Corporate Adviser’s Master Trust and GPP defaults report

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I’ve had a little spare time these past 24 hours which has allowed me to catch up on some important reading. I’ve enjoyed reading AgeUK’s Fixing the Freedom’s report but ultimately found it backward looking and a little disappointing.

Corporate Adviser’s Master Trust and GPP defaults report is another matter, a superb read which takes on many of the taboos of recent pension thinking.


Taboo one – past performance doesn’t matter

Past performance may not matter to employers – who’s primary interest in workplace pensions is staying compliant. But it does matter to employees, and ultimately employees will consider their employers, at least in part, responsible for the outcomes of the pension savings plans they set up for their staff.

This report does not fight shy of measuring the performance of default funds and – wherever possible – takes a long a term view of how members might have done.

It also looks closely at the outcomes for people in their final years of saving and analyses each default both in terms of risk and in terms of return.

Employers will increasingly be needing to answer questions about how the workplace pension is doing, By promoting performance figures as this report does, employers (and their advisers) can start to make head and tail of the purchasing decision they took at AE staging


Taboo two – outcomes based research doesn’t provide help on “value for money” 

No matter how hard under-performing providers may try to avoid awkward questions about outcomes, there will always be quantitative statistics in the public domain that can be used to determine what value has been achieved from the money put into workplace pensions.

Since the outcome of a workplace pension is currently seen as the accumulated fund (the net asset value), then the only real measure of VFM is inputs v outcomes.

While this report does not dig down to the level of member specific outcomes (as AgeWage scores do), it does at least promote outcomes as what most people see as “value” and money in/money out as what most people see as money.

Putting outcomes at the heart of the process makes this report unusually honest.


Myth three- different types of workplace pensions can’t be benchmarked

The report uses peer group benchmarking, that means it lists all those providers who have contributed data against each other so that people can see performance, outcomes and money-out in league tables. It establishes a benchmark for doing this it calls CAPA (Corporate Adviser Pensions Average).

CAPA figures, and the tables in this report, are compiled for savers at three different points in the savings journey – 30 years from state pension age, reflecting the all-out growth attributes of defaults; 5 years from state pension age, capturing some elements of the pre-retirement derisking process; and 1 day before retirement, reflecting the asset allocation strategy that will be in place when members are likely to access their funds. Data is given over 1, 3 and 5 years, where available.

This simple process of comparison is something that ordinary people are used to, league tables are immediately understandable to anyone from a football fan to someone choosing a credit card.

I hope John Greenwood and Scottish Widows will forgive me one clip from the report to show just how simple and easy CAPA is.

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A wonderful report

We can be very grateful to Corporate Adviser and to Scottish Widows for this work.

I will have more time over the next 24 hours to read the wealth of information at the back of this report.

I’m advised that if you want a copy of this report , you should apply to Corporate Adviser.

About henry tapper

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