Warwick pensions research has impact on government policy

The government says that university research should have impact on wider society outside the academy. Here, I believe, is an example where Warwick has had an impact on government policy.

Last November I published a letter in the Financial Times calling for a rethink of the way that pension schemes are accounted and regulated. This was based on an analysis of the universities superannuation scheme, the USS (to which all academic and related staff in the pre-1992 universities belong and is the second largest funded pension scheme in the UK).

I found there was a madly fluctuating deficit - although the scheme seemed otherwise fundamentally sound and relatively stable - and concluded that the fault must lie with the way the actuaries do the sums - that the deficit is artificial to some extent. My letter led to a very active debate among pensions professionals, actuaries and accountants.

I published another letter in the FT in March, following a report by the National Association of Pension Funds showing that a side-effect of the government's quantitative easing policy (aimed at stimulating the economy by keeping interest rates as low as possible) was to damage pension schemes right across the private sector (because the deficits are artificially exaggerated due to record low interest rates). I argued "there is an urgent need for government action" on pensions regulation.

Calls for reform were made by the NAPF and the employers body the Confederation of British Industry, CBI.

Now in last Wednesday's Autumn Statement, the Chancellor, George Osborne, has responded to these concerns by taking action. He announced that there would be a consultation by the Department for Work and Pensions on the issue, to consider the desirability of moving away from the mark-to-market approach that is causing such concern and going back to the smoothing methods that actuaries used to use in the past. There is considerable opposition from vested interests, not least the Pension Regulator, who believes that the problem can be addressed by allowing longer periods for pension scheme recovery plans to operate.

I would not claim to have been solely pivotal in persuading the government to take action - I think pressure from the NAPF and CBI would have been crucial - but my contribution has certainly been influential and therefore had Impact.

Dennis Leech : 07 Dec 2012 14:23 |  Tags: Pensions |  Comments (0) |  Report a problem