Pensions

The subject of pensions does not excite great interest. It seems boring, technical and remote. But a pension is a key aspect of work, being a form of deferred wage. Of the many inequalities opening up between young and old, access to a reasonable pension is one of the most important. Public policy in this area is quite complicated, and very long-term: decisions made now have their impact decades into the future.

This week, the British Government have decided that those in money purchase schemes will in future be free to spend their pension pots as they like, rather than having to buy annuities. There is some sense in this. An annuity means that you pay a lump sum to an insurance company in return for a lifetime of payments (but you lose the lump sum). Returns are quite low, and the crucial issue is how long you live after retiring: if it is a long time, it is not a bad deal. In a sense it is a kind of insurance product, with pooled risk meaning that those who live a long time are balanced out by those who do not. But annuities are not great value in general because the companies providing them take so much of the investment.

So this reform is being greeted as giving greater choice because the pensioner may do as s/he wishes with the pension pot. S/he might blow it on luxuries or invest it soberly for old age. What is interesting about this is that these money purchase schemes developed when, in the 1980s, the State Earnings related Pensions Scheme (SERPS) was wound down in the name of – consumer choice. Both then and now ‘choice’ is seen as the value that trumps all others.

Yet at the same time, final salary schemes are depicted as an elite ‘gold plated’ advantage, available only to public sector workers and senior executives in the private sector. Why don’t ordinary workers in the private sector have them (as they used to)? Well, because those workers decided (or were seduced into deciding) that it was better to have individual choice rather than unionised negotiations of pension rights.

Choice has been valorised in neo-liberalism as the prime – maybe the only – thing that matters. But that is nonsense, and pension provision shows it to be nonsense. The best way of organizing pensions is via collectivization of risk (in this case, longevity risk). The consequence of not seeing this is the generational gap that has opened up between those who under the ‘old settlement’ have decent pensions and under the ‘new settlement’ do not.

The temptation is to see the old benefitting at the expense of the young. But this is nonsense. It is not that the old prosper at the expense of the young but that the collapse of collective provision in the last few decades has effected a massive transfer from ordinary people to the global elite. Of course that elite would love to pit grandparents and parents against children and grandchildren. But the reason why a 20 year old today has no prospect of a decent pension is not because Aunt Nellie has a few thousand a year from her pension scheme. It is because there has been a wholesale transfer of power and wealth – by virtue of the seductive rhetoric of individual choice.

Tony Benn (1925-2014)

Tony Benn, the veteran British socialist has died, aged 88. Like Margaret Thatcher, whose death last year I wrote about in another post, he was one of the figures who defined the politics of my youth, although of course he was far less successful and influential than her. As Benn got older he morphed from his status in the right-wing press as ‘the most dangerous man in Britain’ to being considered a national treasure, in a way that Thatcher never did. That was to cease to take him seriously, but it explains why, whereas her death provoked very polarised reactions his got a more eulogistic response. Thus his death has produced a lot of, to me slightly nauseating, comment from the right about how they didn’t agree with him but respected him. In some ways, it would be more respectful for those who disagreed with him to denounce him, as happened with Thatcher.

Benn was an interesting figure for many reasons. One is that he represented a version of the left – the far left, if you like – which grew not out of Marxism but a kind of Christian socialism (it is not clear that Benn, himself, was a Christian, but he grew up in and was influenced by it and seems to have been diffusely religious). His memoir, Dare to be a Daniel (2004), in its very title as well as its content reflected this. In a strange kind of way he embodied some of the ‘Victorian values’ that Thatcher herself professed to admire: hard work, dedication to duty, moral commitment, independence of mind. But, really, the tradition of Christianity he exemplified was that of the diggers and levellers and those various strands of radical Christianity described in Christopher Rowland’s (1988) book of that name. It is a tradition quite different to the kind of conformist moralism that Thatcher evoked and sought to enact.

Another reason for interest is that he had a very strong sense of history. His diaries and memoir are saturated with an understanding of, in particular, the history of the British Labour Party, its achievements and limitations (of which – to link my two points - he remarked that it had never been a socialist party but had always contained some socialists, just as the Church of England had always contained some Christians). Again, this developed out of his childhood, growing up in a family embedded in the Labour Party. He was one of a literally dying breed of politicians who was formed by the experience of the Second World War (his elder brother was killed in it, and Benn himself served in the RAF), and by the socialism of the post-war Attlee government. As I wrote in my ‘review’ of the Ken Loach film The Spirit of ’45, the experience of war provided both a moral case for a better society but also pointed to the tools of collective endeavour and central planning that would deliver it.

These are very much organizational issues, of course, and relevant to the choices that still face us. Benn stood for a form of collective endeavour that was different (by being collective) to neo-liberalism and (by being non-marxist) to communism. And his engagement with radical Christianity is in some ways reminiscent of the kind of liberation theology that finds an echo in Critical Management Studies’ interest in emancipation. Oh, and we should also note that he was an heroic smoker - the 1993 'Pipe Smoker of the Year', no less. 

Leading to disaster

Today's post is prompted by the news that Euan Sutherland, the Chief Executive of the Co-op Group, has resigned after just 10 months in the post, saying that the Group was ‘ungovernable’. This appeared to be a reference to the unwillingness of the group to accept the more ‘commercial’ approach he advocated. Much attention has focussed on the fact that Mr Sutherland was paid £3.7M a year, more than twice that of his predecessor. To me what is more interesting (though no doubt related) is the fact that his background was in commercial retailing, his previous post having been as head of B&Q, a large DIY chain.

The roots of the Co-op group are in the co-operative movement and ultimately go back to the 1844 Rochdale Pioneers, so it was animated by a different set of concerns than those of pure commercialism. It emerged from a Victorian tradition of working class self-help that also created mutual building societies and friendly societies, as well as mechanics’ institutes and similar institutions. Most of these have now ceased to exist or changed unrecognizably in form. The fate of mutual building societies is especially poignant: as I noted on p.119 of my book, all those which de-mutualised following deregulation in the 1980s have since failed to survive as independent entities or even to survive at all, most notoriously in the case of Northern Rock which was at the centre of the British end of the 2008 financial crisis. They were done for by precisely the adoption of a conventional commercial approach.

It seems as if there was an obvious mismatch between the Co-op and its now ex-CEO but his appointment reflected one of the central tenets of managerialism (or, perhaps, ‘leaderism’): that management and leadership are generic skills applicable in any and every setting. The same kind of idea informs the recent appointment of the ex-boss of Marks & Spencer to review and advise on management in the NHS.

What is bizarre is that leadership theory since at least the 1970s has recognized what common sense might also suggest: that the effectiveness of leadership is intimately related to and contingent upon ‘situation’ or context. We wouldn’t expect a successful military leader to run an advertising agency well, or vice versa. More recently, it has been suggested that what matters is the complex relationship between leadership and followership. But, somehow, it is imagined by the supposedly hard-headed that leaders from one kind of organization can be transplanted seamlessly into a completely different setting and flourish. The inadequacies of that belief are well-illustrated by the Co-op debacle.