The one issue uppermost on my mind at present is the state of pensions in the UK and how the ACT is involved in contributing to the understanding and policy debate in this area. It was underlined to me a couple of weeks ago that the concerns many are articulating about what is happening with UK pensions are shared elsewhere – at an open forum for senior US treasurers in which I participated, the question how to handle the pensions challenges facing their UK subsidiaries was close to top of the list of ‘hot topics’ on which those present wanted to share experience and ideas.
That pensions are a major strategic issue now must be clear to most; and the issue arises at multiple levels – for companies faced with deficits in their schemes, for the public sector, faced with the looming likelihood that the benefits provided to state employees hitherto are becoming fiscally and politically unsustainable, and for individuals faced with a range of challenges from looking after their personal pension provision to participating as trustees or as risk managers.
For some time we in the ACT have taken the view that the treasury profession – as we widely define it – has a real part to play in helping to address the pensions issue. Treasurers have the risk management understanding and the funding responsibility for the scheme sponsor, quite apart from often – and controversially, perhaps – finding themselves invited to take on trustee roles. We have a number of initiatives underway in response to all these elements.
Before the end of the year we will formally launch our new pensions certificate, both as an independent qualification and as an eligible AMCT module. The material is aimed at all those who need to understand how the pensions environment in the UK operates and the major issues associated with risk, funding, investment, trusteeship and of course accounting.
As mentioned later in this newsletter, we are responding to the consultation on the Pension Protection Fund levy proposals. These raise some difficult issues and we are arguing that there is an urgent need to modify the proposals to introduce a more sensible approach to sponsor risk assessment. Without such a change we believe there is a fundamental unfairness in the proposals and we also see the operation of the levy as it is set out as having an adverse, pro-cyclical, economic impact.
At The Treasurer's Conference in 2006 we will have a keynote speech by Adair Turner, who is of course leading the Pensions Commission’s work on the long term socio-political as well as economic issues the UK faces in its pensions ‘crisis’. Those who have heard Adair speak previously – either at our ACT event in April 2004 or elsewhere – will know that he will offer a forthright, eloquent and passionate view on the imperatives we face.
Finally, the ACT’s Advisory Board is extremely fortunate that the Pensions Minister, Stephen Timms, has accepted an invitation to be our guest at the next dinner we hold. Our discussion (under Chatham House rules) in December will be an excellent opportunity for the ACT to articulate its views and position our members as playing an important role in dealing with the pensions challenge.
Away from pensions I should mention that our Annual Review is ready to print and we expect to send it out to members around the middle of October. I hope all will find it informative and that it reflects well on our approach to governance and disclosure as well of course on our performance over the last financial year.
