The Queens Speech; the sausage sandwich game – for pensions!

downloadThe Pensions Reforms in the Queens Speech had been broadly flagged in the Sunday Telegraph and subsequently.

Nonetheless, the inclusion of Defined Ambition Pensions (aka CDC) (aka Target Pensions) is still a major surprise and will further stretch the UK pensions industry (who may have to become industrious).

Here’s how HMG’s press release announces the two Pension Bills

Its centrepiece: ground-breaking pensions reform. The reforms we plan will be the biggest transformation in our pensions system since its inception, and will give
people both freedom and security in retirement. By no longer forcing people to buy an annuity, we are giving them total control over the money they have put aside over
their lifetime and greater financial security in their old age.

It’s all part of our wider mission to put power back in the hands of the people who have worked hard – trusting them to run their own lives.

At the same time we’re completing sweeping reforms to workplace pensions to give employees more certainty about their income in retirement. Taken together, this is a revolution that matches our previous reforms to education and welfare in giving people opportunities they were previously denied.


Note the juxtaposition of the DWP’s DA agenda to the Treasury’s new annuity framework. We reckon the Government have worked out they can’t lose annuities without having something to put in their place- step forward Defined Ambition Pensions.

For Geeks interested in the full text published so far, here is the link  that Alan Higham kindly released on twitter


I append by means of that well know journalistic device “cut and paste”, edited highlights

The point of the Bill is to;-

Enable ‘collective schemes’ that pool risk between members and potentially allow for more stability around pension outcomes in retirement.

We’ll now have three types of pension DB, DC and DA

The Bill would make provisions for a new legislative framework in relation to the different categories of pension schemes. It would establish three mutually exclusive definitions for scheme type based on degrees of certainty in the benefits that schemes offer to members.


These will be distinguished by recourse to Danny Baker’s “sausage sandwich”methodology.

The Bill would define schemes in terms of the type of ‘pensions promise’ they offer to the individual as they are paying in.

A scheme would be categorised as a Defined Benefit scheme, a Defined Ambition (shared risk pension scheme) scheme or a Defined Contribution scheme, corresponding to the
different types of promise – full promise about retirement income a promise on part of the pot or income, or offering no promise at all.

The Section also contains a rehash of the original Treasury promise on the Guidance Guarantee (again juxtaposed to the DA stuff). This now seems to be in the DWP’s Bill which suggests that the Guidance Guarantee is moving into Steve Webb’s purlieu.

Certainly this is good news for TPAS who are keen to have control of this project and suggests that the delivery may well be more a DWP than a Treasury controlled affair.

The new rubric makes no mention of Face to Face- no doubt Gregg McClymont will pick up on this in the debate to come.

In the opinion of the Pension PlayPen, any guarantee of guidance that does not guarantee F2F is a down valued guarantee.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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