{"id":13547,"date":"2012-01-09T14:45:20","date_gmt":"2012-01-09T14:45:20","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=13547"},"modified":"2012-01-09T14:45:20","modified_gmt":"2012-01-09T14:45:20","slug":"pension-funds-its-time-they-were-accountable-to-their-members-so-heres-how-to-do-it","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/01\/09\/pension-funds-its-time-they-were-accountable-to-their-members-so-heres-how-to-do-it\/","title":{"rendered":"Pension funds: it’s time they were accountable to their members, so here’s how to do it"},"content":{"rendered":"

A commentator on this blog<\/a> this morning has made an excellent point on pensions:<\/p>\n

It used to be the case that most employers\u2019 pension schemes in the private sector were defined-benefit schemes. When that was the case, the pension beneficiaries didn\u2019t get much of a say in the decisions made by the scheme\u2019s trustees. Fair enough- after all, it\u2019s the employer that is on the hook if the investments don\u2019t perform, the only agreement with their employees is to pay the pension at the agreed rate.<\/p>\n

Now though, everything has changed, most private sector schemes are defined-contribution. The risk has been switched from the employer to the employee, so if investments don\u2019t perform in the long term, it\u2019s the pensioner who suffers if poor decisions are made. Yet, they\u2019re still isolated from virtually all the decision making, that all happens at the fund level. It doesn\u2019t seem morally right for employees to suffer the consequences of poor long term shareholder decisions, without having any input into what is decided on their behalf.<\/p><\/blockquote>\n

This\u00a0would, however, require that the accounting of pension funds be radically reformed. I gave this some thought a while ago, but never published it at the time. Given the\u00a0topicality\u00a0of the issue - and the relevance of this context, let me do so now.<\/p>\n

What I put together was a checklist of what I would like to see in the accounts I would wish my defined contribution funds would send to me each\u00a0year\u00a0instead\u00a0of\u00a0the incredibly simple note I get now that says, in essence that I\u00a0contributed\u00a0\u00a3X pounds of which they lost me \u00a3Y and charged \u00a3Z in fees, leaving me with a\u00a0reduced\u00a0annual pension\u00a0expectation\u00a0of \u00a3W a year at some dim and distant date in the future. That checklist of what I wanted was this:<\/p>\n

Pensionholder\u00a0capitalism\u00a0-\u00a0the\u00a0information\u00a0needs<\/em><\/strong><\/p>\n

1:\u00a0Who\u00a0runs\u00a0the\u00a0funds<\/strong><\/em><\/p>\n

1.1:\u00a0The\u00a0name\u00a0of\u00a0the\u00a0company<\/em><\/p>\n

1.2:\u00a0A\u00a0summary\u00a0of\u00a0their\u00a0accounts<\/em><\/p>\n

1.3:\u00a0Full\u00a0details\u00a0of\u00a0where\u00a0and\u00a0how\u00a0their\u00a0full\u00a0accounts\u00a0can\u00a0be\u00a0obtained<\/em><\/p>\n

1.4:\u00a0The\u00a0name\u00a0of\u00a0the\u00a0fund\u00a0in\u00a0which\u00a0the\u00a0prospective\u00a0pensioner\u00a0has\u00a0invested<\/em><\/p>\n

1.5:\u00a0Where\u00a0the\u00a0constitution\u00a0of\u00a0that\u00a0fund\u00a0can\u00a0be\u00a0obtained\u00a0from,\u00a0and\u00a0how<\/em><\/p>\n

1.6:\u00a0The\u00a0names\u00a0of\u00a0the\u00a0individual\u00a0pension\u00a0fund\u00a0managers\u00a0responsible\u00a0for\u00a0the\u00a0fund\u00a0and\u00a0for\u00a0each\u00a0such\u00a0manager:<\/em><\/p>\n

1.6.1:\u00a0Their\u00a0age<\/em><\/p>\n

1.6.2:\u00a0Summary\u00a0CV<\/em><\/p>\n

1.6.3:\u00a0Qualifications\u00a0to\u00a0undertake\u00a0the\u00a0task\u00a0entrusted\u00a0to\u00a0them<\/em><\/p>\n

1.6.4: Their remuneration<\/em><\/p>\n

1.6.4.1:\u00a0Linked\u00a0between\u00a0basic\u00a0pay\u00a0and\u00a0bonuses<\/em><\/p>\n

1.6.5:\u00a0Any\u00a0other\u00a0appointments\u00a0they\u00a0have<\/em><\/p>\n

1.6.6:\u00a0Any\u00a0conflicts\u00a0of\u00a0interest\u00a0they\u00a0might\u00a0have\u00a0e.g.\u00a0personal\u00a0shareholdings<\/em><\/p>\n

1.7:\u00a0The\u00a0method\u00a0of\u00a0changing\u00a0the\u00a0fund\u00a0managers\u00a0available\u00a0to\u00a0the\u00a0prospective\u00a0pensioner<\/em><\/p>\n

2:\u00a0What\u00a0the\u00a0fund\u00a0has\u00a0done<\/strong><\/em><\/p>\n

2.1:\u00a0What\u00a0its\u00a0income\u00a0was\u00a0in\u00a0a\u00a0year,\u00a0split\u00a0between:<\/em><\/p>\n

2.1.1:\u00a0Dividends<\/em><\/p>\n

2.1.2:\u00a0Interest<\/em><\/p>\n

2.1.3:\u00a0Rents<\/em><\/p>\n

2.1.4:\u00a0Hedge\u00a0funds<\/em><\/p>\n

2.1.5:\u00a0Private\u00a0Equity<\/em><\/p>\n

2.1.6:\u00a0Profits\u00a0and\u00a0losses\u00a0(each\u00a0stated\u00a0separately\u00a0to\u00a0come\u00a0to\u00a0a\u00a0net\u00a0disclosed\u00a0figure)\u00a0from\u00a0trading\u00a0investments\u00a0split\u00a0between<\/em><\/p>\n

2.1.6.1:\u00a0Equity\u00a0shares<\/em><\/p>\n

2.1.6.2:\u00a0Corporate\u00a0bonds<\/em><\/p>\n

2.1.6.3:\u00a0Government\u00a0bonds<\/em><\/p>\n

2.1.6.4:\u00a0Property<\/em><\/p>\n

2.1.6.5:\u00a0Cash\u00a0related\u00a0activity\u00a0e.g.\u00a0foreign\u00a0exchange\u00a0trading<\/em><\/p>\n

2.1.7:\u00a0Income\u00a0from\u00a0other\u00a0sources<\/em><\/p>\n

2.1.7.1:\u00a0Stock\u00a0lending<\/em><\/p>\n

2.1.7.2:\u00a0Fees<\/em><\/p>\n

2.2:\u00a0Volume\u00a0of\u00a0trading<\/em><\/p>\n

2.2.1:\u00a0Gross\u00a0purchases\u00a0and\u00a0sales\u00a0of\u00a0each\u00a0of\u00a0the\u00a0following\u00a0netted\u00a0to\u00a0produce\u00a0a\u00a0net\u00a0movement<\/em><\/p>\n

2.2.1.1:\u00a0Equity\u00a0shares<\/em><\/p>\n

2.2.1.2:\u00a0Corporate\u00a0bonds<\/em><\/p>\n

2.2.1.3:\u00a0Government\u00a0bonds<\/em><\/p>\n

2.2.1.4:\u00a0Property<\/em><\/p>\n

2.2.1.5:\u00a0Hedge\u00a0Funds<\/em><\/p>\n

2.2.1.6:\u00a0Private\u00a0Equity<\/em><\/p>\n

2.2.1.7:\u00a0Cash\u00a0held\u00a0in\u00a0other\u00a0currencies<\/em><\/p>\n

2.3:\u00a0Costs\u00a0of\u00a0trading<\/em><\/p>\n

2.3.1:\u00a0Split\u00a0by\u00a0category,\u00a0as\u00a0noted\u00a0above<\/em><\/p>\n

2.4:\u00a0Movements\u00a0in\u00a0value\u00a0of\u00a0assets\u00a0in\u00a0the\u00a0year,\u00a0not\u00a0yet\u00a0realised<\/em><\/p>\n

2.4.1:\u00a0Increases\u00a0and\u00a0decreases\u00a0in\u00a0value\u00a0for\u00a0each\u00a0of\u00a0the\u00a0following,\u00a0each\u00a0then\u00a0netted\u00a0to\u00a0a\u00a0total<\/em><\/p>\n

2.4.1.1:\u00a0Equity\u00a0shares<\/em><\/p>\n

2.4.1.2:\u00a0Corporate\u00a0bonds<\/em><\/p>\n

2.4.1.3:\u00a0Government\u00a0bonds<\/em><\/p>\n

2.4.1.4:\u00a0Property<\/em><\/p>\n

2.4.1.5:\u00a0Hedge\u00a0Funds<\/em><\/p>\n

2.4.1.6:\u00a0Private\u00a0Equity<\/em><\/p>\n

2.4.1.7:\u00a0Cash\u00a0held\u00a0in\u00a0other\u00a0currencies<\/em><\/p>\n

2.5:\u00a0Administration\u00a0and\u00a0other\u00a0costs<\/em><\/p>\n

2.5.1:\u00a0Salaries<\/em><\/p>\n

2.5.2:\u00a0Research<\/em><\/p>\n

2.5.3:\u00a0Overhead\u00a0costs<\/em><\/p>\n

2.5.4:\u00a0Management\u00a0fees\u00a0to\u00a0parent\u00a0institution<\/em><\/p>\n

2.5.4.1:\u00a0NB\u00a0if\u00a0the\u00a0previous\u00a0three\u00a0categories\u00a0are\u00a0included\u00a0in\u00a0a\u00a0management\u00a0fee\u00a0an\u00a0indicative\u00a0split\u00a0of\u00a0the\u00a0management\u00a0fee\u00a0into\u00a0these\u00a0categories\u00a0should\u00a0be\u00a0given<\/em><\/p>\n

2.5.5:\u00a0Audit\u00a0fees<\/em><\/p>\n

2.5.6:\u00a0Regulatory\u00a0fees<\/em><\/p>\n

2.5.7:\u00a0Other\u00a0costs<\/em><\/p>\n

2.6:\u00a0Surplus\u00a0for\u00a0the\u00a0year<\/em><\/p>\n

2.6.1:\u00a0The\u00a0surplus\u00a0or\u00a0deficit\u00a0for\u00a0the\u00a0year\u00a0allocated\u00a0by\u00a0sub\u00a0fund\u00a0if\u00a0appropriate<\/em><\/p>\n

3:\u00a0What\u00a0the\u00a0fund\u00a0invests\u00a0in<\/strong><\/em><\/p>\n

3.1:\u00a0A\u00a0balance\u00a0sheet\u00a0for\u00a0the\u00a0fund<\/em><\/p>\n

3.1.1:\u00a0Investments<\/em><\/p>\n

3.1.1.1:\u00a0See\u00a0separate\u00a0notes\u00a0below<\/em><\/p>\n

3.1.2:\u00a0Current\u00a0assets<\/em><\/p>\n

3.1.2.1:\u00a0Split\u00a0in\u00a0the\u00a0format\u00a0required\u00a0by\u00a0Company\u00a0Accounts<\/em><\/p>\n

3.1.3:\u00a0Current\u00a0liabilities<\/em><\/p>\n

3.1.3.1:\u00a0Split\u00a0in\u00a0the\u00a0format\u00a0required\u00a0by\u00a0Company\u00a0Accounts<\/em><\/p>\n

3.1.4:\u00a0Member\u00a0funds<\/em><\/p>\n

3.1.4.1:\u00a0Opening\u00a0funds\u00a0plus\u00a0contributions\u00a0less\u00a0the\u00a0result\u00a0for\u00a0the\u00a0year\u00a0equals\u00a0closing\u00a0member\u00a0funds<\/em><\/p>\n

3.2:\u00a0Investments<\/em><\/p>\n

3.2.1:\u00a0Detailed\u00a0notes\u00a0required\u00a0by\u00a0asset\u00a0category\u00a0showing\u00a0value\u00a0brought\u00a0forward,\u00a0additions,\u00a0disposals\u00a0and\u00a0movements\u00a0in\u00a0asset\u00a0value\u00a0-\u00a0to\u00a0reconcile\u00a0with\u00a0notes\u00a0in\u00a0the\u00a0statement\u00a0of\u00a0what\u00a0the\u00a0funds\u00a0has\u00a0done\u00a0-\u00a0leaving\u00a0closing\u00a0cost<\/em><\/p>\n

3.2.2:\u00a0Equity\u00a0shares<\/em><\/p>\n

3.2.3:\u00a0Corporate\u00a0bonds<\/em><\/p>\n

3.2.4:\u00a0Government\u00a0bonds<\/em><\/p>\n

3.2.5:\u00a0Property<\/em><\/p>\n

3.2.6:\u00a0Hedge\u00a0Funds<\/em><\/p>\n

3.2.7:\u00a0Private\u00a0Equity<\/em><\/p>\n

3.2.8:\u00a0Other<\/em><\/p>\n

3.3:\u00a0Investment\u00a0analysis<\/em><\/p>\n

3.3.1:\u00a0List\u00a0the\u00a0top\u00a0100\u00a0investments\u00a0by\u00a0value\u00a0at\u00a0the\u00a0start\u00a0and\u00a0end\u00a0of\u00a0the\u00a0year\u00a0and\u00a0note\u00a0the\u00a0following\u00a0\u00a0for\u00a0each<\/em><\/p>\n

3.3.2:\u00a0Name<\/em><\/p>\n

3.3.3:\u00a0Type\u00a0of\u00a0asset\u00a0by\u00a0category\u00a0already\u00a0noted<\/em><\/p>\n

3.3.4:\u00a0Proportion\u00a0of\u00a0the\u00a0fund\u00a0invested\u00a0in\u00a0the\u00a0asset\u00a0and\u00a0proportion\u00a0of\u00a0the\u00a0asset\u00a0held\u00a0(e.g.\u00a0what\u00a0percentage\u00a0of\u00a0the\u00a0company\u00a0invested\u00a0in\u00a0is\u00a0owned)<\/em><\/p>\n

3.3.5:\u00a0How\u00a0the\u00a0asset\u00a0invested\u00a0in\u00a0generates\u00a0its\u00a0income\u00a0.e.g.\u00a0what\u00a0use\u00a0is\u00a0made\u00a0of\u00a0a\u00a0let\u00a0property,\u00a0what\u00a0trade\u00a0a\u00a0company\u00a0pursues<\/em><\/p>\n

3.3.6:\u00a0Whether\u00a0the\u00a0investment\u00a0is\u00a0considered\u00a0ethical,\u00a0referencing\u00a0an\u00a0accepted\u00a0standard<\/em><\/p>\n

3.3.7:\u00a0Whether\u00a0the\u00a0investment\u00a0is\u00a0in\u00a0a\u00a0low\u00a0tax\u00a0jurisdiction\u00a0(headline\u00a0corporate\u00a0tax\u00a0rate\u00a0of\u00a0less\u00a0than\u00a020%)<\/em><\/p>\n

3.3.8:\u00a0Value\u00a0at\u00a0the\u00a0start\u00a0of\u00a0the\u00a0year<\/em><\/p>\n

3.3.9:\u00a0All\u00a0purchases<\/em><\/p>\n

3.3.10:\u00a0All\u00a0sales<\/em><\/p>\n

3.3.11:\u00a0Profit\u00a0or\u00a0loss<\/em><\/p>\n

3.3.12:\u00a0Value\u00a0at\u00a0end\u00a0of\u00a0year<\/em><\/p>\n

3.3.13:\u00a0Total\u00a0income\u00a0received<\/em><\/p>\n

3.3.14:\u00a0Income\u00a0of\u00a0highest\u00a0paid\u00a0director\u00a0in\u00a0company\u00a0invested\u00a0ion<\/em><\/p>\n

3.3.15:\u00a0Whether\u00a0the\u00a0fund\u00a0voted\u00a0against\u00a0any\u00a0resolutions\u00a0put\u00a0by\u00a0the\u00a0company\u00a0in\u00a0the\u00a0year\u00a0and\u00a0if\u00a0so\u00a0what\u00a0on\u00a0and\u00a0why<\/em><\/p>\n

4:\u00a0Other\u00a0information<\/strong><\/em><\/p>\n

4.1:\u00a0Future\u00a0investment\u00a0policy\u00a0<\/em><\/p>\n

4.2:\u00a0Green\u00a0policy<\/em><\/p>\n

4.3:\u00a0Ethical\u00a0policy<\/em><\/p>\n

Now that may look like a lot, but if I pout money in a company I get a set of accounts that complicated, and can quit whenever I like. If I put money in a pension fund I get virtually no data, may be\u00a0dependent\u00a0on the outcome for the rest of my life, and have almost no way of quitting. And candidly, any fund must have this information to manage itself.<\/p>\n

This would really transform accountability and since now we take the risk on pension funds it's high time this happened.<\/p>\n

So which party is going to take this one on?<\/p>\n","protected":false},"excerpt":{"rendered":"

A commentator on this blog this morning has made an excellent point on pensions: It used to be the case that most employers\u2019 pension schemes
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29,1],"tags":[],"class_list":["post-13547","post","type-post","status-publish","format-standard","hentry","category-pensions","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=13547"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13547\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=13547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=13547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=13547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}