Former pensions ministers on regrets, successes and why the UK system has to change

Louise Doherty: Hello and welcome to the latest episode of Thinking Forward with myself, Louise Doherty, and Mike Ambery, where we explore the trends and developments affecting the UK pension industry. And today in this episode, we're going back to our roots. We're going to look at global lessons and comparisons for the UK. And we have a real treat in store for you. 

We've got not one but two former pension ministers joining us today from both sides of the globe. In the studio today we're joined by Guy Opperman. Guy was a pension minister in the UK from June 2017 to September 22nd. And we're also joined by The Honourable Nick Sherry, who's a former Australian Minister for superannuation and the Senator for Tasmania. So I welcome you first, Guy. Thank you so much for joining us. Can you introduce yourself to our listeners and tell us a bit about what you've been doing?   

Guy Opperman: So I was the MP for Hexham for 14 years. Prior to that, I ran the family business with my dad. I was a barrister and I was a very fat steeplechase jockey. I broke 24 bones and decided I needed a proper career, so obviously became a member of Parliament. I did seven plus years in DWP, of which five were as Minister for Pensions, lucky enough to bring forward, large amounts of legislation like six different bills during that time, but would have liked to have done an awful lot more. Happy to talk about it today. 

Louise Doherty: And we're going to push you on that later. But I'm going to say 24 bones. Yes. As an avid equestrian myself, I'm only on six bones.

Guy Opperman: So I think I made a mistake at Stratford when I was jumping the second last and the horse did a handstand. I decided to catch him as he came down. 

Louise Doherty: Oh, wonderful. Full rotational. 

Guy Opperman: Yeah. So I've got no spleen, so I have a big scar there. I did what's called a pneumothorax, where you pop up a rib in your lungs. 16 ribs, broken front and back, a couple of vertebrae. I've got a reconstructed shoulder, a few other fun and games. I'll add an ankle to that. Ribs, shoulder, finger, elbow. 

Louise Doherty: We need a new a new hobby. 

Mike Ambery: There's a song there as well. 

Louise Doherty: Hey, Nick, I don't know if you can top that. Broken bones. But welcome to, Thinking Forward again. Because actually, this is the second time you've joined us. You did some events with us in 2022.  

Nick Sherry: Yes, I'm a regular, I should say.  

Louise Doherty: Good. A friend, a friend of the show.  

Nick Sherry: Yeah, good day. I’m obviously from down under, way down under, Tasmania, Australia. Briefly started working life in a casino of all places. Night cashier, auditor. Which led me to be a founding trustee. Back in 1986, of a fund called HostPlus, now one of the mega eight funds in Australia, 120 odd billion. Great experience. I learnt a lot, into the Australian Senate, chaired the Senate Committee on Superannuation. 

When we did the foundation legislation, super guarantee and the regulatory framework. Learned a lot from the UK shadow minister for nine years then and then Minister, first Australian Superannuation Minister in 2007 for three years, retired and now have a range of roles in, superannuation and financial services and back in the UK very regularly, once or twice a year to listen and learn and you listen and learn from us as well.  

Louise Doherty: Fantastic. So we have got many decades of experience in the pension industry with us today. I'm going to start with a nice question, actually. I was thinking about horse racing and winning. What would you say is your biggest career win? What are you most proud of?  

Guy Opperman: As pensions minister, getting automatic enrolment to 8% without the world ending. So from 2012 when we started it to getting to 8% within five years. And the world, you know, there wasn't the opt outs. It wasn't a big deal. And whilst we're doing this, by the way, we had Brexit, we had government changes, new prime ministers. That's chunky stuff to be handling and landing that without any fundamental problems. 

And that it is just happening is without a shadow of a doubt, the most important thing. I mean, there's a whole bunch of other stuff you could talk about, but bluntly, that is the key. It's made the biggest change, hasn't it? Yeah. And of course we can talk about adequacy, future programmes, how we can emulate Australia and get up to however many billion infrastructure productive finance, but nothing that happens unless you get to 8% to start with. And, and everybody buys into that. 

And yes, of course you need to do more. But if you don't get over that first hurdle, as you know, you look at Ireland, you look at other countries who are struggling on this. They are really miles behind and would really be going to us. Well, we'd love to be at 8% right now.  

Louise Doherty: And in 2012 we thought this is where we're going to get to. It is a massive one. Yeah, yeah.  

Nick Sherry: For me, two phases. The first phase was chairing the Senate Committee on Superannuation. Government didn't have a majority in the Senate. We had to get the super guarantee to take contributions from 3% to 9% compulsory in Australia. That was enormously controversial. And I had to do the legislation even though I wasn't the Minister. Enormously controversial, months of public hearings, but the world was going to end according to opponents, and a lot of the industry, interestingly, opposed it. Anyway, we got that through. 

The second accomplishment was the regulatory foundation of the system, which I learned a lot from. The UK visited the UK. The SIS act, which came, in 1994, in my second phase, when I ultimately became a Minister many, many years later, what I'm proudest of is I initiated the review that led to My Super, which is the standard benchmarking approach for the default, performance of funds in Australia. The second project was introducing national regulation for financial products and advisers. We got that done in the first year, and then the global financial crisis hit us, and, everything else went by the board.  

Louise Doherty: And, Nick, thinking about the UK, is there anything here that you think we've done better than you?  

Nick Sherry: Well, look, your system is much simpler. The only simplicity about the Australian system is it's compulsory. But we have so many options for contributions. I won't go to tax. That's extraordinarily complex. The level of individual decision making. If you leave the default and there is a lot of individual decision making. Predominantly most people default. We, and we also have mandatory death and disability insurance within the superannuation system. That level, it's the most complex, defined contribution system in the world. And I'm one of those who says, look, it's a great system. 

But that was a serious mistake allowing all this other stuff, all these options make for a very complex system, regulatory. And for those that, for whatever reason, leave the default path. The second mistake we made, and I think we're both going to have to grapple with this and we're only just starting, is what do you do with a lump sum when you get to retirement? And the truth is, we should have acted, at least five or ten years ago. In designing the drawdown, we focused on building a massive system. 

And it is truly a massive system. It's the fourth largest in the world for the 12th largest economy. But I think that was a major omission that I think we should have done something about earlier.   

Guy Opperman: But the interesting point you make, so the assertion is our system is simpler, which is better? The impressive bit about Australia, though, is, it is the only place, in my view, in the world, possibly America as well, where you genuinely will go to a barbecue. I've done it in Sydney.  

Nick Sherry: Yeah.  

Guy Opperman: And people will be chatting about, what's your super? Yeah. And there's an understanding of, basically pensions and what your major asset is, aside from your house, in a way that, yes, it is a complex system, but there is a greater engagement that you just simply do we don't have. So we have no name for it. We don't have it as a 401K. We don't have it as a super. We call it a defined contribution automatic enrolment scheme. I mean, who on earth... If I went to the Dog and Duck in Hexham, they are not going to be knowing what that is. Whereas in Australia, genuinely, I've been sitting having a tinnie in a back garden where everybody's chatting about what's in your super.  

Nick Sherry: It's superannuation. I mean, the truth is two, we've had 20 years longer experience. We moved away from a defined benefit, and replaced it with a defined contribution. Now, whether you agree with that or not, the reality is the old defined benefit system in Australia only covered three out of ten Australian workers. So your truckies, who I'm chair of their fund, your shop workers, your hotel workers had nothing. And so with a universal system, you created interest over time, members get a six monthly statement. It's now obviously electronic. 

So we members are much more interested in because the system is so large now a consequence of time and because you've got millions of Australians who've been in the system since 1987. They're much more used to, and seeing the benefit, you see your statement, you see the outcome, and, you reach you generally reach that tilt point. I think depending on contributions, when your level of statement to you reaches 20, 30,000 AUD, I mean, the levels are much higher now. So that interest is partly a consequence of time. But the system is so large it dominates the media economic investment. It's about social protection and outcomes in retirement. But the economic impact of this massive pool of savings gets a lot of attention.  

Louise Doherty: And you mentioned when you introduced yourself that everything hasn't been smooth sailing. So you talk about regrets. What is your biggest regret. What would you like to have done that you've not?  

Guy Opperman: I think every single Minister or Prime Minister will look back on their time and wish they had done more and done it quicker. All right, I don’t think there is any exception to that. So I look back and I would say, I should have done a variety of things and I, many of the things which they do in Australia. So I mean, I would end corporate schemes they need to be phased out. Australia have none. And we're going down that route. I would have professional trustees, I'd have proper league tables. 

I started Value for Money. What is being proposed by the FCA is manifestly not good enough. Needs complete rewriting. I'd have a single regulator, rather than the multitude of regulators who are all pulling in different directions in this country. And I genuinely would, shotgun some scale stuff so that you have an ability to have critical mass going forward. There should be a maximum of 10 to 12 master trusts. You know, you should be in a position that we should be getting much bigger scale on an ongoing basis. People get very hooked up on things like adequacy. I'm less fussed about it. I mean, industry love more adequacy. Obviously, I'm less fussed about it because I take the view that will come over time, as the Australians have, shown very good in a very good way and slightly that is dependent on economies as well. 

And we've had a multitude of shocks, whether it is Brexit, Covid, Ukraine war, we are clearly a country that is struggling with a high level of debt and a high form of tax. And you have to have a situation where that will come over time, but I'm more interested in just getting a greater critical mass, and I should of shotgun that much quicker, basically.  

Nick Sherry: I mean, that will evolve inevitably. But government does have an important role in nudging it along. Yeah. And there's no doubt the greater regulation, appropriate to, of trustees, and their role and responsibilities, Accountability, has driven consolidation. It's meant the end of corporate funds because employers don't want to have that level of responsibility. Partly that's because defined benefit declined significantly as well. 

But government has an important role in nudging these reforms. So, the introduction of benchmarking. I mean, we had all the data. Australia's always had really good data on fund performance, into the regulator. But nudging and benchmarking,  overall has been a huge, Advantage, and consolidation, there is no doubt. I mean, my I'm chair of the transport fund. We're merging with the mineworkers to create a $22 billion fund. Sounds like a lot of money, but we'll be a very modest sized fund.  

Guy Opperman: You will be merged again within five years, without a shadow of a doubt. Well, you need to be 50 billion at the very least.  

Nick Sherry: Correct. And there are a couple of other funds, but there are so few small medium funds left in Australia. We've got eight mega funds, we've got a $4 billion system, eight mega funds. There's another four mutuals, there's another four or five major retail funds. And then my fund and others. We're being well. We don't intend to be mopped up and taken over. We will go through this merger and bring in hopefully some of the other smaller funds, and we'll probably end up with five or ten medium sized funds and that'll be it in Australia. That will be it. 

I wouldn't like to see it get to the point of four big banks. I don't want to see that day. But when you got a $4 billion industry with a 150% of GDP, that owns, you know, most of Australia and increasingly parts of the world, you know, you can have that scale. There is a downside of scale. There are dysfunctional consequences, but there's no doubt you can get better deals on fees, better deals on investment. And also increasingly important, you need scale for investment in technology, digital. That's a large part of the future and a large part of the retirement income solution.   

Guy Opperman: And also the scale. The scale breeds a capability to do investments that you couldn't possibly do if you were a smaller entity, and whether that is in, tech or whether it's in green, development, there's a whole host of different things. You can have a 1% of your portfolio if that is nearly £1 billion or a half £1 billion. That is investing in this sort of stuff. You can do VC, you can do other stuff, which frankly, we just can't do right now. I mean, I sat down with the sovereign wealth funds in the UAE when I was Minister, and their sense of scale was just enormous. They pretty much wouldn't get out of bed for less than half a billion, you know, and that is just on a on another level to what we are looking at in this country. And with the consequence that we can't do the productive finance that we'd like to do.  

Nick Sherry: We learnt that really early on in areas like infrastructure and property development. Now when we were much smaller, we were a foundation investor in a specialist infrastructure fund called IFM. They’ve now opened up offices here. We were smaller and we wanted to take, to invest in the infrastructure opportunities, a lot of privatisation, everything you can think of except for water authorities in Australia has been privatised. Ports, airports, great investment opportunities. So we created some of the funds, got together and created a special unit. 

The funds are now so big that they are actually doing their own direct investment in infrastructure, and I think that's why we got into that area very early, much earlier than most other countries, because we had scale. And I think one of the downsides in the UK, is that there are so many funds, if you don't have the scale for investment in areas like infrastructure. And now, importantly, housing is really important. And that scale and knowledge, I mean infrastructure is it's a very complex area. It's more costly. But the returns are fantastic.  

Louise Doherty: I guess it leans into private markets, Mansion House something I know is close to your heart when we were talking with Paul Watson. Correct me if I'm wrong, but I think he said at HostPlus that they were invested 40 to 45% of the fund in alternatives private assets.  

Nick Sherry: And I should mention, look Australia, very quickly the trustees realised defined contribution best long term return for members is about 60% equities, half domestic, half international, 10% to 15% infrastructure, about 10% on average, commercial property, communications etc. less than 10% in bonds and cash.  

Guy Opperman: I mean, that's the staggering difference in this country where it is pretty much the other way around. Right. And one of the reasons we need professional trustees is because, bluntly, they need to be, enlightened. I think it's the polite way of putting it. As to the maximising of returns. You have situations here where master just returning 11% in one case and less than 4% in other cases. That's outrageous, in my view. And we are we're in a situation where, in we need proper heat maps and league tables to hold people to account so that genuinely, we can then get the better outcomes. And we are you know, I drafted most of Mansion House. It's still a very Diet Coke version of where I'd like to be.  

Nick Sherry: Look, I think consolidation and, at least semi-professional trustees who ask questions, probe. I think that's really, really important in any system that's trustee-based. I mean, it's a bit of an irony having, had a personal interest in ensuring Australia went down the trustee route. A lot more funds, of course, but the few fiduciary imposition on those trustees back in the late 1980s was you must ask questions, you must run, you will be held accountable and you have to hold the asset managers accountable, and all the other providers accountable. 

And I think that's probably the greatest strength of the Australian system. It's also independent of government. You don't want government interfering I don't favour personally directing funds from government. But you've got to have accountable, responsible, qualified trustees.  

Guy Opperman: But the flipside of that is so nobody wants to compromise fiduciary duty and be in a position that they, asked for trustees to do stuff. Yeah. But at the same stage, if trustees are invested 80% in bonds, for example, you're going to have a long, hard conversation and say, how on earth is this in the national interest? How is it in the member's interest?  

Nick Sherry: Correct. It's fundamentally about the member and the return. And quite seriously, if I had a trustee in Australia doing that, you're individually licensed in Australia, you'd be sued and you lose everything because you're being irresponsible and you're not, you're not carrying out your fiduciary duty. And I do think the regulator here, in respect to trustees, may be making a bit of an example of a few of these trustees, who are clearly not doing their job.   

Mike Ambery: Nick, and Guy, it’s really good listening to you. I'm going to change a bit of direction if it's okay, and we could probably get more pointy back to a bit of bone cracking and crunching, if that's okay. Guy. To begin with, private markets, and the UK, we're in a position now that we want to see economic growth. We want to see investment in the UK something that would be close to your heart over a very long period of time. So what's gone wrong? Mansion House to where we are now, I will ask the question of is it scale and consolidation and value for member, which you've been critical about earlier in this podcast? Where are we going wrong, realistically?  

Guy Opperman: Well, it’s easy to be harsh on ourselves, but we are at a very different stage to Australia. All right. Absolutely correct. And bluntly, if I was to take the Australian example and be, 15, 20 years ago and the scale that they had in the DC market, we're not that dissimilar. We really are not.  

Nick Sherry: Absolutely correct.  

Guy Opperman: And so, the question is how you go from the position they were in and we presently are in and beef this up. Now there are clear examples of regulation, trustees, Consolidation, getting greater scale. And that is happening already. You can put some rocket boosters up it. There's no question. The other bit is, is government though. So there is a legitimate criticism of successive governments that they've got to create the products that allow you to invest, with the scale that you'd like to do. 

Now, they've got to be not scared of profit. Which is a tricky thing. So, you know, government infrastructure and essential infrastructure owned by effectively private organisations. So a super is not run by government. But that super then owning a port or an airport or road infrastructure, rail infrastructure that is complicated. And you have to be in a position that you've got to embrace the risk that comes with that. You've also got to embrace the profit that comes with that. And government needs to create. Either you have, as IFM have done, a corporate body that is a basically a collection of supers creating an investment vehicle or government creates an investment bond, that allows everybody to buy in. The best example in this country is nuclear. 

So, I used to have lots of the nuclear people come to see me, all right? And they would basically say, we cannot finance this ourselves, but we will be able to finance this if you create a product which has some government buy in, some assurance of regulation and assurance of commitment. So hypothetically, government takes 10% to 20%. And then you create an infrastructure bond, a nuclear infrastructure bond that allows you to invest into that. It's the perfect thing for a DC. 

It's a 30 to 40 year product. You've got a guaranteed return. You can then do some things. You can buy and sell debt as part of that. But we haven't done that. And those are the things that need to be created in this country, which will then allow smaller DC to say, well, I will commit a billion of my funds into a 20 to 50 billion product because that's what you need to create lots of nuclear power stations on an ongoing basis.  

Nick Sherry: That partnering is really important.  The government does have a role. When we had a happy coincidence in Australia, midway 20, 25 years ago, after the system was created, we had massive privatisations. Now your privatisations in the UK occurred before auto enrolment. It was largely individuals buying shares in Australia. Yes, we had individuals buy part of us, Telstra, part of ports, airports. But the bulk of the capital went to the super funds who bought it for obvious reasons. 

Secondly, government privatising and it wasn't, it wasn't, it was both Labour and, Liberal Conservative. It wasn't ideological in Australia. 

And thirdly, regulatory certainty, government framework around those around those privatisations was a great opportunity. The one area where I think we failed and there's a lot in this space is housing. You know, we've got a housing crisis in Australia. Funds have neglected, governments vacated. And again, both major parties vacated housing in Australia. And we've got and we got massive migration. We've got all sorts of challenges. So there's a big focus on that issue now. Yep.  

Mike Ambery: Nick, I'll turn to consolidation if it's okay, because the order of things for me is adequacy, building up the funds. First off. Yeah. Secondly, that economies of scale and consolidation. We've seen consolidation many times before. The third one, as Guy Said, it's opportunity now. The opportunity where Australia supers are gives them a very strong position economically and globally. 

I look around and I think well Aware Super, they're looking at regeneration. They're looking at renewables, looking onshore, offshore wind farms which are packaged within the UK and a great opportunity to wade in, you know, 8, 10, 12, 15 billion. It's not an auction but they're coming in.  

Nick Sherry: Well and you know they are, the Aussies are here. It's a bit like a reverse takeover. You know you sent 200,000 convicts to Australia 200 years ago. We're coming back and taking over. But no, the truth is, because the system is so large, because of our time. It was founded earlier. We've got scale. You simply can't invest the money in Australia.  

Guy Opperman: And again, there's no, there is, there aren't any more ports to build.  

Nick Sherry: Correct. And again, philosophically, because it's been left to the trustees, trustees determine where you invest. There's no barrier to overseas investment. That is not a debate in Australia. Unlike a lot of other countries. So I think that's a really, really important element to it all. But you're right. But also we partner I mean, the Canadian, the US fund too, you know, to acknowledge, those funds there's a lot of partnering. My fund, for example, we own 5% of IFM, we own Stansted Airport. And I think we announced, an investment of $1 billion. I don't think the users are terribly happy with the charges, but, you know, that's to the benefit of our members. And, that's great for our returns.  

Mike Ambery: Completely agree with you. And in which case, Guy, I'm going to go back to the one point over, rocket fuel for consolidation. I personally think that consolidation needs to happen. It's only the very large funds that are taking the opportunities, like Nick says, for that investment and equally bring you through on Mansion House. I know our position at Standard Life and Phoenix, where we're able to do that of size. But I do worry for all the members of smaller schemes, how they're able to get. Well, I'll say we've all said in this room up to now, better outcomes for members because they're missing out on what is Mansion House’s objective.  

Guy Opperman: Well, in the vast majority cases they simply can't. End of story. You know, they I mean, there's ways in which you can address this because they don't have the clout to invest in private markets to the degree they need to invest. You know, if you've only got anywhere between £100 and, I don't know, £300,000, you're just not going to be at the table. Okay. To take the casino point, there's a certain levy bet you've got to make to start just to sit at the table. 

Secondly, in terms of your charges, when you go and see the asset managers to do the investment for you, you can't drive down the cost because you're such a small player. Correct. Now you can do some pooling, which is what IFM and local government do, but it's really, really difficult. So bluntly, there are very few corporate schemes who are able to make the right sort of investments. That will get the sort of returns, which if I ran a 5 to 10 to 20 to £30 billion scheme, I've got massive clout, a massive capability to run so I can buy Stansted and I can put the charges when you park your car up and we have I've got to say, we doing very well. But that's a very simple point, isn't it. 

That's a that's a relatively limited market. There are only basically three airports in London. Everybody uses this particular airport. If you are in North London, you are therefore in a position that either you're going to pay that or you're going to go somewhere else. Your capacity to do that is not great. So the members who own Stansted are going, “Happy days.”   

Mike Ambery: So what would you do, and what would be your magic wand? Well, I think there is a degree to which you can drive this by, greater regulation, trustee. VFM? VFM for me is, the key way. So, the Australian system of VFM is not perfect, you know, we can possibly talk about herding and some of the issues with that. 

But bluntly, if I am not performing and I am, you know, if I was in charge of the master trust, which is only getting 4% and my neighbour is getting 11%, this is not a 1 to 2% differential. This is we're in a different county and I should be genuinely held to account for that. And there should be forced merges without a shadow of a doubt.  

Nick Sherry: Shine a light, shine a light on Returns.  

Guy Opperman: Sunlight is the best disinfectant.  

Nick Sherry: And if you shine a light and there's a public debate, I mean, it's useful for members particularly, but it's very useful for public debate. It then shines a light on who's been making the good or bad decisions. And, you know, the regulator and public opinion will exit them.   

Guy Opperman: But the problem is, we don't say here is our fundamental deficiency in this country. We neither have the regulators, who are holding the schemes to account, nor do we have the people who are interested at the regulators in holding the schemes to account. They have been obsessed with, making sure that we get the DB run-on to satisfy schemes. And they're worried about some of the problems in the past, which, you know, from Maxwell down to Carillion and various other disasters we've had, and they're not focussed on outcomes for members at the present.   

Nick Sherry: And I think that's a big difference. Again, it's time in Australia we closed our DB system down, including for public sector, by the way.  

Guy Opperman: That's going to happen here. And in my view, whatever happens over the next five or ten years, that is a decision that needs to be made by whoever is in power because, the DB day has gone and it's just a question of how and when you negotiate the end of that.  

Nick Sherry: I mean, the interesting thing is, as our system evolved, increasingly defined contribution, it's 95% you have defined contribution, 5% the old legacy DB. You had a public debate about, well, why am I getting nine, it's now 11.5% in a DC, and there is a smaller group, generally better paid, who have got a DB which is far more generous, and even the politicians copped it. We had to cut, all the politicians’ defined benefits were shut in Australia Along with the public sectors, the only ones we didn't, were the judges who are still standing because they, they argued they are special. I don't accept that.   

Guy Opperman: We have the same issue here. Yeah. Judges definitely think they’re special.  

Nick Sherry: In all the time I've been coming to the UK, less so today, it was all about saving DB conferences, etc, conversations. It was all about saving DB. And I think one of the one of the other contrasts. And I always I always make this point, look there are important differences socially, economically, politically between Australia and the UK. So you can't just apply Australian change because there are different circumstances. But our Labour movement to the union movement to the credit, had a partnership with a Labour government and it said, look, we accept the price for a mandatory defined contribution system covering everyone, is that the DBs will close. They accepted that. Yeah.   

Guy Opperman: And I think the follow on from that though is you look at our DB system here and the evolution that's going on. And I look at some of the things I brought in. So super funds and CDCs are a good example. They are alternative ways to find a better DB and a hybrid system. CDC is a hybrid system between DB and DC that allows you to say, you know, DB will still run on to insurance buyout. And everything like that. 

But there are others who would like to do super funds that would like to do a different version. There are others who would like to do CDC, which gets you back into union partnerships. And there is definitely a sort of alternative version you can do within a legacy system that is running, running down on a slow but sure basis.   

Nick Sherry: I should make the really important point, however, that you actually do have DBs continuing. It's the government safety net. It's the flat benefit in in the UK and Australia's case, which is, really important, because even if, your pillar one is your government-state benefits, it should always be there. It's the safety net. And then pillar two is your defined contribution.  

Mike Ambery: And just to be fair for our regulator friends that may be listening, I will say some of the regulation interaction is dependent on legislation and what they're empowered to do. My final question is let's come together. We've got a wonderful trade agreement between Australia and the UK. Your farmers don’t think that! But let's, let's talk about opportunity and outcomes, which is what we're talking about realistically. And for our members, I perceive co-investment investment opportunity together amongst supers, amongst UK pension providers, huge opportunity to create a global ability and that's in UK market, Australian market and co-investment to be able to drive some of those areas you've spoken about, Nick and Guy, before. What can we do better together by co-investing in, where would you go with that?  

Guy Opperman: Well I think there is great opportunities whether you look at what IFM or long- term asset funds things like that. I mean, bluntly, you could easily go down the route of, the obvious thing is nuclear power stations and proper chunky investments. In a country that's saying we're now going to embrace nuclear. We want to do five nuclear power stations. We know roughly what the costs are going to be. There is massive opportunity to invest in such a thing on a long-term basis. I think what you're going to see is you're going to see greater amalgamation and purchasing bluntly, an amalgamation within this country, but also, cross-national purchasing, without a shadow of doubt.   

Mike Ambery: Makes sense. Nick?  

Nick Sherry: I think effective partnering. And it's always disappointed me. Our partnerships are with Canada and the US in this space. Yep. Virtually. You’ve forgotten us! Yeah. Well, well, we go where the opportunities are. Come on in, the water’s lovely. It’s a reverse takeover of the convicts from Australia, but no partnering. Look, and a new opportunities in particular. And I think it's in in wind, new energy, probably housing as well. 

Working together. And we've got a common, relatively common cultural background on that. I notice the king was visiting Australia and there's a bit of controversy. But anyway, yeah, look, we've got common a lot of in common. There's a lot that's different. We've got a lot in common. And, I mean, the UK has chosen to go its own way outside Europe, for better or worse, Australia's standalone economy, we've got no trade blocs. 

We've never had it. We've had to make our own way in the world, which is a pretty tough experience. And we're an open economy, very much like the UK, with a lot of commonality. So, look, I think funds, financial institutions getting to know and working and identifying opportunities to invest together.  

Louise Doherty: Perfect. Like, I don't know if you've watched the podcast before. I'm not going to ask you, but we like to finish, thinking about what we would see if we looked into crystal ball. So a quick answer from both of you. Because Mike's already given his answer, it’s partnerships, I believe. What is the next big pension reform coming over the hill? What are we going to be talking about in five or ten years’ time?  

Guy Opperman: Much larger scale. So, 12%, maybe more. I think, professional trustees, much bigger organisations. And also I think, for me, the big thing will be the merger of all financial services. So banks, pension funds, insurers, will all come together. They're already doing it, but they will come together and they will be way, way, way bigger.  

Nick Sherry: For me it's solving what is the package solution. And it's a package in retirement that is absolutely critical. And I think it's really important the UK get onto this now. We didn't get on to it early enough. The other big issue that's emerging, which worries me is early access. You know, everyone sees pensions as the instant solution to all the problems of the world. There's a big debate in Australia about taking money out for housing. I've been in South Africa where you can take 50% of your money for anything and people are doing it. And that's a really interesting debate for a lot of reasons inflation, cost of living, etc. So I think there are two fundamental challenges to me for Australia.  

Louise Doherty: Okay. Thank you gentlemen, both for joining us today. I've learned a lot. I'm sure our listeners have as well. As always, you can catch up on previous episodes. Just search Standard Life, Thinking Forward, and if there's topics or interviewees you'd like to hear from, just drop me and Mike a note and we will make that happen. Thanks all.