Speeches by Garnier.

“Q Chris, following on from the points about derisking and all the rest of it, we heard from Phoenix a little earlier about the value for money framework. Everybody seems to agree that the framework is a good thing because it is going to drive better performance and all the rest of it, with one exception, expressed by P…”

“Q One of the original ideas of the last Government was to have a lifetime pot, whereby an employee would pay into a fund, but it was deemed by the industry to be quite difficult to administer, because as an employer you would have to be dipping bits into different pots. What was put up as an alternative was a magnetic …”

“Q On this derisking thing, a number of investment managers over the years have pointed out to me that the rules were brought in as a result of Maxwell absconding and taking a lot of money out of his pension fund. Deficits are now placed on to the balance sheet of the host company, which means that the inclination of th…”

“Q A previous witness, Michelle Ostermann, made two really interesting related points. One is that, having derisked the UK pensions industry, there is not the appetite to make some of these investments. The second is that other countries are much better at leveraging their pensions industries in order to promote economi…”

“Q Obviously, the most controversial part of the Bill is mandation—or rather, reserved powers for mandation; I am corrected by the Minister, who is flashing me interesting looks. Why do you think it is that Canadian pension funds are investing more into UK assets than British pension funds are—without being mandated? Ch…”

“Q So while we were all running around like headless chickens trying to figure out what was going on, you were saying, “We told you so. We knew that was going to happen.” Michelle Ostermann: It is definitely something that was on our radar. When we build the investment strategy for an open DB scheme, such as those I des…”

“Q I must ask a question that is perhaps a self beat-up, if you like. There was a disastrous mini-Budget a few years ago under a different Prime Minister—of course, at the time, we got rid of our bad leaders. Did you stress test a scenario such as that? Michelle Ostermann: Not here in the UK, but as you can tell by my a…”

“Q Michelle, you run the compensation scheme. Do you see any risk in surplus extraction? I know that by definition, it is surplus and therefore you should be able to take it out, but at the moment, a lot of funds are in surplus. We went through a period of low interest rates, where it was a bit tricky, but now interest …”

“Q One of the questions around that is what drives a removal. We heard from previous witnesses that if a host employer puts in more money than is necessary, it seems perfectly reasonable for them to get some of that back. In some cases, that money could be used for investment in plant and machinery to expand the employe…”

“Q For defined-benefit pension funds? Morten Nilsson: Yes.”

“Q The Bill provides for surplus extraction from funds. Do you see that as a good or a bad thing? Morten Nilsson: I see it as a good thing. I think it will change the pension industry quite a bit as a positive innovation. Closed DB schemes, which we focus on, might be seen more as an asset for sponsors, rather than a li…”

“Q So you could run into the same problems that we saw recently where the Financial Ombudsman Service was publishing who has been under investigation, which caused problems. That has now been changed, but we could be entering into that same problem. Tim Fassam: If you see very strong market or regulatory consequences fo…”

“Q Very quickly, if you get an intermediate rating, is it published? Tim Fassam: Your value for money rating will be published.”

“Q Ian, can I start with you? One of the problems with auto-enrolment is where individuals move from one job to the next, not with a small pot under £1,000 but with a slightly bigger pot that is none the less still administratively tricky. Do you think that the Bill sufficiently tackles that problem? Ian Cornelius: I do…”

“Q I have one final question. Various clauses look at the asset manager and the trustees effectively marking their own homework on this. There are consequences of an intermediate rating, consequences of a “not delivering” rating and various other issues. Is that the best way of doing it? To a certain extent, the manager…”

“Q I want to ask about the value for money framework. There seem to be a lot of fans of the value for money framework. Are Phoenix as enthusiastic about it as everyone else seems to be, if that is not too loaded a question? Tim Fassam: The short answer is yes, we are big fans of the value for money framework, but it is …”

“Q I completely agree: I think it is absolutely right that the more money you have, the more negotiating power you have and the more you can diversify risk and all the rest of it. But part of what I am worried about is this: how is anybody going to prove to the regulator that they will have £25 billion of assets under m…”

“Q Yes, that is kind of helpful. Patrick, could I turn to you? We met and had a very interesting chat. One thing we discussed was the scale of the funds. There is a requirement in the Bill that funds such as yours will need to be valued at £25 billion by 2035. One thing we discussed at the time was whether that creates …”

“Q Do they know that they can do that? Somebody who is changing jobs quite a lot would not necessarily be the sort of person who is making strategic decisions about their retirement. Ian Cornelius: I think that is right. It probably goes back to dashboards. They are key to helping to increase visibility. That will get p…”

“But you would rather see the opportunities first? Sophia Singleton: Absolutely—we would love to see the opportunities first. Helen Forrest Hall: The other dynamic there is that international pension funds, for example, are often looking to invest in the UK for reasons different from the reasons UK pension funds might w…”