Mobilising our money

Just a quickie on the Government's proposed Personal Accounts pension scheme. According to the White Paper on Personal Accounts, the scheme will ultimately have assets of £100bn to £200bn, and a membership of between 6 and 10 million people (these figures are on page 135 of Chapter 7 of the White Paper). Needless to say this will be the largest pension scheme in the UK, in terms of both assets and members.

Union membership in the private sector is from memory something around 15% of the total workforce. Given that most members of the Personal Accounts scheme will come from the private sector that suggests that maybe a million union members could end up in the scheme (this is a bit optimistic, since many of those enrolled into the scheme will be from the SME sector which has both patchy pensions coverage and lower union membership). Now imagine if all those union members could be convinced to apply some kind of labour-oriented activism policy to their assets. It could have significant power, both as an force engaging with companies and in dealing with service providers.

Although I am personally not at all keen on DC provision the Personal Accounts system could bring about some democratisation in the capital markets - IF there is a concerted effort by the labour movement to grasp the opportunity. We need to start thinking - right now - about how individual scheme members can be given the opportunity to express their values through their investments. I'm not talking disinvestment (because I don't think it achieves much) but voting and engagement strategies.

This should be difficult for ideologues (on any side) to argue against since it is really applying democracy to investments. If scheme members don't want to take any sort of activist stance with their investments that's fair enough, but equally those that do should not be prevented from doing so (this is the kind of development envisaged in The New Capitalists). If we could make it straightforward for union members and Labour supporters to make that kind of choice within the Personal Accounts system that would be quite an achievement.