Making best use of our resources to protect members; encourage investment and support current employees

Money for investment is available by not over solving the pension funding question.

• Vast cash sums are being used to fund debatably calculated pension deficits which can be better directed to generating “sustainable growth”.  In 2017, nearly £14 billion was spent by 360 large UK organisations and deficits have absorbed £140bn over the last decade.  And the money is being used to buy assets returning less than inflation. 

• The price is paid in jobs and investment.  The UK is a high cost place to do business.  The proportion of UK profits taken up by pension funding is staggeringly high across industrial Britain.
• Change can come when companies take responsibility directly and use surplus financial capacity to protect members through guarantees not cash.  Trustees can then rely on long-term, steady, low risk returns, not corporate cash to be received ASAP.  This frees up much of the cash for investment.
• The Pensions Regulator can apply greater focus to sustainable growth and long term pension provision and not on setting KPIs to use its powers more to raise cash contributions levels.
• The Pension Protection Fund can reassess the cash it needs in levies given how much better schemes are now funded.  Can it give more generous payouts?
• With equity holding falling and UK equities in particular unfashionable, the eco system of UK members working in business partly financed by pension schemes has gone.  The treasury broke it with the abolition of tax breaks for equity holdings in the 1990s.  It should end the trend by not expecting schemes to fund in cash beyond accounting levels if they provide guarantees.
  

So:

• Derisk the employer with guarantees
• Revamp the investment strategy to assume long-term, sound returns
• Recovery plans need less cash from companies because of the investment returns
• Invest the cash freed up in people and products

 
Large sums are readily available to back investment in Britain.