Perspectives

I had planned to post on Paul Maynard's speech last week to Professional Pensions, but Kim Gubler won the Lifetime Award from the Pensions Management Institute (PMI) - and that was far more important.

Calm waters with the odd splash

The minister mostly swam in the calm waters of pension rhetoric: “highest standards", "best possible outcomes", etc, but he did make a few notable splashes!

TPR being given powers to tackle underperformance was one. No details as to how, or over what period, but it recognises a lack of focus on investment growth. "Best returns for every pound saved"; no explicit mention of "risk", but he did mention "value", which I assume encompasses risk, but then I have learned that assumptions make an ass out of everybody. It also sounds like a bureaucratic nightmare.

The "shift from cost to value" was clear and repeated, although what "value" sounded a lot like "put money into productive finance"!

DC

He believes having many small pots is a significant problem (I think the fact they are small rather than many is the real problem) but they have a solution in "authorised default consolidator schemes" - no details provided.

When the government says they want “meaningful behaviour change”, I usually look to see what they know that is so clever that the entire market has yet to work it out. However, I agree that the focus in workplace procurement is heavily tilted to cost, not value.

On DC consolidation, he wants to see 80% of members in the largest 5 MTs by 2030; the direction of travel won't be news, but the timeframe feels a bit punchy.

There was a view that CDCs could be a large part of the future of decumulation. As long as the risk sharing isn't just "with profits" repackaged, maybe they have a place.

Pot for life was mentioned, a lot, as was consideration to passing a law allowing workers to force employers to pay into a provider of their choice, that will give MT provides something more to think about.

DB

I welcomed his comments on enabling DB schemes to improve member benefits and not just focus on de-risking and downside protection. More flexibility for pension scheme surpluses will hopefully align interests, and they plan to make run-on easier, whilst the superfund framework will allow businesses to focus on core functions.

I've commented on my thoughts on using the PPF as a consolidator; no further teaspoon analogies are required here.

So, what do we know?

Priorities are: 1) mansion house, 2) dashboards, 3) value not costs.
He likes transport infrastructure from his time at DFT, and is connected to his bank account and mortgage but not his pension.

A firm belief that Productive Finance is not just a slogan, and that it is part of the long-term levelling-up project. Given the polling, that puts "long-term" somewhere into the Autumn of next year.

However, he did ponder whether groupthink was about to be shattered and that I have a whole lot of time for!