Emma Douglas' address to PLSA Investment Conference 2022 | PLSA

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Emma Douglas' address to PLSA Investment Conference 2022

25 May 2022
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During two years of huge global change, the PLSA has been making your voice heard on issues from workforce reporting to productive finance to pension adequacy. Our chair Emma Douglas sets out the PLSA’s policy and strategic priorities and celebrates being able to do it in person again.

Good morning everyone! It is fantastic to be back here in Edinburgh and to speak to you in person again!

All of us have done so many events where we speak or see speakers in their offices or homes. It feels good to be back on stage with the audience really here and I hope less likely to be interrupted by lost signal or someone’s cat, although I’m worried that the tech team might randomly mute my mic, just for old times’ sake.

This event last took place in this venue in March 2020. It was one of the last big conferences in Europe to take place before the lockdowns began.

Since then we’ve connected in new ways, and digital events have allowed us to bring more people together on more occasions than we were able to before 2020.

But nothing beats the value of being together in person. We’re celebrating this with #pensionstogether, and we hope to see you sharing photos of our big industry reunion.

This week we’ll feel the power of collective debate as we tackle some major investment issues for UK pension funds: inflation, the war in Ukraine, DC defaults and investing for decumulation, responsible investment and TCFD, private markets, the changing nature of work and the workforce, cost transparency – and many other areas.

We’ve got a very rich programme for our first live event in over two years. And I know lots of you previewed it during the pre-conference webinar earlier this month.

So much has happened since March 2020, for the world and for our industry.

The recent big news globally has of course been the terrible situation in Ukraine.

All investors have been dealing with rough markets and rising inflation, which means higher liabilities for funds and eroded purchasing power for savers.

We’ve conducted two rounds of research on the impact of sanctions on our members. Fortunately, the scale of Russian investments for UK pension schemes is small, though there have been some high-profile disinvestments in Russian assets from schemes in this room.

But the huge geopolitical change we’re seeing now could have big impacts on the way we invest in future, and as our members you need to know that PLSA is taking an active role in the key policy debates and making the voice of our members heard.

Policy Highlights

For example, the Government has a new power to prevent local authority funds investing in anything that runs counter to UK foreign and defence policy.

We’ve already said this could make things more difficult for local authority funds as long-term investors and stewards, increase costs and add a layer of complexity and confusion onto the good guidance on responsible investment and ESG issues that the LGPS already has.

We’ve raised these points with government ministers and our voice has already been heard on the floor in the House of Lords.

We’re also seeing that scrutiny of the social impact of investments is increasing across the whole industry. And that includes the way employers report on their own workforces.

In March the PLSA, CIPD, High Pay Centre and Railpen launched new research on workforce reporting by FTSE100 companies. It revealed significant variation in the quantity and quality of disclosures on Diversity & Inclusion, skills and training, pay reporting and mental wellbeing.

We need more transparency on how employers recruit, invest in and manage their workforce. That’s why the PLSA will be working with our partners to agree a baseline framework for workforce reporting.

We’ve also been working to help our members on the many other areas of responsible investment.

A Joint PLSA, ABI and IA Working Group developed the Carbon Emissions Template to help pension schemes meet their Climate Change Governance and Reporting Regulations obligations.

We’ve responded to DWP consultations on this topic - welcoming the new metrics, but seeking a year’s delay for implementation of one year and noting concerns about the lack of clarity in some of the new guidance.

Meanwhile we’re making your voice heard on broader investment issues such as productive finance John Chilman, the Chair of the PLSA Policy Board, and I belong to the Bank of England and HM Treasury advisory group looking at this issue.

We support efforts to remove barriers to long-term investment opportunities, but are not convinced that removing performance fees from the charge cap will make a significance different in adoption or deliver an improvement in member outcomes.

Because a better income in retirement is the ultimate goal of the work that we in this room do..

That’s why it’s the PLSA’s mission and the overarching aim of all our policy work.

Last month we announced a new partnership – again with the ABI and also with a number of large schemes and providers – on a campaign to boost people’s engagement with their pensions, including in how and where their money is invested and their choices at retirement.

This is important for PLSA members, saving them the cost and headaches that could have come with the original proposal for a predominantly paper-based statement season, yet still helping to increase understanding and awareness of pensions – an objective that the industry and the Minister share .

The Retirement Living Standards reach 35 million people through providers and likely many more through more than 50 pieces of national media coverage in the last 6 months. Their success shows that people value simple, easy to understand information and facts.

And of course, as I’ve said before, what really determines that value is the amount they, their employers and the government put into those pensions in the first place.

The PLSA’s major strategic policy aim for 2022 is improving pensions adequacy.

We’re campaigning for the Government to follow through on its commitments made after the 2017 Automatic Enrolment Review. The fact that there was no mention of AE reform in the Queen’s speech was worrying and shows the need for us to keep up the pressure, without appearing tone deaf to the cost of living crisis.

We are asking for an extension of the current auto enrolment regime to include younger people and pension saving from the first pound of earnings, starting during the mid-2020s.

And by the end of the decade, we want to see employer contributions levelled up to match those of employees so each pay in 5% - increasing total pension contributions from 8% to 10%.

And in the early part of the next decade, we want to see 1% extra paid in from both the employer and employees, to bring total automatic enrolment pension contributions to 12%. We realise that this may result in over-saving for some, so we need an opt-down mechanism, or other means to address this issue.

We’ve made the case to the Work and Pensions Select Committee and we’re about to begin a research programme to inform a report on improving pensions adequacy which we’ll launch at our Annual Conference in October.

Strategy

Improving pensions policy, so savers get an adequate income in retirement and you, our members, work in an environment that helps you deliver that, is one pillar of the strategy behind our mission.

For Julian and his team at the PLSA, that’s built on the right investment in our people and systems so we can make the maximum impact on policy, and on the financial sustainability to maintain it.

It’s also built on engaging PLSA members, so we understand your needs and we can give you the tools to succeed in delivering for savers.

And events like this one are, as ever, the best place to do that and to bring the industry together behind our common goal.

I’ve missed every aspect of these – the freebies from the exhibition stands, the great speakers, the insights from our members, and most of all the chance to have a conversation and share ideas about what matters most to you right now.

So it’s nice to see you.

Thank you…