The recent National Association of Pension Funds (NAPF) annual conference in Manchester signalled significant change for the industry. Not only did the 92-year-old organisation rebrand as the Pensions and Lifetime Savings Association, it welcomed, for the first time in five years, a new pensions minister in Ros Altmann, who had announced hours before her speech that she would halt most of her predecessor’s reform proposals.
After years of work, the policy of the former pensions minister Steve Webb for defined ambition pensions will be set aside in favour of a focus on auto-enrolment for the millions employed by small businesses.
The idea of a pension pot following employees from one job to the next has also been sidelined, seemingly in favour of the pensions dashboard being considered by the Financial Conduct Authority. Altmann also said she wanted to communicate 2016’s state pension reform and, potentially, work on further regulation for the master trust sector.
Altmann was at pains to stress that an element of defined ambition – the ability to launch collective defined contribution (CDC) schemes – had not been abandoned. But she is likely to have been told on arrival at the Department for Work & Pensions (DWP) that the drafting of the new fund structure was ‘ongoing’, which former UK foreign minister William Hague explained to delegates as meaning “a task nowhere near completion”. Altmann informed delegates that, even if the DWP pushed ahead with its work, the regulatory underpinning for CDC would not be published until 2017.
The long time lag was given as a reason to suspend the work, although Altmann stressed it was a tactical and strategic retreat. “This isn’t abolished, this isn’t abandoned,” she said. “This is on hold for the moment because of all the other changes going on. I actually mean what I say, so please don’t read anything else into it.”
In a later speech, Webb backed Altmann’s priorities and said CDC was “always something for the long term”. But he urged the industry not to let the Pensions Scheme Act 2015, which allowed for CDC, simply to “gather dust on the shelf”, and argued that a system should be ready to help when the appetite for risk-sharing returned.
The conflict between old and new was also played out when Lesley Titcomb, who only became chief executive of the Pensions Regulator (TPR) in March, seemed to clash with her predecessor, Bill Galvin.
Galvin, now chief executive of the Universities Superannuation Scheme, argued strongly in favour of the “revolutionary” impact of doing away with “well-meaning amateurs” on trustee boards, likening their role, in terms of complexity, to the Bank of England’s monetary policy committee.
Titcomb, who spoke the day before Galvin, ruled out any stricter trustee education in line with what has been implemented in the Netherlands and is under consideration in Ireland.
“We would run the risk of struggling even more to attract good lay trustees if we were to introduce mandatory qualifications for everybody,” she said.
However, Titcomb did seem to qualify her support and noted that TPR’s research shows better governance at schemes with professional trustees. The research shows that boards with professional trustees are more likely than those with lay trustees to spend 10 days or more on their duties, although, even with professionals, this only applied to 46% of respondents.
The clash of ideas is unlikely to stop in the near future with Webb’s new role as head of policy at Royal London Asset Management and Galvin in place at the UK’s largest pension fund. But only time will tell if they have any sway over their successors.