Michael trained with JP Morgan in New York and, after 21 years in investment banking, joined Towers Watson, the actuarial consultants. Subsequently he was responsible for the running of David Cameron’s Economic Competitiveness Policy Group, working with Oliver Letwin, John Redwood and Lord Wolfson (CEO of Next plc). The Group examined some of the main barriers to prosperity, focussing on deregulation, energy, public sector effectiveness, retirement savings and pensions, skills, STEM and transport.
Michael is the author of Don’t let this crisis go to waste (CPS, 2009), in which he proposes a radically simplified State Pension structure and amendments to the (flawed) NEST. This was followed by Simplification is the key (CPS, 2010), backed by Conservative and Labour peers, which highlights the ludicrous complexity of our pensions and savings arena and promotes the idea of unifying the ISA and pension worlds. The paper goes on to visualise the long term savings Holy Grail, namely a single, unified tax regime for ISAs and all pensions products.
Michael then focused on the challenge of reforming public sector pensions, with Self-sufficiency is the key (CPS, 2011), again backed by Conservative and Labour peers. The paper concludes that a pure DC framework is inevitable, after an interim period of (politically palatable) CARE-based DB. The £100 billion negotiations, (CPS, 2011) followed, which describes how the Government is being out-manoeuvred by the unions in the public sector pensions negotiations. It goes on to propose a way forward.
This was followed by Pensions: bring back the 10p rebate, and goodbye higher rate relief (CPS, 2012), and then Put the saver first; catalysing a savings culture (CPS, 2012), again backed by Conservative and Labour peers, which makes 104 proposals, predominately concerned with how the industry itself could put the saver at the centre of everything it does.
The theme of tax incentives for retirement saving was revisited in Costly and ineffective: why pension tax reliefs should be reformed (CPS, 2012), and A toxic tangle (CPS, 2013) followed, which examines the damaging interaction between the Public Service Pensions Bill and the DWP’s White Paper for a single tier state pension. This revealed a potential annual hole of up to £9 billion in the Treasury’s coffers, and prompted a briefing request from Margaret Hodge MP, chair of the Public Accounts Committee.
Michael’s attention then switched back to the public sector, with The Local Government Pension Scheme: opportunity knocks (CPS, 2013), which highlighted the LGPS’s inefficiencies. The paper makes a series of proposals to rectify them, prompting invitations to discussions with both DCLG and the Cabinet Office. The Pensions Bill 2013-14 catalysed Aggregation is the key: retirement saving nirvana for consumers (CPS, 2013), which was subsequently referred to by several peers during debates in the House of Lords.
Michael has given oral and written evidence to both the DWP Select Committee inquiry into Governance and Best Practice in Workplace Pension Provision, and the House of Lords Select Committee on Public Service and Demographic Change.
Michael can be contacted by email on [email protected]
Full list of Michael's papers:
- Don’t let this crisis go to waste (CPS, 2009), in which a radically simplified State Pension structure is proposed, along with amendments to the NEST structure.
- Simplification is the key (CPS, 2010), which highlights the ludicrous complexity of our pensions and savings arena. The paper promotes the idea of unifying ISAs and pension products.
- Self-sufficiency is the key (CPS, 2011), which concludes that a pure DC framework for public service pensions is inevitable, after an interim period of (politically palatable) CARE-based DB.
- The £100 billion negotiations (CPS, 2011), which describes how the Government is being out-manoeuvred by the unions in the public sector pensions negotiations. It goes on to propose a way forward.
- Pensions: bring back the 10p rebate, and goodbye higher rate relief (CPS, 2012).
- A market-orientated solution to the problem with annuities (CPS, 2012), which proposes the establishment of an efficient annuity clearing house, and contract standardisation.
- Put the saver first; catalysing a savings culture (CPS, 2012), which details the dysfunctional nature of markets, the lax standards of governance and industry opacity. The paper makes 104 proposals, predominately concerned with how the industry itself could put the saver at the centre of everything it does.
- The approaching cashflow crunch: why coalition reforms to public sector pensions will not hold (CPS, 2012). Using OBR data, the paper evidences that, post-Hutton, the cashflow shortfall between public sector contributions and pensions in payment remains unsustainable. It proposes that the Government starts to prepare the public sector for a risk-sharing arrangement such as a cash balance scheme, en route, ultimately, to a wholly Defined Contribution framework.
- Costly and ineffective: why pension tax reliefs should be reformed (CPS, 2012).
- A toxic tangle: the Public Service Pensions Bill and the DWP’s White Paper (CPS, 2013). This paper examines the damaging interaction between the Public Service Pensions Bill and the DWP’s White Paper for a single tier state pension. It revealed a potential annual hole of up to £9 billion in the Treasury’s coffers.
- Public service pensions: Parliamentary Ping-Pong, anyone? (CPS, 2013): an update on unfunded public service pensions’ deteriorating cashflow.
- Aggregation is the key: retirement savings nirvana for consumers (CPS, 2013). This paper argues that aggregation, combined with a central clearing house and database, has the potential to achieve far more than pot follows member, both for consumers and the industry.
- The Local Government Pension Scheme: opportunity knocks (CPS, 2013), which highlighted the LGPS’s inefficiencies. The paper makes a series of proposals to rectify them, including moving to passive fund management.
- Retirement saving incentives; the end of tax relief, and a new beginning (CPS, 2014) which proposes the scrapping of all income tax relief on pension contributions, replacing it with a simpler, more redistributive incentive 50p per £1, paid irrespective of the saver’s taxpaying status.
- Introducing the Lifetime ISA (CPS, 2014), which proposes the assimilation of Junior ISAs and New ISAs into a single Lifetime ISA. Crucially, savings would be eligible for the same Treasury incentive as contributions into pension products, combined with a degree of ready access.
- NICs: the end should be nigh (CPS, 2014). This paper evidences why exhaustion of the National Insurance Fund is imminent and that, consequently, NICs and Income Tax should be replaced with a single Earnings Tax. It also concludes that the forthcoming single-tier State Pension is unsustainable.
- What price localism? A case study: the Local Government Pension Scheme (CPS, 2014). Decades of lax, ineffective governance has allowed the LGPS to become a staggeringly inefficient, self-serving empire. This paper makes nine proposals for structural reform, including a single fund with four allocators, full in-house asset management and one, trust-based, governance board that would be responsible for the cost control levers.
- Pensions regulation: governance to the fore? (CPS, 2014). There is much debate about the number of regulators concerned with pensions (five). But perhaps there is a more fundamental point to consider: irrespective of the delivery structure, is regulation the most effective tool with which to control the pensions industry?
- Auto-protection at 55 (CPS, 2015), which proposes the introduction of a default option for people reaching private retirement age: a complement to auto-enrolment. The paper also highlights that today’s private pension age (currently 55) is an anachronism, out of step with post-war improvements in life expectancy: it should be rapidly raised to 60. The paper is backed by a Conservative peer and the TUC.
- Time for TEE: the unification of pensions and ISAs (CPS, 2015). This paper details why tax relief on pensions contributions is expensive, ineffective, and inequitable, and incompatible with the 2014 Budget’s annuitisation liberalisation. It proposes scrapping it, accompanied with the introduction of a Workplace ISA. For those without an employer sponsor, alternative (competing) providers should be available, including NEST (the NEST ISA).
- Some suggestions for the new pensions minister (CPS, 2015). A wish list of recommendations for the new Pensions Minister to consider, plus some additional proposals which would need Treasury cooperation.
- Who will care for Generation Y? The baby boomers’ legacy (CPS, 2015). This paper highlights the vast unfunded promises that baby boomers having being making to themselves, leaving Generation Y to foot the bill. There are six specific proposals, their purpose being to improve transparency and put a brake on deferring costs, further detailed in The case for an Office for Inter-generational Responsibility (CPS, 2015).
- The Workplace ISA and the ISA Pension (CPS, 2015). The paper envisages occupational pensions being replaced by an ISA framework, to complement the Lifetime ISA’s replacement of personal pensions.
- Tough love for a better future. The 2015 Spending Review: cultural consequences (CPS, 2015). The 2015 Spending Review requests that government departments model two scenarios for reducing their Resource budgets, for 25% and 40% real term savings by 2019-20. Implementation will require a significant cultural shift: the paper identifies 15 tips as to how to effect change within the public sector.
- An ISA-centric savings world (CPS, 2015). This paper introduced the idea of an ISA warehouse to house a Lifetime ISA (replacing personal pension provision) and a Workplace ISA (replacing occupational pension provision). That latter could be used to secure an ISA Pension. The warehouse could become a universal, all-purpose savings vehicle to serve everyone from cradle to grave.
- The Local Government Pension Scheme: unsustainable (CPS, 2015). Notwithstanding Lord Hutton’s 2014 reforms, the LGPS’s financial deterioration continues. This paper evidences why the scheme ultimately risks running out of cash to meet pensions in payment and why, in particular, cashflow faces a perfect storm over the next decade.
- LGPS (2018), CPS, 2016. Seven proposals to put the LGPS onto a sustainable footing include introducing a new defined contribution (DC) scheme in 2018, perhaps with a cash balance arrangement for an interim period. Funded and pay-as-you-go (PAYG) arrangements are considered for meeting past DB accruals, as is the LGPS’s relationship with the Chancellor’s proposed British Wealth Funds. Infrastructure investment could be incentivised by a Treasury-funded “Social Premium”, to be used for deficit repair.
- The 2016 Budget: pensions, CPS, 2016. This paper summarises the advantages and drawbacks of four potential scenarios including cost implications for the Treasury: (i) the end of all NICs relief on employer contributions; (ii) the introduction of a single flat rate of tax relief; (iii) the end of the 25% tax-free lump sum (TFLS); and (iv) replacement of all Income Tax and NICs reliefs with a 50p incentive for each post-tax £1 saved, housed within an ISA framework.