Few individuals can truly claim to be at the forefront of their chosen profession. The author of the first ever book on UK pensions and a trailblazer in the development in innovative solutions to pensions problems, Robin Ellison, partner at Pinsent Masons is by a considerable margin Britain’s best-known pensions lawyer.
A career spanning three decades in pensions law took off when the solicitor, then a sole trader operating from his London flat, entered a David and Goliath battle for the right to advise on the privatisation of the state’s water pension schemes.
“That was one of two pieces of business that I got through sheer luck, which really set me up. I met some bloke on the tube who was organising the Water Board’s pension schemes. He said put your name in the hat for the business, and even though I didn’t have an office and was competing with the likes of Nabarro’s and Linklaters, I got the business. The price I bid was higher than them, but they agreed to pay it in the end.”
His second stroke of fortune came as a result of his writing a book on pensions law. “My publisher’s husband was a solicitor in ICI and they didn’t want to do the pensions work. Out of the blue I had the water privatisation and ICI – two massive contracts.”
His book, Private Occupational Pension Schemes, was the fruit of a five year research fellowship at Cambridge University, and was very much charting new ground when he wrote it. “I’d like to say I got the fellowship because I was brilliant, but in fact I was the only applicant,” he says. “I wrote what was a very bad book, made of mud and straw, but it was the first-ever book on UK pensions.”
Ellison found himself specialising in pensions in the early 1980s when pension issues were just beginning to shoot up the agenda for companies, governments and regulators. He recalls two huge scandals which really put pensions in the spotlight in the decade before the Maxwell debacle.
“There was the British Leyland case, where it was alleged a guy on the board had put the pension with an insurance company rather than have it self-administered and was taking commission in those days of £1.5m for himself,” he says.
“And then there was the furore about Jimmy Hoffa, the US trade unionist. One of the biggest trade unions in the US saw its pension fund taken over by the mafia. It was the biggest scheme in the States at the time and was invested in various mafia businesses in Las Vegas. Interestingly they found it was the most profitable pension fund of all.”
The Maxwell case that hit the headlines in the early 1990s is for Ellison the perfect example of the potentially disastrous effects of misguided or excessive regulation, a subject that is one of his biggest bugbears.
“The paradox of Maxwell is, and its got lost in all the self-righteousness after Maxwell, that the money wasn’t stolen from the pension funds at all. In the 1980s pension funds weren’t allowed to run their own money. You had to give it to an authorised regulated asset manager. So the Mirror scheme gave its money to an authorised, regulated asset manager, but it so happened that it was a Maxwell-owned authorised regulated asset manager,” he says.
“The money was stolen there, but if it had not been for that law it would have been much harder, because the trustees were very worried at the time and would have kept a keen eye on it,” he says. “It is one of the unintended consequences of regulation, of which Maxwell is the paradigm, that he would have found it much harder to get his hands on the money if it hadn’t been for the regulations.”
Ellison then had a role in picking up the pieces of the Maxwell disaster as a trustee of three of the funds. That role showed him the way in which conflict of interest barely registered as an issue in UK business at the time.
“The trustees thought we ought to go and investigate the Maxwell pensions scheme office. We almost had to break in. Coopers & Lybrand were auditors of the company at the time but were also acting for the pension scheme. We sent everyone home but there was one guy in the corner who stayed. When asked to leave, he said was also from Coopers and he had been appointed by the regulator, so he should stay. I said ‘how can you be there with three hats on – for the pension scheme, the company and also for the regulator?'”
His high profile in representing pension schemes led him to the role of chairman of the NAPF for two years from May 2005 at what was a difficult time for the organisation and the occupational schemes it represented. So how does he think the NAPF has changed?
“The NAPF firstly had to recognise that DB schemes weren’t going to be the dominant channel going forward. Secondly, as a body it was losing money hand over fist. I don’t claim responsibility but we did turn it round financially, and we repositioned it as an organisation so that rather than being a technocracy it is now more of a policy group. The idea is to make NAPF a think-tank talking to government,” he says.
Some would argue that the Government’s acceptance of a trust-based model for the Personal Accounts project marks a success for the lobbying of the NAPF. “We were influential in changing thinking, but what we had to do is face up to reality. We had to accept there were going to be Personal Accounts even though in our heart of hearts we saw it as a long term mistake.
“We were disappointed in the Turner report, not in terms of analysis – that was brilliant – but it gave the management consultant’s response to the problem for political reasons.”
Ellison sees Turner and the Government’s failure between them to address the complexity of the state system before addressing anything else as a major failure, and one that will come back to haunt them for years to come.
“No-one can describe how the pension system works. We said burn all this stuff and have a basic state pension for everybody, whether they deserve it or not. Give everyone over 70 £200 a week, and if you are rich you pay tax. By doing that you get rid of housing benefit, heating allowances and all that bureaucratic paraphernalia,” he says. “And then the private sector can get on and do exactly what it wants.
“Instead of doing that they decided to keep the three systems, adjust them to make them even more complicated, and then put a fourth system on top. A fourth system whose admin overhead is as yet unknown and where the record is not good.”
He is scathing about the Government’s history on running huge computer systems. “I am not saying we can’t do it, but the omens don’t look good. Is it what is needed for people at the lower end of the income scale?”
He puts the failure to address the obvious problems with state pension complexity down to the political system. “There was paranoia in the Treasury about losing contracting out – it is dying out anyway – and the Conservative Party had an equal paranoia about the ending of the contributory principle. Political parties are prisoners to their history, but it was time to move on.”
On the issues created by the EU Distance Marketing Directive for contract-based schemes wanting to auto-enrol members, he is rather more positive, betting on a solution being found. “I would think they would resolve the dilemma somehow. Lawyers are paid to resolve these problems,” he says.
But for the wider Personal Accounts agenda he is less positive, as the Government’s track record in forcing private sector pension change has not been great. “Stakeholder wasn’t successful, and no-one remembers Individual Pension Accounts, which were going to be a big thing but just died a death,” he says.
“The low earners, for who this scheme is really designed are going to fall through the net again, so we will end up redesigning it again in 10 years time. I am a Steve Bee fan and even if he does over-egg the pudding sometimes he has found the issue the Government is going to have to struggle with,” says Ellison.
He sees two huge potential potholes for PADA – firstly the day to day administration, and secondly dealing with errors. “If money goes up, you are happy, if not, you are unhappy. If you give instructions for your money to go from A to B and it hasn’t happened, people are going to be upset,” he says.
As to the evolution of workplace pension arrangements he says: “The actuaries are worried which is why there is a big campaign for mixed risk – half DB, half DC pension schemes. But the actuarial profession has been beating itself up unnecessarily. The danger for their profession is it is overregulated, and they turn more into number crunchers than advisers. They mustn’t lose self confidence. The fear is that regulation becomes too tight and actuaries lose what surgeons and lawyers need which is independence of spirit. The reason you go to an adviser is because he gives you advice. He doesn’t give you a guarantee.”
His theme of the negative effect of regulation re-emerges when he talks about the problems faced by ASW and other schemes whose members lost out. “Before regulation a pension would go bust and by and large there was 80p in the pound. Trustees would mete out rough justice which might pay pensioners 85p and young members 75p. Now you have got to give the retired ones 100 per cent plus indexation.
“At ASW most members were retired. They aren’t on the beach with their trousers off. But you had other guys who have worked 39 years, who lost the lot. I would take my trousers off in that circumstance,” he said.
But was there a failing by the professionals that led to these people being let down? “Lawyers, actuaries, administrators, consultants, trustees, the whole industry, we are all responsible. We have not communicated the risks to members in the way that we should have. The industry as a whole has not covered itself in glory and I am a part of that,” he says.
A big issue for the UK pension industry is whether Europe is a challenge or an opportunity, says Ellison. “I spend much time exploring whether we should move registration of British schemes to another country because of our dysfunctional regulation. Over the next three to four years you will start to see a steady trickle of pension schemes moving elsewhere because tax is unnecessarily complicated here,” he warns.
Ellison sees three potential markets for Europe – private individual with a SSAS or a Sipp, companies trading in the UK and multinationals. “If you are multinational you would certainly not choose the UK because of stamp duty and its tax system. That is a big threat to the UK – if pension schemes move their registration out, do they then move their investments out?” he says. “If you couple that with the Government’s attack on non-doms, will the climate be attractive over the next 20 or 30 years for the UK financial services industry?”
As for big Ssas or Sipp clients he predicts we will see most of the big players pushing overseas offerings in the UK. “Ireland, Malta Luxembourg, Belgium and Austria will be the places as they have got their systems very simplified. Belgium and Austria want to be the places to register – they are not cowboy jurisdictions. Tax rules in the UK are 3,500 pages long – in Belgium they are four or five pages long. There aren’t many real tax advantages if you take your benefits in the UK, but it is simpler so you can offer cheaper products,” he says.
CV Robin Ellison
“No-one can describe how the pension system works. We should have a state pension for everbody, whether they deserve it or not”
Born 1949
Education Manchester Grammar School
1976-1981 Research fellow, Cambridge University
1981-1994 Senior partner Ellison Westport Solicitors
1994-1997 Hammond Suddards
1997-2002 Eversheds
2002-to date Pinsent Masons (formerly Pinsent Curtis Biddle) head of strategic development pensions
Chairman of NAPF 2005 – 2007
Family 2 boys – 21 and 17
Enjoys Skiing, until an accident, sailing, has been a keen collector of antiquarian law books
As if he wasn’t busy enough
• On board of L&C Pensions, the company behind the Gibraltar-registered open annuity
• Set up the Occupational Pensions Trust
• Represents the UK arm of the Israeli Red Cross
• Chairman of a lung cancer charity
• Visiting chair at Cass Business School
• Various pensions books in the pipeline, including one on ‘too much law’
Few individuals can truly claim to be at the forefront of their chosen profession. The author of the first ever book on UK pensions and a trailblazer in the development in innovative solutions to pensions problems, Robin Ellison, partner at Pinsent Masons is by a considerable margin Britain’s best-known pensions lawyer.
A career spanning three decades in pensions law took off when the solicitor, then a sole trader operating from his London flat, entered a David and Goliath battle for the right to advise on the privatisation of the state’s water pension schemes.
“That was one of two pieces of business that I got through sheer luck, which really set me up. I met some bloke on the tube who was organising the Water Board’s pension schemes. He said put your name in the hat for the business, and even though I didn’t have an office and was competing with the likes of Nabarro’s and Linklaters, I got the business. The price I bid was higher than them, but they agreed to pay it in the end.”
His second stroke of fortune came as a result of his writing a book on pensions law. “My publisher’s husband was a solicitor in ICI and they didn’t want to do the pensions work. Out of the blue I had the water privatisation and ICI – two massive contracts.”
His book, Private Occupational Pension Schemes, was the fruit of a five year research fellowship at Cambridge University, and was very much charting new ground when he wrote it. “I’d like to say I got the fellowship because I was brilliant, but in fact I was the only applicant,” he says. “I wrote what was a very bad book, made of mud and straw, but it was the first-ever book on UK pensions.”
Ellison found himself specialising in pensions in the early 1980s when pension issues were just beginning to shoot up the agenda for companies, governments and regulators. He recalls two huge scandals which really put pensions in the spotlight in the decade before the Maxwell debacle.
“There was the British Leyland case, where it was alleged a guy on the board had put the pension with an insurance company rather than have it self-administered and was taking commission in those days of £1.5m for himself,” he says.
“And then there was the furore about Jimmy Hoffa, the US trade unionist. One of the biggest trade unions in the US saw its pension fund taken over by the mafia. It was the biggest scheme in the States at the time and was invested in various mafia businesses in Las Vegas. Interestingly they found it was the most profitable pension fund of all.”
The Maxwell case that hit the headlines in the early 1990s is for Ellison the perfect example of the potentially disastrous effects of misguided or excessive regulation, a subject that is one of his biggest bugbears.
“The paradox of Maxwell is, and its got lost in all the self-righteousness after Maxwell, that the money wasn’t stolen from the pension funds at all. In the 1980s pension funds weren’t allowed to run their own money. You had to give it to an authorised regulated asset manager. So the Mirror scheme gave its money to an authorised, regulated asset manager, but it so happened that it was a Maxwell-owned authorised regulated asset manager,” he says.
“The money was stolen there, but if it had not been for that law it would have been much harder, because the trustees were very worried at the time and would have kept a keen eye on it,” he says. “It is one of the unintended consequences of regulation, of which Maxwell is the paradigm, that he would have found it much harder to get his hands on the money if it hadn’t been for the regulations.”
Ellison then had a role in picking up the pieces of the Maxwell disaster as a trustee of three of the funds. That role showed him the way in which conflict of interest barely registered as an issue in UK business at the time.
“The trustees thought we ought to go and investigate the Maxwell pensions scheme office. We almost had to break in. Coopers & Lybrand were auditors of the company at the time but were also acting for the pension scheme. We sent everyone home but there was one guy in the corner who stayed. When asked to leave, he said was also from Coopers and he had been appointed by the regulator, so he should stay. I said ‘how can you be there with three hats on – for the pension scheme, the company and also for the regulator?'”
His high profile in representing pension schemes led him to the role of chairman of the NAPF for two years from May 2005 at what was a difficult time for the organisation and the occupational schemes it represented. So how does he think the NAPF has changed?
“The NAPF firstly had to recognise that DB schemes weren’t going to be the dominant channel going forward. Secondly, as a body it was losing money hand over fist. I don’t claim responsibility but we did turn it round financially, and we repositioned it as an organisation so that rather than being a technocracy it is now more of a policy group. The idea is to make NAPF a think-tank talking to government,” he says.
Some would argue that the Government’s acceptance of a trust-based model for the Personal Accounts project marks a success for the lobbying of the NAPF. “We were influential in changing thinking, but what we had to do is face up to reality. We had to accept there were going to be Personal Accounts even though in our heart of hearts we saw it as a long term mistake.
“We were disappointed in the Turner report, not in terms of analysis – that was brilliant – but it gave the management consultant’s response to the problem for political reasons.”
Ellison sees Turner and the Government’s failure between them to address the complexity of the state system before addressing anything else as a major failure, and one that will come back to haunt them for years to come.
“No-one can describe how the pension system works. We said burn all this stuff and have a basic state pension for everybody, whether they deserve it or not. Give everyone over 70 £200 a week, and if you are rich you pay tax. By doing that you get rid of housing benefit, heating allowances and all that bureaucratic paraphernalia,” he says. “And then the private sector can get on and do exactly what it wants.
“Instead of doing that they decided to keep the three systems, adjust them to make them even more complicated, and then put a fourth system on top. A fourth system whose admin overhead is as yet unknown and where the record is not good.”
He is scathing about the Government’s history on running huge computer systems. “I am not saying we can’t do it, but the omens don’t look good. Is it what is needed for people at the lower end of the income scale?”
He puts the failure to address the obvious problems with state pension complexity down to the political system. “There was paranoia in the Treasury about losing contracting out – it is dying out anyway – and the Conservative Party had an equal paranoia about the ending of the contributory principle. Political parties are prisoners to their history, but it was time to move on.”
On the issues created by the EU Distance Marketing Directive for contract-based schemes wanting to auto-enrol members, he is rather more positive, betting on a solution being found. “I would think they would resolve the dilemma somehow. Lawyers are paid to resolve these problems,” he says.
But for the wider Personal Accounts agenda he is less positive, as the Government’s track record in forcing private sector pension change has not been great. “Stakeholder wasn’t successful, and no-one remembers Individual Pension Accounts, which were going to be a big thing but just died a death,” he says.
“The low earners, for who this scheme is really designed are going to fall through the net again, so we will end up redesigning it again in 10 years time. I am a Steve Bee fan and even if he does over-egg the pudding sometimes he has found the issue the Government is going to have to struggle with,” says Ellison.
He sees two huge potential potholes for PADA – firstly the day to day administration, and secondly dealing with errors. “If money goes up, you are happy, if not, you are unhappy. If you give instructions for your money to go from A to B and it hasn’t happened, people are going to be upset,” he says.
As to the evolution of workplace pension arrangements he says: “The actuaries are worried which is why there is a big campaign for mixed risk – half DB, half DC pension schemes. But the actuarial profession has been beating itself up unnecessarily. The danger for their profession is it is overregulated, and they turn more into number crunchers than advisers. They mustn’t lose self confidence. The fear is that regulation becomes too tight and actuaries lose what surgeons and lawyers need which is independence of spirit. The reason you go to an adviser is because he gives you advice. He doesn’t give you a guarantee.”
His theme of the negative effect of regulation re-emerges when he talks about the problems faced by ASW and other schemes whose members lost out. “Before regulation a pension would go bust and by and large there was 80p in the pound. Trustees would mete out rough justice which might pay pensioners 85p and young members 75p. Now you have got to give the retired ones 100 per cent plus indexation.
“At ASW most members were retired. They aren’t on the beach with their trousers off. But you had other guys who have worked 39 years, who lost the lot. I would take my trousers off in that circumstance,” he said.
But was there a failing by the professionals that led to these people being let down? “Lawyers, actuaries, administrators, consultants, trustees, the whole industry, we are all responsible. We have not communicated the risks to members in the way that we should have. The industry as a whole has not covered itself in glory and I am a part of that,” he says.
A big issue for the UK pension industry is whether Europe is a challenge or an opportunity, says Ellison. “I spend much time exploring whether we should move registration of British schemes to another country because of our dysfunctional regulation. Over the next three to four years you will start to see a steady trickle of pension schemes moving elsewhere because tax is unnecessarily complicated here,” he warns.
Ellison sees three potential markets for Europe – private individual with a SSAS or a Sipp, companies trading in the UK and multinationals. “If you are multinational you would certainly not choose the UK because of stamp duty and its tax system. That is a big threat to the UK – if pension schemes move their registration out, do they then move their investments out?” he says. “If you couple that with the Government’s attack on non-doms, will the climate be attractive over the next 20 or 30 years for the UK financial services industry?”
As for big Ssas or Sipp clients he predicts we will see most of the big players pushing overseas offerings in the UK. “Ireland, Malta Luxembourg, Belgium and Austria will be the places as they have got their systems very simplified. Belgium and Austria want to be the places to register – they are not cowboy jurisdictions. Tax rules in the UK are 3,500 pages long – in Belgium they are four or five pages long. There aren’t many real tax advantages if you take your benefits in the UK, but it is simpler so you can offer cheaper products,” he says.
CV Robin Ellison
“No-one can describe how the pension system works. We should have a state pension for everbody, whether they deserve it or not”
Born 1949
Education Manchester Grammar School
1976-1981 Research fellow, Cambridge University
1981-1994 Senior partner Ellison Westport Solicitors
1994-1997 Hammond Suddards
1997-2002 Eversheds
2002-to date Pinsent Masons (formerly Pinsent Curtis Biddle) head of strategic development pensions
Chairman of NAPF 2005 – 2007
Family 2 boys – 21 and 17
Enjoys Skiing, until an accident, sailing, has been a keen collector of antiquarian law books
As if he wasn’t busy enough
• On board of L&C Pensions, the company behind the Gibraltar-registered open annuity
• Set up the Occupational Pensions Trust
• Represents the UK arm of the Israeli Red Cross
• Chairman of a lung cancer charity
• Visiting chair at Cass Business School
• Various pensions books in the pipeline, including one on ‘too much law’
Few individuals can truly claim to be at the forefront of their chosen profession. The author of the first ever book on UK pensions and a trailblazer in the development in innovative solutions to pensions problems, Robin Ellison, partner at Pinsent Masons is by a considerable margin Britain’s best-known pensions lawyer.
A career spanning three decades in pensions law took off when the solicitor, then a sole trader operating from his London flat, entered a David and Goliath battle for the right to advise on the privatisation of the state’s water pension schemes.
“That was one of two pieces of business that I got through sheer luck, which really set me up. I met some bloke on the tube who was organising the Water Board’s pension schemes. He said put your name in the hat for the business, and even though I didn’t have an office and was competing with the likes of Nabarro’s and Linklaters, I got the business. The price I bid was higher than them, but they agreed to pay it in the end.”
His second stroke of fortune came as a result of his writing a book on pensions law. “My publisher’s husband was a solicitor in ICI and they didn’t want to do the pensions work. Out of the blue I had the water privatisation and ICI – two massive contracts.”
His book, Private Occupational Pension Schemes, was the fruit of a five year research fellowship at Cambridge University, and was very much charting new ground when he wrote it. “I’d like to say I got the fellowship because I was brilliant, but in fact I was the only applicant,” he says. “I wrote what was a very bad book, made of mud and straw, but it was the first-ever book on UK pensions.”
Ellison found himself specialising in pensions in the early 1980s when pension issues were just beginning to shoot up the agenda for companies, governments and regulators. He recalls two huge scandals which really put pensions in the spotlight in the decade before the Maxwell debacle.
“There was the British Leyland case, where it was alleged a guy on the board had put the pension with an insurance company rather than have it self-administered and was taking commission in those days of £1.5m for himself,” he says.
“And then there was the furore about Jimmy Hoffa, the US trade unionist. One of the biggest trade unions in the US saw its pension fund taken over by the mafia. It was the biggest scheme in the States at the time and was invested in various mafia businesses in Las Vegas. Interestingly they found it was the most profitable pension fund of all.”
The Maxwell case that hit the headlines in the early 1990s is for Ellison the perfect example of the potentially disastrous effects of misguided or excessive regulation, a subject that is one of his biggest bugbears.
“The paradox of Maxwell is, and its got lost in all the self-righteousness after Maxwell, that the money wasn’t stolen from the pension funds at all. In the 1980s pension funds weren’t allowed to run their own money. You had to give it to an authorised regulated asset manager. So the Mirror scheme gave its money to an authorised, regulated asset manager, but it so happened that it was a Maxwell-owned authorised regulated asset manager,” he says.
“The money was stolen there, but if it had not been for that law it would have been much harder, because the trustees were very worried at the time and would have kept a keen eye on it,” he says. “It is one of the unintended consequences of regulation, of which Maxwell is the paradigm, that he would have found it much harder to get his hands on the money if it hadn’t been for the regulations.”
Ellison then had a role in picking up the pieces of the Maxwell disaster as a trustee of three of the funds. That role showed him the way in which conflict of interest barely registered as an issue in UK business at the time.
“The trustees thought we ought to go and investigate the Maxwell pensions scheme office. We almost had to break in. Coopers & Lybrand were auditors of the company at the time but were also acting for the pension scheme. We sent everyone home but there was one guy in the corner who stayed. When asked to leave, he said was also from Coopers and he had been appointed by the regulator, so he should stay. I said ‘how can you be there with three hats on – for the pension scheme, the company and also for the regulator?'”
His high profile in representing pension schemes led him to the role of chairman of the NAPF for two years from May 2005 at what was a difficult time for the organisation and the occupational schemes it represented. So how does he think the NAPF has changed?
“The NAPF firstly had to recognise that DB schemes weren’t going to be the dominant channel going forward. Secondly, as a body it was losing money hand over fist. I don’t claim responsibility but we did turn it round financially, and we repositioned it as an organisation so that rather than being a technocracy it is now more of a policy group. The idea is to make NAPF a think-tank talking to government,” he says.
Some would argue that the Government’s acceptance of a trust-based model for the Personal Accounts project marks a success for the lobbying of the NAPF. “We were influential in changing thinking, but what we had to do is face up to reality. We had to accept there were going to be Personal Accounts even though in our heart of hearts we saw it as a long term mistake.
“We were disappointed in the Turner report, not in terms of analysis – that was brilliant – but it gave the management consultant’s response to the problem for political reasons.”
Ellison sees Turner and the Government’s failure between them to address the complexity of the state system before addressing anything else as a major failure, and one that will come back to haunt them for years to come.
“No-one can describe how the pension system works. We said burn all this stuff and have a basic state pension for everybody, whether they deserve it or not. Give everyone over 70 £200 a week, and if you are rich you pay tax. By doing that you get rid of housing benefit, heating allowances and all that bureaucratic paraphernalia,” he says. “And then the private sector can get on and do exactly what it wants.
“Instead of doing that they decided to keep the three systems, adjust them to make them even more complicated, and then put a fourth system on top. A fourth system whose admin overhead is as yet unknown and where the record is not good.”
He is scathing about the Government’s history on running huge computer systems. “I am not saying we can’t do it, but the omens don’t look good. Is it what is needed for people at the lower end of the income scale?”
He puts the failure to address the obvious problems with state pension complexity down to the political system. “There was paranoia in the Treasury about losing contracting out – it is dying out anyway – and the Conservative Party had an equal paranoia about the ending of the contributory principle. Political parties are prisoners to their history, but it was time to move on.”
On the issues created by the EU Distance Marketing Directive for contract-based schemes wanting to auto-enrol members, he is rather more positive, betting on a solution being found. “I would think they would resolve the dilemma somehow. Lawyers are paid to resolve these problems,” he says.
But for the wider Personal Accounts agenda he is less positive, as the Government’s track record in forcing private sector pension change has not been great. “Stakeholder wasn’t successful, and no-one remembers Individual Pension Accounts, which were going to be a big thing but just died a death,” he says.
“The low earners, for who this scheme is really designed are going to fall through the net again, so we will end up redesigning it again in 10 years time. I am a Steve Bee fan and even if he does over-egg the pudding sometimes he has found the issue the Government is going to have to struggle with,” says Ellison.
He sees two huge potential potholes for PADA – firstly the day to day administration, and secondly dealing with errors. “If money goes up, you are happy, if not, you are unhappy. If you give instructions for your money to go from A to B and it hasn’t happened, people are going to be upset,” he says.
As to the evolution of workplace pension arrangements he says: “The actuaries are worried which is why there is a big campaign for mixed risk – half DB, half DC pension schemes. But the actuarial profession has been beating itself up unnecessarily. The danger for their profession is it is overregulated, and they turn more into number crunchers than advisers. They mustn’t lose self confidence. The fear is that regulation becomes too tight and actuaries lose what surgeons and lawyers need which is independence of spirit. The reason you go to an adviser is because he gives you advice. He doesn’t give you a guarantee.”
His theme of the negative effect of regulation re-emerges when he talks about the problems faced by ASW and other schemes whose members lost out. “Before regulation a pension would go bust and by and large there was 80p in the pound. Trustees would mete out rough justice which might pay pensioners 85p and young members 75p. Now you have got to give the retired ones 100 per cent plus indexation.
“At ASW most members were retired. They aren’t on the beach with their trousers off. But you had other guys who have worked 39 years, who lost the lot. I would take my trousers off in that circumstance,” he said.
But was there a failing by the professionals that led to these people being let down? “Lawyers, actuaries, administrators, consultants, trustees, the whole industry, we are all responsible. We have not communicated the risks to members in the way that we should have. The industry as a whole has not covered itself in glory and I am a part of that,” he says.
A big issue for the UK pension industry is whether Europe is a challenge or an opportunity, says Ellison. “I spend much time exploring whether we should move registration of British schemes to another country because of our dysfunctional regulation. Over the next three to four years you will start to see a steady trickle of pension schemes moving elsewhere because tax is unnecessarily complicated here,” he warns.
Ellison sees three potential markets for Europe – private individual with a SSAS or a Sipp, companies trading in the UK and multinationals. “If you are multinational you would certainly not choose the UK because of stamp duty and its tax system. That is a big threat to the UK – if pension schemes move their registration out, do they then move their investments out?” he says. “If you couple that with the Government’s attack on non-doms, will the climate be attractive over the next 20 or 30 years for the UK financial services industry?”
As for big Ssas or Sipp clients he predicts we will see most of the big players pushing overseas offerings in the UK. “Ireland, Malta Luxembourg, Belgium and Austria will be the places as they have got their systems very simplified. Belgium and Austria want to be the places to register – they are not cowboy jurisdictions. Tax rules in the UK are 3,500 pages long – in Belgium they are four or five pages long. There aren’t many real tax advantages if you take your benefits in the UK, but it is simpler so you can offer cheaper products,” he says.
CV Robin Ellison
“No-one can describe how the pension system works. We should have a state pension for everbody, whether they deserve it or not”
Born 1949
Education Manchester Grammar School
1976-1981 Research fellow, Cambridge University
1981-1994 Senior partner Ellison Westport Solicitors
1994-1997 Hammond Suddards
1997-2002 Eversheds
2002-to date Pinsent Masons (formerly Pinsent Curtis Biddle) head of strategic development pensions
Chairman of NAPF 2005 – 2007
Family 2 boys – 21 and 17
Enjoys Skiing, until an accident, sailing, has been a keen collector of antiquarian law books
As if he wasn’t busy enough
• On board of L&C Pensions, the company behind the Gibraltar-registered open annuity
• Set up the Occupational Pensions Trust
• Represents the UK arm of the Israeli Red Cross
• Chairman of a lung cancer charity
• Visiting chair at Cass Business School
• Various pensions books in the pipeline, including one on ‘too much law’
Few individuals can truly claim to be at the forefront of their chosen profession. The author of the first ever book on UK pensions and a trailblazer in the development in innovative solutions to pensions problems, Robin Ellison, partner at Pinsent Masons is by a considerable margin Britain’s best-known pensions lawyer.
A career spanning three decades in pensions law took off when the solicitor, then a sole trader operating from his London flat, entered a David and Goliath battle for the right to advise on the privatisation of the state’s water pension schemes.
“That was one of two pieces of business that I got through sheer luck, which really set me up. I met some bloke on the tube who was organising the Water Board’s pension schemes. He said put your name in the hat for the business, and even though I didn’t have an office and was competing with the likes of Nabarro’s and Linklaters, I got the business. The price I bid was higher than them, but they agreed to pay it in the end.”
His second stroke of fortune came as a result of his writing a book on pensions law. “My publisher’s husband was a solicitor in ICI and they didn’t want to do the pensions work. Out of the blue I had the water privatisation and ICI – two massive contracts.”
His book, Private Occupational Pension Schemes, was the fruit of a five year research fellowship at Cambridge University, and was very much charting new ground when he wrote it. “I’d like to say I got the fellowship because I was brilliant, but in fact I was the only applicant,” he says. “I wrote what was a very bad book, made of mud and straw, but it was the first-ever book on UK pensions.”
Ellison found himself specialising in pensions in the early 1980s when pension issues were just beginning to shoot up the agenda for companies, governments and regulators. He recalls two huge scandals which really put pensions in the spotlight in the decade before the Maxwell debacle.
“There was the British Leyland case, where it was alleged a guy on the board had put the pension with an insurance company rather than have it self-administered and was taking commission in those days of £1.5m for himself,” he says.
“And then there was the furore about Jimmy Hoffa, the US trade unionist. One of the biggest trade unions in the US saw its pension fund taken over by the mafia. It was the biggest scheme in the States at the time and was invested in various mafia businesses in Las Vegas. Interestingly they found it was the most profitable pension fund of all.”
The Maxwell case that hit the headlines in the early 1990s is for Ellison the perfect example of the potentially disastrous effects of misguided or excessive regulation, a subject that is one of his biggest bugbears.
“The paradox of Maxwell is, and its got lost in all the self-righteousness after Maxwell, that the money wasn’t stolen from the pension funds at all. In the 1980s pension funds weren’t allowed to run their own money. You had to give it to an authorised regulated asset manager. So the Mirror scheme gave its money to an authorised, regulated asset manager, but it so happened that it was a Maxwell-owned authorised regulated asset manager,” he says.
“The money was stolen there, but if it had not been for that law it would have been much harder, because the trustees were very worried at the time and would have kept a keen eye on it,” he says. “It is one of the unintended consequences of regulation, of which Maxwell is the paradigm, that he would have found it much harder to get his hands on the money if it hadn’t been for the regulations.”
Ellison then had a role in picking up the pieces of the Maxwell disaster as a trustee of three of the funds. That role showed him the way in which conflict of interest barely registered as an issue in UK business at the time.
“The trustees thought we ought to go and investigate the Maxwell pensions scheme office. We almost had to break in. Coopers & Lybrand were auditors of the company at the time but were also acting for the pension scheme. We sent everyone home but there was one guy in the corner who stayed. When asked to leave, he said was also from Coopers and he had been appointed by the regulator, so he should stay. I said ‘how can you be there with three hats on – for the pension scheme, the company and also for the regulator?'”
His high profile in representing pension schemes led him to the role of chairman of the NAPF for two years from May 2005 at what was a difficult time for the organisation and the occupational schemes it represented. So how does he think the NAPF has changed?
“The NAPF firstly had to recognise that DB schemes weren’t going to be the dominant channel going forward. Secondly, as a body it was losing money hand over fist. I don’t claim responsibility but we did turn it round financially, and we repositioned it as an organisation so that rather than being a technocracy it is now more of a policy group. The idea is to make NAPF a think-tank talking to government,” he says.
Some would argue that the Government’s acceptance of a trust-based model for the Personal Accounts project marks a success for the lobbying of the NAPF. “We were influential in changing thinking, but what we had to do is face up to reality. We had to accept there were going to be Personal Accounts even though in our heart of hearts we saw it as a long term mistake.
“We were disappointed in the Turner report, not in terms of analysis – that was brilliant – but it gave the management consultant’s response to the problem for political reasons.”
Ellison sees Turner and the Government’s failure between them to address the complexity of the state system before addressing anything else as a major failure, and one that will come back to haunt them for years to come.
“No-one can describe how the pension system works. We said burn all this stuff and have a basic state pension for everybody, whether they deserve it or not. Give everyone over 70 £200 a week, and if you are rich you pay tax. By doing that you get rid of housing benefit, heating allowances and all that bureaucratic paraphernalia,” he says. “And then the private sector can get on and do exactly what it wants.
“Instead of doing that they decided to keep the three systems, adjust them to make them even more complicated, and then put a fourth system on top. A fourth system whose admin overhead is as yet unknown and where the record is not good.”
He is scathing about the Government’s history on running huge computer systems. “I am not saying we can’t do it, but the omens don’t look good. Is it what is needed for people at the lower end of the income scale?”
He puts the failure to address the obvious problems with state pension complexity down to the political system. “There was paranoia in the Treasury about losing contracting out – it is dying out anyway – and the Conservative Party had an equal paranoia about the ending of the contributory principle. Political parties are prisoners to their history, but it was time to move on.”
On the issues created by the EU Distance Marketing Directive for contract-based schemes wanting to auto-enrol members, he is rather more positive, betting on a solution being found. “I would think they would resolve the dilemma somehow. Lawyers are paid to resolve these problems,” he says.
But for the wider Personal Accounts agenda he is less positive, as the Government’s track record in forcing private sector pension change has not been great. “Stakeholder wasn’t successful, and no-one remembers Individual Pension Accounts, which were going to be a big thing but just died a death,” he says.
“The low earners, for who this scheme is really designed are going to fall through the net again, so we will end up redesigning it again in 10 years time. I am a Steve Bee fan and even if he does over-egg the pudding sometimes he has found the issue the Government is going to have to struggle with,” says Ellison.
He sees two huge potential potholes for PADA – firstly the day to day administration, and secondly dealing with errors. “If money goes up, you are happy, if not, you are unhappy. If you give instructions for your money to go from A to B and it hasn’t happened, people are going to be upset,” he says.
As to the evolution of workplace pension arrangements he says: “The actuaries are worried which is why there is a big campaign for mixed risk – half DB, half DC pension schemes. But the actuarial profession has been beating itself up unnecessarily. The danger for their profession is it is overregulated, and they turn more into number crunchers than advisers. They mustn’t lose self confidence. The fear is that regulation becomes too tight and actuaries lose what surgeons and lawyers need which is independence of spirit. The reason you go to an adviser is because he gives you advice. He doesn’t give you a guarantee.”
His theme of the negative effect of regulation re-emerges when he talks about the problems faced by ASW and other schemes whose members lost out. “Before regulation a pension would go bust and by and large there was 80p in the pound. Trustees would mete out rough justice which might pay pensioners 85p and young members 75p. Now you have got to give the retired ones 100 per cent plus indexation.
“At ASW most members were retired. They aren’t on the beach with their trousers off. But you had other guys who have worked 39 years, who lost the lot. I would take my trousers off in that circumstance,” he said.
But was there a failing by the professionals that led to these people being let down? “Lawyers, actuaries, administrators, consultants, trustees, the whole industry, we are all responsible. We have not communicated the risks to members in the way that we should have. The industry as a whole has not covered itself in glory and I am a part of that,” he says.
A big issue for the UK pension industry is whether Europe is a challenge or an opportunity, says Ellison. “I spend much time exploring whether we should move registration of British schemes to another country because of our dysfunctional regulation. Over the next three to four years you will start to see a steady trickle of pension schemes moving elsewhere because tax is unnecessarily complicated here,” he warns.
Ellison sees three potential markets for Europe – private individual with a SSAS or a Sipp, companies trading in the UK and multinationals. “If you are multinational you would certainly not choose the UK because of stamp duty and its tax system. That is a big threat to the UK – if pension schemes move their registration out, do they then move their investments out?” he says. “If you couple that with the Government’s attack on non-doms, will the climate be attractive over the next 20 or 30 years for the UK financial services industry?”
As for big Ssas or Sipp clients he predicts we will see most of the big players pushing overseas offerings in the UK. “Ireland, Malta Luxembourg, Belgium and Austria will be the places as they have got their systems very simplified. Belgium and Austria want to be the places to register – they are not cowboy jurisdictions. Tax rules in the UK are 3,500 pages long – in Belgium they are four or five pages long. There aren’t many real tax advantages if you take your benefits in the UK, but it is simpler so you can offer cheaper products,” he says.
CV Robin Ellison
“No-one can describe how the pension system works. We should have a state pension for everbody, whether they deserve it or not”
Born 1949
Education Manchester Grammar School
1976-1981 Research fellow, Cambridge University
1981-1994 Senior partner Ellison Westport Solicitors
1994-1997 Hammond Suddards
1997-2002 Eversheds
2002-to date Pinsent Masons (formerly Pinsent Curtis Biddle) head of strategic development pensions
Chairman of NAPF 2005 – 2007
Family 2 boys – 21 and 17
Enjoys Skiing, until an accident, sailing, has been a keen collector of antiquarian law books
As if he wasn’t busy enough
• On board of L&C Pensions, the company behind the Gibraltar-registered open annuity
• Set up the Occupational Pensions Trust
• Represents the UK arm of the Israeli Red Cross
• Chairman of a lung cancer charity
• Visiting chair at Cass Business School
• Various pensions books in the pipeline, including one on ‘too much law’
