Taking the Long View – Effective Pension Trusteeship in Uncertain Times.

Back again to last Friday and to the annual TUC pension’s trustee conference at Congress house. The first speaker was James Purnell, Secretary of State for Work and Pensions (and bad photographer).

James called Pension trustees the “unsung heroes” of financial services. This is something useful which I will store away for the future. He thought that there was a vital role for member nominated representatives to play in helping rebuild confidence in pensions.

Confidence is key to the future success (or otherwise) of Pension Personal Accounts. In the 1980’s and 1990s we had Maxwell, collapse of pension schemes, contribution holidays and the mis-selling of private pension plans. The government now has the “Architecture in Place” to help rebuild confidence. The Pension protection fund (PPF) protects some 11 million pensioners. Together with a strong regulator and compensation for those schemes that failed before the PPF.

James celebrated the 100th anniversary of the Old Age pension. He told the audience though that there use to be a “Character Test” for access to pensions in 1908. He joked that maybe this should be re-introduced for MPs before they could get their pensions! Only 25% of the population reached the age of 70 in 1908, most died in their 40’s. Only 500, 000 people were entitled to a state pension in 1909, now over 11 million. Including probably the first woman who will live in the UK to be 120, who he thought was probably 65 now and would live off her pension for the next 55 years. I think he put this fact in to make people think.

He finished off by pointing out how significant Personal Accounts will be – he estimated there will be up to 9 million extra savers and within a few years £10 billion of extra savings.

Could we be finally, starting the long and tortuous journey to the abolition of poverty for all in old age?

James Purnell - DWP Minister (and bad photographer)

Tom P has reminded me that while new Work and Pensions secretary, James Parnell may have many talents, photography is not one of them! In March last year I asked James to take a picture of Tom and I with the journalist Nick Cohen (see photo). We had just been to see Nick talk about his book “What’s Left”. I’ve spoken to James briefly a couple of times since on pension issues. While I don’t agree with everything he says, he knows his stuff (The Radio 4 “Today” programme this morning tried to catch him out by asking "what is an annuity"?).

While many in the trade union movement will regret Peter Hain leaving the Cabinet, I doubt if we have seen the last of him. I believe he will “clear” his name and resume his "colourful" career at some point soon.

TUC Pensions Champions launch

Last night I went to the launch of the TUC online network of “Pension Champions” at Congress House. The aim is to train and support volunteers to deliver advice and information on pensions to their workplace colleagues. They will be supported by a new website and on-line “pension doctor”. This will help build up someone’s pensions profile and assit them to decide what they need to do to increase their pensions. This is potentially exciting stuff and even “cutting edge” (in trade union terms). Minister of State for Pensions, James Parnell, (Alan Johnson Supporter!) and Natascha Engel MP (not yet a supporter of Alan but gave an excellent speech) congratulated the TUC on this initiative.

On the way in I had a chat with trade union demonstrators handing out leaflets on behalf of members of failed pensions schemes. Due to their campaigning pressure they now have got up to 80% of their pensions restored, but of course, they want what they were promised. James said that he was trying to see what could be done. I think one of the TUC aims is to get members involved and aware of their schemes to prevent future mismanagement. The real villains of course are the Tories for failing to properly regulate and protect people from rogue companies. Lets not also forget the financial consultants who creamed off massive fees from robber pension funds for decades in return for supporting their under funding and reckless investment policies.

UNISON is pursuing a complimentary programme through its Capital Stewardship forum. However, since we have funded pension schemes (such as the local government pension scheme) the forum is more concerned with ownership and governance issues (see The New Capitalists).

I appreciate that some may people may be surprised that the Pension Champion training is currently open to non trade union members. However, we have got to think out of the box. Pensions are a potential recruitment and organising opportunity. Especially with the introduction of Personal Pension Accounts. Which will be compulsory on all companies including small businesses (with the inevitable individual “opt out”)? Remember my report on the SERTUC conference on Saturday which reported that only 35% of British workers were subject to collective agreements? Think about it.

(Picture Left of UNISON “Pension Champion” Michael Gribben from London Ambulance Service, who was allowed to “stand down” for an hour to attend this launch, with James and Glyn Jenkins, UNISON National Pensions officer; Natascha Engel and Brendan Barber at back)

“Protecting Future Pensions”: Conference for Trade Union Pension Trustees/Reps

The annual TUC “Trustee Network” Conference takes place on Friday 22 June 2007 at the Cass Business School, London, EC1Y. Keynote speakers are James Purnell MP, Minister of State for Pensions Reform (who took my photo with Tom and Nick Cohen last month), Paul Myners, Chairman, Guardian PLC and Chair, Low Pay Commission (my pension fund sacked him and his company, Gartmore, as its fund manager in 1994 – something he describes as the “worse day in his life” – a Joke BTW) and Brendan Barber, TUC General Secretary (photo with UNISON London region last week).

Seriously, this is the only Trade Union national meeting of member nominated trustees/representatives on pension schemes. Ordinary workers in this country actually own huge chunks of British and international capital via our pension schemes, life insurance policies and other collective investments (such as PEP’s, unit trusts, investment trusts). However, often we have little or even no influence over how this money is governed. Pensions are just deferred wages. We should be exercising our rights of ownership (as well as taking responsibility for what is done in our name).

The pressure group “Fair Pensions” describes how some of our money “is invested in companies that are attacking employees’ rights and fighting attempts to unionise. This can include the use of militias against trade unionists in South America to “Union-busting” in the UK. We need to use our investments to change some companies’ behaviour. Pension funds own almost a fifth of the stock market, but the vast majority of funds - including some that offer “ethical” options – make no effort to challenge this behaviour.

Responsibly-invested pension funds are already putting Wal-Mart under heavy pressure over its labour practices in the United States. In the UK, pension funds have successfully lobbied drug manufacturers to lower the cost of HIV treatments for southern Africa and persuaded companies to start tackling climate change.

Responsible investment is about using shareholder power to improve company behaviour, rather than avoiding certain industries, so it does not lower returns, and can improve financial performance by identifying the potential cost of corporate strategies that ignore legal, reputational and other risks”.

If you want an agenda and booking form contact Jayne Cranefield on 020 7467 1225 jcranefield@tuc.org.uk (normally a bit pricy – make sure that your pension fund or union pays). If you have a “funded” pension scheme (has actually investments rather than “pay as you go” UNISON and the TUC are running courses on pensions), check to see if you could be a member nominated trustee/representative. If you are already a trustee join the network

UPDATE: Download entry form from TUC