Henry Tapper asks how an improved pension system could help with Brexit.
Recently I went to the Battle of Ideas Festival. It made me think how we might make a good pensions system work for Britain (we usually think the other way round).
Most political ideas revolve around Brexit, so why not try out this way of thinking. How could a better pension system ease Britain through Brexit? There's no doubt that the changes will put a strain on the organisations we work for. We may not be fighting at the front, but can't we help out like the Home Guard did?
I've been consider this for a few days and have come up with four ideas. How good would it be if we had a conversation with government which started "here's how we might help".
- Productivity: Britain's productivity lags our OECD peer group. One of the reasons for this is we do not invest in technology and training; we have neither the systems or the skills to out-produce our neighbours. What could pension funds do to allow employers the time and resources to tech-up and skill-up? Could we find better ways to share the risk of pension underfunding than by demanding our schemes are funded to buy out every valuation? Could we move to a more progressive way of valuing pension scheme liabilities?
- Cost to employers of operating pension schemes: Currently we have 46,000 DC occupational pensions. This can hardly be efficient. What if we narrowed this down to 460 or even 46? What would we lose? Perhaps we'd lose the vanity of having our own company pension, we'd lose the perks of being a trustee and many advisers would lose fees. Come to think of it, fees would fall for asset managers too. But this would be to the advantage of employers and staff who have to pick up these costs. Add to this the benefits of bringing new technologies such as Artificial Intelligence and the Block chain into our systems and processes, couldn't we make it easier for our employers to make it through Brexit?
- Wellbeing: I think that happy staff are more stable and savvy and do more and better work. Financial wellbeing can be improved in the workplace if employers are prepared to financially empower workers. Whether through distance learning, face-to-face advice or making available financial guidance, there are many ways we can use our skills to improve workers' experience. There is of course a synergy: work and pensions are both boring – why not do the two together, improve our financial wellbeing and improve the human resource at the same time?
- Attitude: I am struck when I talk to the natural leaders I meet, that they are not moaners but inspirers. I think of business leaders like Nigel Wilson of L&G and Stephen Kelly of Sage; I think too of pension leaders such as Michelle Cracknell, Otto Thoresen and Laurence Churchill. You won't spend time with them without wanting to do something positive as a result.
So there are four ideas I'll use to turn Brexit from a problem to an opportunity. One to do with investment, two to do with efficiency, three to do with empowerment and four to do with attitude.
Somebody told me that Brexit was our biggest national challenge since the second world war. Blimey – if Britain had sat around and moaned about being at war instead of getting on and winning it who knows what might have happened.
Henry Tapper is a director at First Actuarial
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