NAPF delegates meet the new government
The National Association of Pension Funds' annual conference in Liverpool came at a time of uncertainty for British pensions: there was the announcement of a new Pension Protection Fund (PPF) levy; the release of Lord John Hutton's report into public pensions; and Steve Webb's assurance to the industry that auto-enrolment was still the way forward for the UK - despite ongoing uncertainties.
PPF chief executive Alan Rubenstein argued that the new three-year fixed levy would give businesses the stability they needed. Rubenstein also acknowledged that those insured funds that posed a greater risk to the system would be expected to compensate the PPF for its higher risk investment decisions with adequate contributions.
The chief executive stressed that the new rules would not be rushed in, with a 2012 date giving the industry time to prepare in a year when pension tax relief changes are to be implemented with six months' notice.
The biggest crowd of the day was drawn by Lord Hutton who earlier had published his review of public sector pensions. Hutton stressed that no funding changes were being proposed for the Local Government Pension Scheme and insisted that it was proper procedure for trade unions to be involved in any scheme redesign that resulted from his review. As chair of the Public Service Pension Commission, he came to the conclusion that final salary schemes were becoming increasing unsustainable and that a career-average pension was the way forward for the industry, while insisting that a move to a straight defined contribution system was not desirable.
The question of pension funds helping to rebuild Britain was also addressed, with Scottish MSP Alex Neil, Scotland's minister for housing and communities urging them to invest in affordable housing.
He argued that up to £1bn (€1.1bn) was needed in Scotland alone to meet housing needs and that pension funds should assist, as it was a low-risk endeavour. He concluded by reading out his office phone number.
Finally, Chris Verhaegen, of the European Federation for Retirement Provision (EFRP) sought to assure UK pension schemes that the EC's current Green Paper on pensions was simply a means of relaunching the policy debate among member states. Furthermore, she warned of the dangers of the IORP Directive, including a review of Solvency II, arguing the outcome would be damaging for the industry.