Friday, 15 December 2017

    Changing of the guard

    From the Queen’s Speech to the Budget, pensions have rarely featured so high up the news agenda. It’s unsurprising, when we look at the state of the market today.

    Uncompetitive annuity rates, swathes of jargon and layers of cost have conspired to create a reputation for opacity and inefficiency.

    No wonder the chancellor, George Osborne, has singled pensions out as an area which is urgently in need of reform. It’s an election battleground, too, with politicians having to balance winning the the grey vote with needing to make the system more sustainable for both the state and our ageing population.

    This month, collective defined contribution schemes have been posited as the latest solution to the underlying problem of poor outcomes from DC schemes, but will they dovetail with the moves announced in the Budget? We’re not convinced.

    A former with-profits fund manager told me that such large-scale funds become cumbersome beasts

    A former with-profits fund manager told me that such large-scale funds become cumbersome beasts and it’s very difficult to make changes to investment strategy without moving the market.

    Is it better to go steady with passive than to gamble on a manager you trust?

    Listening to that, it was hard not to draw parallels with the Local Government Pension Scheme. Those monolithic funds are asking the same questions about whether economies of scale are better for end investors and whether they should invest their money with expensive active managers or cheaper passive managers, or some combination of the two.

    Active management does outperform, but only if you choose the right investment manager. So is it better to go steady with passive than to gamble on a manager you trust?

    We’ve just published our own exclusive research into the issues plaguing the LGPS; see here for the highlights. The debate continued at our flagship conference, Workplace Pensions Live, earlier this month (news from WPL is featured here).

    Changing of the guard

    This is my first editor’s note for Pensions Insight, and I am delighted to be taking on the mantle. David Blackman, PI’s hugely well-respected former editor, has taken on a new role with the magazine as editor-at-large, so you will continue to see his byline in these pages.

    David is pursuing a part-time MSc in Politics, Policy and Government while continuing to write for us. What degree could be more apt at this time, as pensions and politics remain so inextricably entangled? David, thank you for all your hard work building PI, which I hope to continue.

    With any changing of the guard, there is always a process of taking stock. Whether you enjoy what you read in this issue or would like to see us tackle another subject, I’d love to hear your feedback.

    Louise

    louise.farrand@pensions-insight.co.uk

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