There are two ways to react to the Government’s u-turn on their “option 3” proposal for the General Levy. Option 3- aka “the nuclear option ” would have seen small occupational schemes having to stump up an extra £10,000 in 2027 as a fine for being small. The Government says it has listened to the pensions industry who thought that such a sum would be passed on to members in higher charges and risked dislocating a functional part of the market. The other way is to see the DWP having fired a shot across the bows of the long-tail of small DC schemes with the  ongoing message “shape up – or ship out”.

I hope that it has also given some though to small businesses who should not be having to pay up for having small pension schemes, especially where such schemes are integral to their running their business.

I suspect the Government has played its cards right. It has got an increase to the General levy of 6.5% through as the “least worst option“.  It has shown itself a listening Government but it has made its point. Small schemes are too expensive for it to regulate and they are the ones that risk worst practice to members as they sneak under the regulator. Unless there is good reason to stay, small schemes should “go” . That means combining (consolidating) with big schemes.

If the only small schemes we were talking up , were set up by benevolent employers believing that their small DC scheme was worth the massive on costs of compliance with pension regulations, then I could see DWP’s point. Frankly such schemes are vanity projects. Whatever kudos there once was for having the “company pension scheme” is long gone. There is now more kudos in a higher contribution rate into a master trust or GPP with the extra company contribution coming from the savings in fixed costs arising from winding things up. If trustees cannot see that they , their advisers, administrators, fund managers and auditors are sucking their sponsors dry, then there is something wrong with them and their sponsor.

But there is a different kind of small occupational scheme that was “at risk” from the £10,000 “super-levy”. Many small businesses run SSAS schemes as their “family office”, choosing to invest for the long-term using the same entrepreneurial approach to running the pension as they have in establishing their businesses.

These businesses ae typically not trying to become unicorns, they are usually family affairs with the Small Self Administered Scheme set up to be their “family office”. Often these schemes shelter corporate premises from capital taxes such as CGT and IHT and the assets are maintained so that the business becomes the pension. This is proper and part of the incentivisation of small businesses on whom Britain’s prosperity was built . Napoleon was right to call us a nation of shopkeepers, even if he said it 200 years ago. Some things don’t change!

I doubt many new SSAS are being set up to day, but those that were set up the day before yesterday, were set up with long-term horizons. Those that founded the SSAS and the business behind them did not anticipate political intervention in the form of a punitive levy – delivered for no reason other than a small self-administered scheme is “small”.

So – overall – I am glad that SSAS will survive and not be savaged by penal levies , that would cause them collateral damage.

Meanwhile a 6.5% increase in the general levy needs to be justified. It can only be justified by improved performance of the Pensions Regulator which is currently under-performing, not least because so many of its staff are out on strike. TPR has said that it does not intend to become more efficient by cutting staff but by making its staff more “imaginative” in their regulation. This is a noble aspiration. We need less box-ticking and more imagination from TPR and while I recognise in what’s left of their Director base, the energy and competence to make this happen, it urgently needs more senior staff to step up to the plate.

A 6.5% increase in General Levies should give TPR the increase in budgets to recruit high quality leaders, it is now in new premises and under new management. We expect more.

Meanwhile, the long-tail of occupational DC schemes needs to be better understood. We are due around this time , MI from TPR about their numbers . This year, that information has been pushed back to the summer so we will have to wait a little longer. Let’s hope that there is good news, that small company DC schemes are declaring they have given up aspiring to offer value for money and have negotiated exits with master trusts, while SSAS’ are striving towards the excellence of the businesses that support them.