Former pension scheme boss Charles Amos says the the NAPF rebrand was long overdue
Congratulations to the former National Association of Pension Funds (NAPF) on its decision to rebrand as the Pensions and Lifetime Savings Association (PLSA). It needed doing.
As you'd expect, their official blurb emphasises the positive. The success of auto-enrolment has not only brought millions of workers within a lifetime saving framework for the first time, but has also brought in thousands of new, smaller employers. Many of these don't want or need the complexities of their own employer-branded pension scheme. What they need is a choice of cost-efficient ways to help employees save for later life, without having to be providers or guarantors themselves.
Savers, for their part, need help understanding that this has to be their responsibility, not least because most of them will far outlive their current employer. Active, healthy (semi-) retirement will be different from less capable later life, and different again from terminal years. Each will pose different financial challenges and, for those who make the effort to save in earlier life, offer widely-differing opportunities.
Whether we like it or not, the combined effect of millions of votes and billions of pounds will ensure that longer-term saving remains a perennial political football. PLSA is absolutely right to home in on lifetime saving as the central issue here - not just to provide financial security for the old, but also to give financial protection for the young from the burden of older generations. The government's latest, reckless proposals to abolish the distinction between medium-term ISA saving versus whole-life retirement saving grimly illustrates the need to educate people and policymakers alike on why the difference matters - and the price our whole society could pay, if ambitious spads and spin doctors were to succeed in painting the traditional pensions industry as concerned only with its own decline.
The modern reality, which PLSA is bravely taking on, is an aeon away from the world in which the old NAPF was formed. Its roots were in an age of employers who thought their company would live forever, of powerful trade unions, weak shareholders and meagre life expectancy beyond retirement age. Looking after the few employees who survived for long after retirement ‘felt like the right thing to do' and wasn't that expensive, particularly if it helped soften the tone of otherwise-confrontational industrial relations. The pension fund was relatively neutral territory between opposing industrial sides and so having a national association of them - one which emphasised their common interests and played down potential conflicts - made sense and did a lot of practical good.
The Thatcher-Major years, however, saw a complete reversal in the relative power of shareholders versus employees, while top management rewards escalated to levels which made their own bonuses more valuable than pension scheme membership. The concept of a joint mission to preserve a strong employer and a strong pension fund lost out to the shareholder-value mantra of slimly-efficient balance sheets and zero discretionary giveaways, forcing reluctant governments to intervene and regulate.
The pensions industry still carried on talking about ‘pension funds', but it increasingly became a codeword for what only one party - shareholders - wanted. Meanwhile, the true solution to reuniting interests of employers and employees - defined contribution savings, where responsible employers can encourage and facilitate without putting their shareholders at risk - was continually dismissed as inferior, irrespective of how much people actually saved or how dubious the value of some defined benefit guarantees.
Rebranding the old NAPF as a new Pensions and Lifetime Savings Association creates a wonderful opportunity to regain thought-leadership in the new savings landscape. A huge responsibility now falls on the PLSA's legacy defined benefit council not to soil the new nest with old detritus. They must immediately announce a clear conflict of interest policy - one that makes clear who speaks for shareholders, who have to pay when things go wrong, and who else speaks for past savers, who will lose if they don't. Threats to close the few private sector defined benefit schemes still open for future service no longer justifies postponing honest recognition of where the interests of the vast majority of defined benefit savers lie.
The NAPF was one of the great institutions of the 20th century. The trouble, in 2015, is that it still was - while the world it sought to influence had changed beyond recognition. Establishing a new, unfamiliar brand will be hard work, especially at the start; but they are well rid of the old one. Long live the PLSA!
Charles Amos is former chief executive, ICI Pension Fund
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