Along with mists and mellow fruitfulness, autumn is normally a season of conferences. While this year’s PLSA (Pensions & Lifetime Savings Association) annual conference still took place in October, Covid-19 meant it happened online.
This meant speaker presentations on Zoom from a variety of home offices, while delegates could flock to a digital venue with virtual exhibitor stands and a networking lounge for their taste of the conference experience, 2020-style.
But as we have all learnt this year, virtual meetings are not the same as the real thing. For many of us, conferences are about renewing old contacts, making new ones, discussing ideas, and exchanging gossip. This is best done in person. But good events also let delegates discover relevant and illuminating content. This works online, as this year’s PLSA conference demonstrated, with industry experts and practitioners on the latest UK pensions developments, and keynote speakers from the outside world on more general topics. In theory, presentations from inside and outside the pension industry might have little in common, but some common threads ran through much of the conference’s content.
One overarching theme was, unsurprisingly, how our lives are being reshaped in ways that were unimaginable a few months ago. As historian David Olusoga eloquently put it, we are now living through history in a way that rarely happens. This was not just a reference to the pandemic, but also to social change, signified by statues being toppled and mass protests in the streets this year. “The old world that we knew, that seemed to be chugging along – we’re not going back to it. Attitudes have changed as well; there has been a remarkable shift in our capacity to confront one of the biggest issues our society faces, which is inequality based on race and skin colour,” Olusoga said. He added that as a university professor, he sees how young people now are determined to discuss racism and discrimination in a way that previous generations did not. “Not all generations emerge with a sense of mission or are as political. The last time it happened in the West was in the nineteen sixties”. Along with a rejection of all forms of prejudice, this emerging generation’s other fundamental concern is the struggle against climate change.
Climate change, as well as race and diversity issues, was addressed in a pensions context at the conference. For instance, NEST’s Diandra Soobiah and Adam Matthews, from the Church of England Pension Board, spoke about their funds’ approaches to ESG investing and climate change as part of that. While NEST, as a national low-cost DC scheme for auto-enrolled workers, almost certainly has a lower average member age than the Church of England’s, both funds take climate change seriously. Soobiah said research has shown that NEST members care about climate change, and both agree that their pension funds did not want to see members retire into a world ravaged by global warming. Opportunities for pension funds to do something about this could be increasing, Matthews said, pointing out that the pandemic means that many companies will need refinancing in the next few years through new bond issuance. If pension funds use their collective leverage, through collaborative efforts such as Climate Action 100+, they can help drive the transition to a low-carbon economy, in the interests of their beneficiaries.
Demographics and generational differences were at the heart of another stimulating keynote presentation, on pensions, the economy and society. Here the first speaker, HSBC global chief economist Janet Henry, showed how young people have felt the brunt of the job losses caused by the pandemic. She was followed by Resolution Foundation chief executive Torsten Bell, who set out five trends shaping the UK pensions landscape. In the past 20 years, Bell noted how real incomes have stagnated for those in work. At the same time, younger workers now save in riskier and less generous DC pensions, while pensioners have become relatively wealthier. Inheritances have doubled in size in the past two decades and will double in size again over the next two, but as the average age of inheritance is now 62, this looks like increasing the share of the pie for older age groups. As a result of these trends, Britain is increasingly divided on demographic lines. And this now translates to geographical divisions, Bell said, with the young and the old tending to live in different places. In an echo of Olusoga’s comments on the politicized nature of the emerging generation, Bell said that age is now the defining feature of the UK’s political map, with the safest Conservative seats found in places with the oldest age profiles.
Speaking of Conservatives, pensions minister Guy Opperman, praised the pensions industry for the way that it has coped with the pandemic. Opperman also touched on the migration from DB to DC pensions, by talking about how master trusts could help members of smaller DB funds and how DC funds should be able to invest in less liquid assets, to help provide finance for a transition to a greener economy. Opperman described climate change as the defining issue of our time and he praised the efforts of pension funds such as NEST and the BT fund, among others, on this issue. It would have been interesting to see how Opperman’s speech would have gone done in a packed auditorium, but it’s hard to gauge the audience reaction in cyberspace.
The shift from DB to DC also featured in the presentation by Charles Counsell, chief executive of The Pensions Regulator (TPR). In the 15 years since its inception TPR has been associated with ensuring that DB pensions are adequately funded, but it will now focus more on DC pensions. “Don’t take this as a signal that we want DB schemes to close, but the reality is that most are closed. Employers no longer bear the risk, savers bear the risk, whether they understand that or not”. So there will be a greater emphasis on savers, as Counsell labeled DC members, to help them reach good retirement outcomes.
As well as pushing people apart in 2020, the pandemic has highlighted some of the fault lines running through pensions and society in the UK, such as unequal distribution of wealth between generations, and their different attitudes. But it is also the case that the pandemic could accelerate some emerging trends, such as a greater focus on sustainability. ‘Build back better’ is a much-used phrase to describe how economies should recover from the pandemic. One encouraging reflection is that it could align with the demands of younger pension fund members over the next few years, while also serving the interests of older members.