TUC Pension Trustee 12: "Tools For Challenging Scheme Closures"

After the opening speeches at last weeks TUC Pension Trustee Conference 2012, I went to the "Tools for Challenging Scheme Closures" workshop led by Hilary Salt from First Actuarial & Neil Walsh, Pensions officer at Prospect.

This workshop, is of course, right up my street. Decent defined benefit schemes are being closed down completely unnecessarily and being replaced usually with third rate, inadequate alternatives which will result in employees being dependant on the state when they retire and then dying in poverty.

The first tool they described is a "tape measure". How you measure your pension liabilities? At the moment the tape measure used (the yield in Government loans called gilts) is broken. Due to Quantitative easing and the so called "flight to quality" from the weaker Eurozone countries, gilt yields in the UK are not only historically low but even negative. Pension liabilities may have increased during the last 12 months but nothing has really really changed. It is the broken tape measure.

There are a number of things should be considered long before closure :- tiered contribution levels, changes in retirement age, CARE (career average) rather than Final Salary, reducing  accruals, longevity adjustments, caps on salary, inflation measure, contract back into SSP, Cash balance schemes, hybrid DB/DC etc.

Trustees should also consider the "Sledgehammer" approach of winding up schemes if closed.

All schemes are different and trustees must refer to the trust rules and make sure they get truly independent advice. If contributions have to go up then time with any pay rises and consider salary sacrifice.

CARE schemes are not only fairer but if risk is the real driver for the employer to close the scheme rather than cost then they will reduce salary risk. Consider risk sharing such as contribution caps.

In the Q&A I asked about the argument that closing schemes did not get rid of the deficit and that they can make things worse. Hilary said that this can be true and that a closed defined benefit scheme can be as inefficient as defined contribution schemes. They become like annuities invested solely in gilts and cash.

Hilary has recently written an excellent booklet for the TUC on "The Future of Defined Benefit Schemes" here.

While the Association of Member Nominated Trustees (AMNT) will be producing their own guide on what to do if your employer tries to close your scheme on December 11 at our AGM. 

Croydon North By-Election: UNISON London Labour Link Voter ID

After today's TUC Pension Trustee conference I went upstairs in Congress House to the UNISON regional office for a voter ID telecanvass session.

There was only a few of us at Congress House but more at the UNISON centre in Euston Road.

We used the same very efficient and clever (but a bit buggy) software that we used in the GLA elections last year to ring the 800 UNISON members in Croydon North.

UNISON members are an interesting lot to ring up. You get a far better quantitative and qualitative response than normal Labour Party telecanvassing. Most of those we manage to speak to (the curse of the answer machine) will be more honest and open about their voting intentions. It is humbling how many will immediately volunteer their total support and that of their family for the Labour Party. While you also have frank conversations with rank and file members about their gripes and moans about the union.

I may have been just a little lucky tonight but conversations I had with members, who by and large had never spoken to a union bod outside their workplace, were positive and constructive. Labour candidate, Steve Reed, does seem quids in to be the next Croydon North MP but no one should take anything for granted.

If you can help out during the next 2 days go to :-

"Ruskin House (first floor)
23 Coombe Road (corner of Park Lane)
Croydon CR0 1BD

Times of opening:
Wednesday 28 November between 10.30am to 8pm
Polling Day Thursday 29 November between 8.30am and just before the polls close at 10pm.
We need all the phones to be constantly in use, so please don’t wait to be asked. Ring 07985 290 644"
UPDATE: Victory for Steve and Labour

TUC Pension Trustee Conference 2012: Making Pensions Work For People

Picture is of Pension minister, Steve Webb MP, address the opening of the 2012 TUC Trustee conference at Congress House.

Steve spoke about his recent discussion paper on "Reinvigorating Workplace Pensions" which I will post upon another time.

He thought that auto enrolment had been a success so far with far less "opt outs" than feared (Great news).

He wants reform to allow people who build up small "pension pots" with a number of different employers to have the "pots follow the member" and consolidate into big fat pots (Good idea).

The new state pension scheme must be above the means tested income support level or people will not have the confidence to save for their pensions in case it is all eaten up by reductions in benefit (yep).

He tried to explain what his big pension idea "defined ambition" will mean in practise. While he would prefer pensions to be guaranteed and salary related, what can be done if employers don't want to offer such schemes? (you can force them Steve thought I).

In Q&A my question was about his comments in Pensions press in June this year, that accounting standards in defined benefit schemes were "a complete nightmare" and "killer" for pension schemes. While he also promised to "not stand idly by" and do something. Yet today schemes such as the Pension Trust are still using these completely artificial standards, to justify kicking employers out of schemes and forcing the closure of decent pensions for no good reason. These so called pension "deficits" do not exist.

Steve answered by saying that he wouldn't quite agree that the deficits did not exist, he had not forgotten his words but he cannot say anymore at the moment except that he hasn't forgotten what he has said. He also said that he had met with a number of big charities recently to talk about their difficulties with the Pension Trust.

Well, wait and see I think. I am told that it is Vince Cable as Secretary of State for Work and Pensions who is responsible for addressing such accountancy standards ("Mark to Market" and "Smoothing").  I don't know and frankly don't care who does what as long as something is done. Perfectly good pension schemes are going to wall every week in this country, while those responsible appear to wring their hands as ordinary workers are being cheated out of a decent retirement!

You can check my twitter posts of the whole conference here  It was probably one of the best TUC ones I have attended. I will try and post more during the next few days. Its a busy time for pensions. 

TUC Pension Member Trustee Conference 2012

Today I finally booked a place here for this year's TUC trustee conference.

"Date Tue, 27 Nov 2012

Location Congress House, London WC1B 3LS

Cost - Unions: £50
- Educational, public or voluntary sector: £75
- Commercial and others: £250

Description
The TUC invites pension trustees to the annual conference on Tuesday 27th November. The Conference will feature speakers from the pensions and wider financial and political world and will engage delegates with a range of technical and informative workshops.

Keynote speakers include:
- Pensions Minister Steve Webb MP
- Professor John Kay, author of the Kay Review of UK Equity Markets and long term decision making.
Contact for more information
Enquiries: Jennifer Mann 0207 467 1222, Email: trusteenetwork@tuc.org.uk
To register for this event please visit:

http://tucmembertrustee.eventbrite.co.uk/