⁠Can Labour Fix The UK’s Pension Crisis? Torsten Bell MP

23:21Americans. Yeah. But it's really important, this, because these easy lines are being used as excuses for putting up with the status quo that it's not good enough. We've got to raise the investment levels in this country, and if we don't, we will be poor. Yeah, I understand. Here's another easy line then. You might be credible, well thought out, well researched, but do you worry that you're setting a precedent for people down the line who are not you to dip into the pot? That you've basically given this broad scope that we can… No, it can't be used for that. The definition's pretty loose when you read it.

23:54No, no. This power does not allow a government to say, I want this money to go into this pet project or this pet project, which I think the worry you're talking about. Absolutely not. and the power has a backstop to it so that it disappears, right? It's qualifying assets is what it's defined as, isn't it? Yeah, private assets, yeah. You can't be like, I want you to invest in this project. That's not what a government can do and rightly so because it's for trustees or for investment managers to focus on what the right investment projects are and that's what it's going to be. Are you confident then, say like 10 years out, another government that they won't be able to...

24:24Wait, wait, wait. No, no. We're going to be in government. None of this nonsense. None of this defeatism on you. I'm in the business of not just sorting out the pension system but winning elections. And I know it may not, you know, sometimes things look a bit rough right now, but don't start prejudging. Four years till the election, we're going to be winning. All right, fair enough. Okay, so 50 years out. All right. The power's gone. The power's gone. The power's gone. It's a backstop to it. It disappears. How long is the backstop? Because it's the industry that has said, we're going to deliver this change by 2030.

24:54That's what they've said to get to the 10 % or 5 % you're talking about. Sounds good to me. Let's get on with it. and the power is just to say, has that happened? And then it disappears in the 2030s. If they've got there and we haven't had to use it, great, the power disappears. You can't just use it in 2014. And if they haven't got there, it's still... If they haven't got there, then we're going to have to do something, aren't we? Because like I said to you, you can't carry on with the status quo. Okay, T, talk to me about your attitudes towards risk. I mean, I like a bit of risk in my investments, but I definitely would say since the podcast, I've toned it down a little bit, not quite as gung-ho and like carefree as I was in risk.

25:26Yeah, shooting from the hip all the time, weren't you? Yeah, I think personally that you should take risks, but it should always be in areas where you have a unique skill set, an edge, expertise, like your job, things like this. One area that I wouldn't take any risks is compliance. Yeah, the risk changes you grow in business and you need to be on top of it, which is why we partner with Vanta. Vanta automates a lot of risk processes and helps you see your risks in a centralized platform so you know what really needs your attention. Besides risk, the main thing Vanta does is automate compliance with security protocols you need to scale, like GDPR, HIPAA, ISO 27001, and SOC 2.

26:05The beauty of Vanta is they make it easy to prove you're compliant with these standards, saving you up to 90 % of the time it takes, and on average half a million dollars. If you know what these acronyms like SOC 2 are, you probably need Vanta. You can book in a demo at vanta.com forward slash making money. There's a link in the description. I'd like to move on to state pension That was the first bit you got excited about There was you and your cat And then you got excited about the state pension Because we have our audience Of maybe 25 to 45 year olds And any time we talk about state pensions I'm Justin Are we classifying that as a young audience?

26:42Yeah you're one of us I'm going to self-identify as young for the next 10 seconds You look better than me So you're doing something right I definitely don't Someone sent me a photo the other day from the 2010 election campaign. I look a lot worse than that. It's a very long time ago. It ages you quickly, does it? It ages you a lot. It's a dark thing. Go on anyway. So in our comments, people who are, our audience always ask, they say, when we talk about state pension, they say, I'm not going to get that, am I? Like, they don't think they're going to get a state pension. Yeah, they are going to get it.

27:10What age do you think they are going to get it? They're going to get that. Well, if people are retiring right now, they get it at 66. 25 to 45. Well, the current legislative timetable is it will go, so it goes up to 67 between 2026 and 2028. So I'm afraid your 25-year-olds are not in that. I need to be a bit careful here because there's currently a legal requirement on us to conduct a review of the state pension age. For legal reasons, I can't prejudge that. That review needs to go through and be considered in the right way by the Secretary of State. But I can tell you what the current legal position is, which is the age then goes up to 68 in the early 2040s, right?

27:47So that's the age when it gets it. And then you get into like, then we're all dead. But yeah, so if there are some rises pencilled in, then the really fast rises, which is why this has been a big feature of politics in the recent years, were because when the coalition government came in, George Osborne, he accelerated quite a lot of the increases in the state pension age, particularly for women that were coming through in the last decade. He used to boast about it being like the biggest saving he ever made. And I was always like, OK, but this is a load of people's lives that you just changed at very short notice.

28:17So we're not doing that. We're taking sensible, longer term decisions. you shouldn't be moving around state pension ages at short notice. Young uns like you deserve to know where you're aiming for. Broadly, those are the numbers that are in the legislation. But as I say, we're legally required once every, I think it's six years or once a parliament, to do a review of the state pension age. So that's happening right now. But that's not going to change anything that happens in the short term. That review's come around quicker, hasn't it, this time? No, we have to do it every six years. The last one was in 2023.

28:47So we have to publish the results by 2029. what we've done is ask for some of the independent input to be put in train. So you're like, that's what's going on at the moment. Independent people are going away and doing maths, basically, which I know will excite you. And they'll present their maths to the Secretary of State, who will have to then do the review. I imagine the maths would say that the triple lock is potentially a problem. You called it a poor tool in the past. Do you still feel that's the case, or have you changed your mind? I think the way we should think about this is, like what there's like differences of views on the exact mechanism of the triple lock right exactly how it works um the more important thing is what do you like what do you think about what's most important for pensioners and my view is what are the two things this government is actually offering pensioners today's pensioners everything we've talked about before is mainly about tomorrow's pensioners today's workers right which sounds like is your target audience but there are people above age of 45 and some of them are above the age of 66 and are receiving their state pension.

29:47We've got them as well. It's just the bulk is 25 to 45. Okay, good. You don't want to lose those. No, no, I mean... And there's more of those coming. We cover everyone. We cover everyone. So there'll be people of all ages listening. It's not just... So you're talking directly to them. What's our priority for pensioners? There's basically two, to keep it simple. Raising the state pension relative to earnings. Now, the triple lock is the way we're doing that, but that's the policy. And then saving the NHS. Those are the two most important things we need to do for pensioners. If you look at what we're spending, those are the two priorities.

30:15Sometimes that means there's other stuff pensioners might like that we're not doing. I'm not taking your pensioners out of tax because the two priorities are making sure they actually have an NHS that's fit for purpose because the biggest single betrayal of older generations is the state of the NHS. We cannot have these huge waiting lists. We've got to get them down. I see it in Swansea every weekend, people who've had a tough time waiting too long. And the waiting lists are now coming down in Wales and in England because we put the investment in. So that's the first thing we're doing. And then we're raising the state pension because remember, yes, there are lots of pensioners who do have better defined benefit schemes who are coming into retirement at the moment.

30:52That's a really good thing. There's a reason why pensioner poverty is halved from the levels I mentioned earlier in the 1990s. It used to be about 30 % halves over the course of the last Labour government. It's risen a bit under the Tories, but it's still a lot lower than it was in the 90s. So you've got this cohort coming through with these defined benefit schemes. that's a good thing. They're generally higher income. But remember, there's still over a million pensioners who are just living on the state pension. And those kind of people will also be particularly likely to be spending their money on essentials like food and energy bills.

31:22And so we're making sure that they are not... I want those people to enjoy a decent retirement. And that's what raising the state pension is about. Yeah. But it guarantees that it will outstrip wage growth and inflation long term. And that is sustainable. And do you think then that what we're doing, because the theme here is long termism, and I do believe that you've got a long term view. Do you think that we're sacrificing the potential viability of state pension long term to protect that triple lock in the short term? No, that isn't what we need to do. We do need to think about the whole system in the long term.

31:55I think that's a really important thing to do, as well as the two short term priorities I just gave to you. I think that is important. That is what the Pension Commission is doing, which is what the original Turner Commission did as well, which is look at the system in the round. Are we sure that people retiring in 2050 will have the same kind of comfortable retirements as people retiring today? And where we are today, I can't promise you that. If you look at the projections, we're talking about private pension income for retirees in 2050 being about 8 % lower than for retirees today, and that is not acceptable.

32:26So that's what the Pension Commission's job is about, getting right, making sure today's workers have that comfortable retirement. and that does mean looking at the public and private pension system in the round. That's what the Commission will do for the long term. But if you're asking me about this year, next year, then we have decided that we do need to slightly increase the rate of the state pension. That's the triple lock is the mechanism we're using for doing that. That does not mean – I see lazy stuff saying that means the whole system is going to blow up tomorrow. That isn't what the maths say.

32:52There is an issue, obviously, that we are an older country. That is an issue. That does put pressure on how do we make sure we're laying the ground for a sustainable system. But remember, these are not separate things. Don't think about the private pension system here and then the state pension here. If you do what we need to do to make sure we have a decent private pension system, so at some point you start saving and all the other self-employed as well. No, but that is important because it's taking pressure off the state system. It means you'd have fewer people coming into pension credit, into the means-tested pension provision.

33:24So saving for our own pensions as individuals is really important to make sure we have a comfortable retirement. As a system, it's also really important to make sure that the state is sustainable. It's not just care about the state pension. That's what matters for fiscal sustainability. The state and the private system massively match together. But that triple lock that guarantees that the state pension grows above wages puts more pressure on the working population so they can save less into their private schemes. Because it's a pay-as-you-go system that supports an ageing population with a decline in birth rate.

33:54If your point is, are there pressures that come from an older population over time, then I agree. No, more that the pressure has been amplified through a system that you said was a poor tool. And it seems like everyone outside of government agrees that the triple lock probably needs to be looked at. And I'm just wondering why you guys won't. Well, we've written a manifesto and it says we're going to be raising the state pension because that's the right thing to do for now. And we're going to do it. OK, thank you for that. In five years, you're going to still be in power. you're going to be the leader of the Labour Party.

34:24Yeah, I'm better. I'm definitely not, mate. Okay. Yeah, mate, my age are a bit too much. I just want to say, what do you think is going to, what do you think, what do you hope will have happened in that period for people and their pensions, their retirements and the outlook? I think that's a really good thing. And I always try to encourage the industry to focus on that. Like, where are we going to be in five, ten years? Because that's how countries actually get better, right? If everyone's just thinking what happens tomorrow, you do not get good policymaking, you don't get good pension savings, he keeps saving nothing, everything's a mess.

34:52So that is the right question. I think if we do this right, in five years, we'll have put in place the system that is fit for the 2050s. That means that tomorrow's pensioners, today's workers, can look forward to a secure retirement, aren't worried, like you say, that bits of the system are going to disappear. And that is what we're busy laying the groundwork for. That's what we're doing by making sure that people are getting the best possible returns on their pension savings, getting rid of the small pots problem, right? So people don't have to like go around dealing with all their little pension pots.

35:19We automatically sweep those all together to make sure they are delivering good value for money. Get rid of poorly performing pension schemes. That is what we are doing. Then look at the Pension Commission to say, right, having done that, made sure the system is delivering good now, well now. What do we need to do to make sure we're going to be in the right place in 2050? We'll get their report in 2027, early 27, and we will get on with it. Thank you so much. Good luck. Sounds great. Exactly. Lovely to meet you guys. good luck with the partner with your relationship with the Prime Minister with getting out of Manchester alive I'm confident you can do it Damo Torsten Bell that was epic hard and fast yeah got through a lot what do you think yeah sorry mate I'm just going to put on my speaker lanyard big in the game just in case where's your press one yeah where's my press lanyard so they know I'm I'm big press backstage yeah I mean smooth operator clearly well media trained We are not media trained.

36:16So I hope we did okay. He also turned up pretty late. So we had not much time. Like half an hour. So you're conscious of like trying to get through a lot of things. We had, yeah, roughly half an hour. I would have liked to have gone into more detail about certain areas. Yeah, which like, what did you miss out? Yeah, so if we're looking at it now,

36:39I think, you know, stuff that they could do today to improve the returns. I think there's lots of things that the industry do that I don't agree with that would be really easy to fix. When I mentioned relief at source, he was like, we'll come back to that. We're talking broad strokes. He knows that that costs loads of people, loads of money every year because they just simply don't know that they should be claiming the tax back. It's quite convenient probably for the tax take that like a billion a year gets unclaimed, you know, but they could just end that and more money would be going into people's pensions instantly.

37:11We've made, like so many of your followers have said, oh, thanks, I claim back some tax thanks to your video. So like, he just, yeah, I assume they don't want everyone claiming it back. It's higher rate taxpayer, so it's a small group, but they typically are the people that are under saving anyway, because a lot of pensions apply to qualifying earnings, which is a band of about 6K to 50K. So if you earn above that, you might not be paying in as much as you think you are. and that as well as that, you might pay in. And let's face it, 90 % of people are in default funds. They don't know what's going on.

37:44They probably assume that it's all getting taken care of. They don't realize they need to go away and claim that extra 20%. And I think that's a really simple move that they could make. So it's automated that would just result in more money going into the pots. 20 % of the contribution is a lot. So you're upping people's contributions by 20 % of those higher rate taxpayers, right? So, and I know he knows that. I know he knows there's probably some low hanging fruit, but I also think I was surprised by him saying we're going to deliver the commission in a year. We'll hold them to that. And we'll see how that, if that comes about, they should be better at communicating that, I would think.

38:21I think something they should be better at communicating, all the investments that he says that they've put in to make England a more attractive investment area. Like I didn't know about all the investment in solar panels and all these reservoirs and things like that. So yeah, he did say that he seems very confident that - He's really strong on the mandation thing of like, it's not mandation, but the back door to say, oh, if you don't do it, we can force you. It does feel like a bit of a shakedown. But then, you know, if he's saying behind closed doors, they're worried about doing it because they're worried that other pension companies will basically just go, oh, we're not going to do that.

38:54So we can be cheaper and then we'll win clients as a result. Okay. I still think that anything that tells people where their money should go is anti-investor sentiment. You shouldn't tell people you have to put your money into this, like this style of investment. And yeah. But I did like that you said, there's a limit to the time. So after 2030, that power goes away. Yeah, but like bloody hell. It's like a tax, isn't it? It's like they introduce it. They get the benefits of it, which might be further investment into the UK, which benefits them. And they go, oh, well, we introduced that because it worked.

39:28I would also like to push back in the moment and said, Nest would probably challenge you on the basis that they're not doing domestic investments. When we sat down with the guy who was the head of investment, he was talking about wind farms and, you know, remember, he was really proud about the fact that they built these offshore wind farms and stuff. So it feels to me that they do invest in these kinds of projects. And I think the categorization of them is just all in index funds is probably doesn't stack up. If you look at the breakdown of one of the default funds, they're in all sorts of assets.

39:59So, yeah, I think that like, he's well thought out that argument, but I do think the mandation suits them in the sense of they want to jumpstart investment into the UK. I will say that 25 % of the Australian super funds are in the Australian market. The lights just came on. Did you not notice? Yeah, the whole room got illuminated. The heating has a noise, bloody freezing in there. I'm like shaking. I'm shaking like a shitting dog, mate. I've got cold sweats. That's how cold it is. Honestly. Yeah. Yeah, the mandation point. So yeah, we could have gone all day about it. It's one of them where you just keep going round and round and only time will tell.

40:35And if in 20 years, it's everyone's got great returns from it and the UK has an upward trend with investment, you go, well, it worked. But I am just nervous about politicians saying to pension companies, you have to put money here because that to me feels against the fiduciary duty of the pension companies to chase the best returns for their investors. And then I would have loved to have asked him, I hinted at it around the triple lock about you said this in the past and now you're saying this. I would have loved to have gone into more about his book where he was quite brave about bold reforms and you know, is it a damp squib?

41:11Is that the right saying? Damp squib? Is it a damp squib? I've never heard that before. a damp squib? Yeah. Stolly, of course you would. Stolly's Lexus is crazy. He's coming up with the most outrageous words. other one you were saying at dinner? Rouge, booge, or whatever. A hush-bush, a hush-bush-migosh. Anyway, no, yeah, a damp squib I think is something that's a bit of like a wet flannel. I'm probably getting it wrong but Labour feel like they haven't been that bold, right? So it feels to me like I would have liked to have hammered him, not hammered him, just ask more, why have you gone from being super bold, full of ideas to now it feels like Labour are a bit rudderless, you know, in that sense.

41:54And let's talk about the things that are good i think he is like in terms of like politicians i think not many he's a not he comes across well right i'd like to go for a drink with him yeah because he's like a nice guy i think more of that because sometimes politicians can feel like aliens yeah he's like more like human like personality yeah and i think he was having a joke with us um which i think is is nice and i think he's a good communicator uh i do think as well that he's thought for years about this problem before he got into the job he's in. And I think politics is full of people that are, they've only started thinking about the thing that they're in charge of.

42:33When they get the job. And then they know that in two years, they're not going to have the job again. What you have there is someone that's through the Resolution Foundation. And you might not agree with their approach and their ideology, but he has thought about it for a decade. So I would rather people like that be in these problems than, you know, someone who's just like, oh, I got the job last week. What is a pension? You know, which sometimes feels like that. And it seems like I get the feeling he's looking a little bit more long-term. Like he's got a long-term focus. I think, yeah, yeah, yeah.

43:03I mean, we need long-term and we need short-term. And I do worry about if a long-term focus means we kick the cam further down the road. And every year that we wait to sort this out, people fall through the cracks. There's self-employed people where that makes a big difference, you know? Like something needs to be done. If you know what the problem is, something should be done sooner rather than later. And they do know what the problem is. And, you know, he was hinting at one point around, oh, there's certain aspects of this we knew. There's loads of it. They knew there was going to be an aging population.

43:31They knew, I think, if you look at the triple lot projections, you know that that thing's going to run wild over time. But like on other things they are doing, the whole making all your pension pots visible in one place. I think that's really good. Some simple changes like that, they make a big difference. What I'm going to say is that there's more change going on in the pension industry right now than any time that I've been alive. So you can't sit there and criticise him too directly and go, you're not doing enough because he's doing more than anyone I've seen before. More than anyone's done previously, exactly.

44:02So yeah, and hopefully the outcomes are good. I mean, there's a real buzz around this pension show. And, you know, from our perspective, it's hard for us because that was 30 minutes. We've got to be quick. I hope we delivered in that front I think I think he pinned him down pretty well yeah well we'll see it's not always about just pinning down I don't just want to give him a hard time for giving him a hard time's sake but I do think the triple lock thing is like come on mate you know you wrote up you literally wrote you were ready to die you were ready to die on that hill yeah right let's leave it there I think that's that's a wrap yeah Damo's going on stage to talk on a panel yeah what are you going to say well it's all about so like In the last 12 months, I've been trying to shift my focus a bit with how I kind of do what I do.

44:51So one element of what I do is talking to individuals, the public, if you call it that, and trying to help them understand their pensions and their investments so they can engage in their finances better and change their lives. But I think the other piece now, where I can have a big impact, is turning to the industry and saying, this is how you can communicate with the wider world in a better way, because they kind of look at what I do as if it's the like, oh God, how do you do that? How do you speak to people? And it seems almost, it seems weird that the industry needs those conversations. But yeah, I mean - I think a lot of industries need that though, like communicating what they do to the average person.

45:30When you're in the industry, you get so bogged down with the technical stuff and all the details that you can't actually explain it to a normal person on what's important. You just give them too much info. We like it or not, we're going to need the finance industry to support people's personal finances. And there's a lot of organisations that do amazing research behind the scenes and they are well-intentioned. They just don't understand new media and social media and how to potentially communicate. So I think I can do some good there that if I turn that way and try and help them, it just spreads the message in a better way, doesn't it?

46:04So that is what I'm here to talk about. And on a closing note, how daffer is Devo in his suit. This boy cleans up all right, doesn't he? I got my uncle shoes on though because I packed the wrong shoes mate you were like oh I like them shoes I was like yeah but they look like Nigerian uncle shoes that's why what are those yeah I should have I thought I bought my black Oxfords but I was in a rush and I opened my bag this morning and I was like oh no I packed my Nigerian uncle shoes on I'll take those off you after the conference yeah they won't fit your feet your tiny little feet yeah you've got tiny feet no I haven't mate 13-14 you know it's the case and you're only 5 foot 8 that's crazy That's wild.

46:40In my pants.

46:44It's a wrap. End of that.

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