By Hannah Gilbert, Pension Power team member
13 May 2016
Recently, we took a trip to Central London to visit the Department of Work & Pensions (DWP). We had a simple message for the officials that met with us: the government should take steps to improve transparency in the pensions industry. Simply put, we want the people that manage our retirement savings (pension providers) to communicate clearly with members like us, and be open about the investments they make our behalf.
A meeting with government officials might seem a little daunting, but we were accompanied by ShareAction staff and armed with some home truths. We were sure our personal stories of engaging with pension providers would drive home the arguments we wanted to make.
A key point was related to democracy. The majority of us save for retirement via our workplace. Employers pick the pension provider that suits them and, unless we opt out and don’t save at all, we’re stuck with that provider, for a long, long time. It seems sensible then, that we should get a say in how our pension scheme operates.
In particular, we should have the ability to hold key decision-makers to account. These people manage and invest trillions of pounds of our savings. With great power comes great responsibility. Or at least it should do which is why we told the officials at the DWP that pension savers need formal opportunities to find out what those decision-makers are up to and if they’re doing a good job.
What do these formal opportunities look like? We pointed out how some pension providers are already stepping up in this area. Some are organising annual members’ meetings to update savers face-to-face. Others appoint people to their boards who are selected by the members themselves. So the saver’s voice gets right to the heart of the action. These are tangible steps towards a democratic pensions system.
To truly work out if the people managing our savings are looking after our long-term interests, we need information as well. That’s why we stressed that the government should also concentrate on promoting transparency.
Pension providers own large shares in the biggest companies in the world. But what are they doing with these holdings? Are they meeting with company bosses to encourage good governance that promotes long-term value? Are they using their right to vote on key company decisions, including environmental and social issues that have a material financial impact? They should be. We made it clear in the meeting that savers deserve to know this information about their pension provider’s action.
The DWP officials seemed impressed by our knowledge, and our personal stories had a real impact on their team. They said they wanted to hear more savers’ stories and case studies to paint a clearer picture of how their policies work on the ground. Great news!
We also had some time to hear about the government’s priorities for the coming years. Not surprisingly, they are focusing on auto-enrolment and providing value-for-money for savers. With so many new pension savers entering the system, there’s a huge opportunity to use policy to improve consumer outcomes and choice. Increased transparency will be vital in making the most of this opportunity.
Better pensions policy for savers won’t happen overnight. We have high hopes that the meeting was the start of a sustained relationship with the DWP. But for now, we are glad that we had the opportunity to take the voice of savers to heart of government!
Thanks Hannah. To learn more about our Pension Power work, email Jamie Audsley, Head of Education & Organising