Pension Fund CEOs’ Room 101

Four UK pension fund CEOs choose their nemeses to banish to George Orwell’s torture chamber.

(October 18, 2013) – Quantitative easing, the trust versus contract debate, EU legislation affecting pension funds, and chancellors of the exchequer were all banished to Room 101 by UK pension funds CEOs at Europe’s largest pensions conference.

Four of the UK’s top pension fund chief executives were asked to nominate issues within the pensions industry that they wanted to banish to Room 101, George Orwell’s torture chamber in the Ministry of Love from his novel 1984.

Chris Hitchen, the CEO of RPMI—the pension services company that runs the UK rail industry’s pension arrangements for 350,000 beneficiaries—was the most successful CEO, getting two of his suggestions voted into the infamous room by delegates at the National Association of Pension Funds conference.

His first suggestion was for all previous chancellors of the exchequer, who had “raided our pension funds” through a variety of taxation introductions, including limiting tax relief on contributions.

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His second winning proposal was to ban quantitative easing, for “damaging pension schemes and pensioners… making annuities poor value”, and for rigging the financial markets to the detriment of defined contribution (DC) funds.

Lesley Alexander, CEO of the UK’s HSBC pension fund, successfully argued for EU legislation affecting UK pension schemes to be banished to Room 101, saying she was “frustrated with the pace of EU legislation, and with its interventional stance”.

Referring to a controversial way of accounting for pension assets and their risk profile being tabled by the European regulator EIOPA earlier this week, Alexander added: “We hate the holistic balance sheet: we thought it had been sent away to rest in peace, but now it’s back.”

Bill Galvin, CEO of the Universities Superannuation Scheme and former CEO of the UK’s pensions regulator, won the right to banish the debate over whether trust-based pension funds were better or worse than contract-based pension funds “because I’m sick of it”.

“It damages the whole industry…and everybody loses a bit of confidence,” he told delegates. “What matters is getting the best components in place and a focus on getting those across. I’ve seen pretty rubbish trust-based schemes and pretty rubbish contract-based schemes, but I’ve also seen really good examples of both. We need to move the dialogue away from the wrapper.”

The only CEO not to win the right to banish his bête noire was Stephen Nichols, CEO of the Pensions Trust, which runs the pension fund money for 2,400 not-for-profit organisations and more than 157,000 members.

Nichols campaigned for the Department for Work and Pensions’ inconsistency, DC risk assessment processes, the complicated auto-enrolment regulations, and active fund managers who make bad excuses for poor performance to be sent to Room 101.

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