Time to pack your bags

BB&CE’s workplace pension empire has changed. EasyBuild  is shrinking its policyholders  and moving their “pots” to  the People’s Pension  with the help of The B&CE IGC.

EasyBuild was once Britain’s largest stakeholder pension scheme, the B&CE flagship. , B&CE has moved with some agility to running one of Britain’s largest master trusts – People’s Pension.

The transition is a result of Government interventions, the stakeholder initiative has been supplanted by auto-enrolment. B&CE has been at the forefront of providing for small employers and their members both as a stakeholder and master trust provider and should be commended for its foresight, responsiveness and operational efficiency.

Over the course of 2017, all but £9m of the £1.2 bn. in EasyBuild moved to People’s Pension , securing lower charges and a more certain future for the rump of stakeholder pensioners. Of the 2000 policies remaining in EasyBuild, 400 are for those who have died (and are awaiting payment) and 700 are in the process of transferring away to other providers, the 900 members left will be looked after by the IGC, though you would hope that keeping an expensive governance committee in place for much longer , can be avoided.

The B&CE IGC has overseen an effective dismantlement of EasyBuild and , though it fights on for lower charges for the remaining members, the work of Delo, Pickering et al is as good as done. Those who were members can thank their IGC for doing an effective job. I give them a green – this transition has no doubt been conducted better for their help, expertise and oversight.

The 2017-18 IGC report still engages

One of the good things about reviewing IGC reports is that none are written to a template  (unlike some GAA reports). Even with such a meagre audience, the B&CE report reads a considered piece of work. Steve Delo, the Chair, is used to working to a tight time and financial budget and though there is a little padding (see appendices), this report is engaging and – for those interested in consolidation of small pots – a fascinating case study. It is to both the IGC’s and B&CE’s credit that this report exists and reads as well as it does ; it too gets a green.

Value for Money

I won’t go so far as give the report green for amber for money. I will give it an amber, since what is happening within EasyBuild is no more than care and maintenance. While the 900 members who choose to stay within EasyBuild may be an irritant to B&CE, they have taken a conscious decision to stay (opting-out of the transfer). B&CE pledged to provide a stakeholder pension through to their chosen retirement date and has an obligation to do so and these members deserve to be treated as fairly as any other customers (including members of People’s Pension).

I fear for groups like this, the pensions equivalent of property tenants and owners , holding up the clearance of sites intended for other purposes. While I am sure they will not be harassed, let’s make sure they leave on good terms. I hope too that they are not holding out for bonus payments to clear off and that B&CE will not buy them out on  special terms. The IGC should not be kept alive as part of a protracted dispute ; it should close itself down as soon as the FCA will let it.

Since the sum of money the IGC is looking after (£9m) is rather lower than the governance budgets of some larger IGCs, I suspect that given time, the IGC will become one of Easybuild’s greater expenses, because of the stakeholder charge cap – that expense won’t fall to the remaining few policyholders, but it will put a brake on greater value for money which no doubt be available elsewhere.

In Conclusion

The transition of almost all assets within EasyBuild to People’s is another quiet success story for People’s Pension and for its owner B&CE.

Because the transition has been successful, it is not subject to the publicity that usually accompanies the wind up of a collective financial arrangement.

Other IGCs should look at the example that B&CE has created and ask whether there may not be arrangements such as EasyBuild within its remit, that could be managed into the equivalent of People’s Pension (a large and growing arrangement offering better value for money for members.