries trustees who will be acting on their behalf and making sure they are not being ripped off .

Greg thought that greater trusteeship would help establish checks and balances which is especially important since millions of people have been auto enrolled by the state and there is even a greater  responsibility to make sure the money is looked after properly.

Gregg McClymont MP: Rethinking Pensions Conference 2014

Picture of Labour Shadow Minister for Pensions Gregg McClymont MP, speaking at last months "Rethinking Pensions" conference. 

This took place only a day after the Budget, when the Government announced its plan to allow personal pension policy holders to "cash in" their accounts when they retire rather than buy an annuity. 

Gregg apologised to us that he would have to leave early since he had to go to the House of Commons to listen to Coalition Pension Minister, Steve Webb MP give further details of the proposed changes. 

This is the sort of situation when politicians earn their money. A massive change in pension policy (and largely unexpected by all including the media) was less than 24 hours old yet the "Loyal Opposition" had to come out very quickly with a considered response. 

Gregg suggested that he could be using this conference as a test bed for the debate in Parliament later that day. He wants more detail about the Budget proposals but thought that the the new approach of yesterday, seemed to be a move away from the Turner Commission consensus building on Auto-enrolment? It also seems at odds with the apparent government support for Collective Defined Contribution (CDC) schemes? How can CDC work if people take their money out in cash at age 55? How can you share the risk? Who and how will this "advice" to savers be provided? Are pensions becoming an Individual Savings Accounts (ISA)? 

As well as being a professional politician (and of course in my view on the side of the forces of light and reason), Gregg is also a former Oxford don - so was able to think on his feet and give a good account of himself. 

Check out this article in Professional Pensions about what I think is the debate between Greg and Steve Webb later that day in Parliament.

My own initial views on the Budget proposals are here. 

AMNT Meets Shadow Pension Minister Gregg McClymont MP at House of Commons

On 27 November we had a special Open meeting for AMNT members at the House of Commons. 

Beforehand there had been a brief tour of Westminster Hall.  Then  40 of us were in a Committee room to hear Gregg McClymont MP talk about the UK pension landscape and then take part in a Q&A.   

He reaffirmed Labour Party policy that they will be looking to introduce in any future Labour Government beneficiary governance for all pension funds including contract schemes. This is not a panacea for all wrongs but to ensure value for money.

He also wants a Fiduciary duty for everyone in the investment chain.

Next was presentation by David Heslop from the Pension Protection Fund who painted a positive picture of the PPF and they believe that if things go to plan they will not have to levy pensions by 2030.  

 Our AMNT  joint Chair’s Barry Parr and Janice Turner also gave an update on our recent activities and plans for the future.

Afterwards as a contrast, we went to the offices of fund managers Evercore Pan-Asset at Queen Anne’s Gate and had a presentation by the chair of their investment Committee RH John Redwood MP on the state of the global economy and what this means for pension funds. This was followed by a drinks and nibbles reception.

Gregg McClymont MP Shadow Pension Minister: TUC Pension Trustee Network Conference 2013

 The last session of the TUC Pension Trustee network was chaired by Kay Carberry, the Assistant General Secretary of the TUC. First speaker on "Where next for UK Pensions?" was Gregg McClymont MP and Labour Shadow Pension minister.

Gregg thought that a key problem with auto-enrolment was that the employer in the main will select the workplace pension for employees. Therefore we need to make sure that there is competition and value for money. It is an "odd" market which is not transparent.

The Office Fair Trading (OFT) recently sampled the pension market and found insufficient competition. Transaction costs are not fully disclosed. If you don't know what a product will cost how can you buy it? There are incentives for fund managers to churn. In pensions size and scale matters.

In Australia where there are already only large funds the regulator has been given powers to force the merger of schemes if it makes sense. Also each year trustees are obliged to formally consider whether or not it is in the interests of beneficiaries to merge. There needs to be independent trustee governance for funds.

This doesn't mean 200k small pension trustee boards. The 4 biggest providers make up 16% of schemes. OFT did identify some weakness in Trustee governance. It is not a panacea but the best option. You need tension to deliver share owner value and we should extend the fiduciary duty up the chain to everyone who handles trustees money.

Next was Sarah Smart from "Smart Cats Consulting" and currently the Chair of the Pension Trust and on the Lothian Pension fund (LGPS). Sarah predicted that in the next 15 years NEST will have 8-10 million members. You need to have scale in pensions. Big is not necessary better but with big you can buy better governance. 

With big you can also share mortality risk with other members. Invest in growth assets rather than in annuities where you have to invest in gilts. For any new kind of Defined Ambition or Collective DC pension scheme employers have got to be reassured that they will not be liable with a scheme that is suddenly deemed to be DB?

She thinks that modern day politics means it is too short term for pensions. Instead we should have an independent pensions commission that decides things.

 Last speaker was independent trustee Fiona Draper. She stressed the importance of good administration in a pension scheme. Even if you have a global firm in charge there is no guarantee in her experience that they can work things out right. The role of professional trustees is important but they should not replace member nominated trustees.

She mused why the Australians can have proper compulsion in pensions but we can't? Why?

Finally, she teaches on a UK international course on pensions designed for the developing world. When this course started no doubt the UK Defined Benefit Pension scheme and state pension was held up to be the best that the rest of world should aspire towards. Nowadays she finds that often her students are unimpressed with the UK model and say that their own countries pension provision is better.

After the close of conference there was the famous TUC Pension network reception which this year I had to leave early to rush off to my trade union branch meeting.

Building a pensions system people can trust – another victory for Labour

Hat tip Labour List. "Today sees another victory for Labour in the battle to build a pensions system people can trust. When over a year ago Ed Miliband called for action on pensions rip-offs the Government dismissed this as scaremongering. Now minsters have finally been forced to act.

In reaction to Ed’s intervention when asked about the possibility of a cap on charges, Pensions Minister Steve Webb dismissed a cap, saying:

“why doesn’t the Government set a price cap on a tin of baked beans? We don’t need to because there’s a vibrant market, people have lots of choice.”

But a year after Ed raised the issue the Government has finally launched a consultation on a charge cap and agreed to intervene in this broken market. In doing so they have exposed their failure to address the broken energy market for what it is: an inability to stand up against the Big Six to tackle the cost of living crisis.

Why was Ed right?

With the current cost of living crisis, squeezed families who struggle to put money aside need to know that the pensions into which they save offer good value for money. But British savings are at risk of being sliced and diced to line the pockets of fund managers and insurance giants. If we want people to save, we need to restore trust in private pensions, and that means making this broken market work.

If we don’t act now there’s a real danger that employees will opt out of saving for a pension, rightly fearing that they might not be getting value for money. This is why Labour has pushed hard for amendments to the Pensions Bill that put the interests of savers first, with full transparency on all costs and charges. Despite following Labour’s lead on the price cap, the Government yesterday voted against our amendments

But we will continue to pressure the Government to take further action to re-make this broken market. This is what Labour says the Government should do in addition to a price cap.

First, the government should impose a legal requirement that all pension scheme providers must prioritise the interests of savers above those of shareholders. Second, the Government lift restrictions on the state backed pension provider NEST, whose pro-saver approach has forced private providers to improve their performance to a degree. And third, the Government should learn the recent lessons from Australia and change the rules to recognise that scale is important in ensuring pension schemes and trustees can negotiate the best deals for savers.

Labour’s amendments to the Pension bill offered the Tory-led Government one last chance to make this legislation comprehensive, coherent and value for money for the 10 million Britons who are now being automatically enrolled in private pensions.

But this out-of-touch Tory-led government will always drag its heels when it comes to standing up for hard pressed working families and challenging powerful interests.

Today’s announcement shows the clear role governments have in stepping in to fix broken markets when competition fails. The question for the Tory-led Government now is if it is acceptable to intervene and place a permanent cap on pension charges why do they remain so opposed to a 20 month freeze in energy prices?

Time and time again this government has shown itself incapable of standing up to powerful vested interests. The cap on pension charges confirms David Cameron’s opposition to freeze on energy prices isn’t based on principle – it’s simply that he is unwilling to stand up to the Big 6 energy companies.

As Ed Miliband said at Labour Party Conference last month the real test of leadership is “whether you stand up to the strong and know who to fight for”. David Cameron has failed this test. Labour will continue to lead the fight to stand up for ordinary people and tackle the cost of living crisis.

Gregg McClymont is the Shadow Pensions Minister