BLOG: PLSA IC 2018 – what we learnt

Written by Theo Andrew

As you would expect, this year’s Pensions and Lifetime Savings Association (PLSA) Investment Conference tackled all the top issues facing the pensions system, from how to make the defined benefit sector more robust, to increased trustee consideration on ESG issues and what next for defined contribution after auto-enrolment.

Attendees welcomed the first keynote, former Deputy Prime Minister Nick Clegg, who discussed with the Edinburgh audience his role in helping the country through the great financial crash of 2008.

What was clear was that this was a well-trodden speech, but, when asked about pensions reform, there was a moment when Clegg allowed himself to speak passionately about the wider effect that Brexit is having on reform in the country, labelling it a “tragedy”.

“You must not exaggerate the capital for governments on several different fronts at once … the government is in a state of paralysis - it can’t do more than Brexit,” Clegg said.

So what might this mean for much of the planned reform in the system, namely the most recent automatic-enrolment review, and defined benefit white paper expected to be delivered in the spring?

Speaking at the conference, the Department for Work and Pensions deputy director of private pensions policy, Ronan O’Connor, remained tight lipped about the details of the DB white paper, but confirmed that consolidation, more powers for The Pensions Regulator and heightened scheme governance through clearer trustee objectives and more accountability was the order of the day.

Trustees also faced increased scrutiny over their role in both the defined contribution and defined benefit pension systems, as pressure grows over their ability to handle risk and invest their pension scheme responsibly.

Furthermore, J.P. Morgan head of Europe Middle East and Africa pensions solutions Sorca Kelly-Scholte said pension schemes must start building their de-risking strategies now, as more schemes transition into run-off.

Despite this, pension funds were also warned against getting too swayed by “the flavour of the month” within the industry, such as ESG, according to FRC's senior investor engagement manager, Jennifer Sisson, although climate change was highlighted by some investment managers as the "single biggest risk" to pension portfolios.

To round the conference off, SCM Direct co-founder and transparency and ethics activist Gina Miller highlighted how much further the industry has to go in terms of polishing its image.

Miller proclaimed that the pensions and asset management industry has been "tarred with the brush of the financial services industry" and that in order to tackle this mistrust, the industry needs to be "more proactive in defending what we do".

The conference will have given much of the industry food for thought, and with reform on the agenda, it will be interesting to see how far we've come by the time of the PLSA Annual Conference in October 2018.

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