Over this Easter weekend, Helen Dean, former CEO of Nest and one of the architects of auto-enrolment, will take over as Chair of Standard Life’s Master Trust.
Big challenge 1.0
She can look back at this statement, made when she took over at Nest with some pride. Nest didn’t buckle, they were buckled in , constrained by Government ownership and the £1bn + DWP loan, from competing in the “secondary market”.
Standard Life is owned by Phoenix, one of Britain’s outstanding success stories over the last 20 years. It is the one branch of a chain of insurers that can properly claim to be “open” and though it has large contract based books, it is it’s workplace pension master trust that is the flagship of its savings business. Small wonder, its Head, Donna Walsh , looks so pleased with herself.
Standard Life is looking to consolidate failing DC schemes and pick off employers looking for better value for their and their staff’s pension money. It is competing in the secondary market though not yet- I suspect – as successfully as Phoenix expect. The arrival of Dean as Trustee Chair is a serious statement of intent (as is the appointment to the trustee board of Gurmukh Hayre.
Big challenge 2.0
So what is Helen Dean taking on? How will she work with Walsh, who is doing her job when she was at Nest? What will elevate Standard Life’s Master Trust to compete with larger schemes in their peer group such as L&G’s master trust and LifeSight? How will it differentiate itself from Aviva, Aegon and to an extent Scottish Widows, all of whom offer familiar brand names without quite breaking through? How will it fight off aggressive pricing from Cushon and Smart and the hard-hitting SEI?
By all accounts, the master trust is currently shooting the lights out when it comes to quality of service to its members. While its investment returns aren’t dazzling, they are turning round from the dark days when Standard Life believed GARS was the answer to everything. Top thinkers like Michael Ambery and Callum Stewart have been drafted in and it is now hard not to put Standard Life on any shortlist for bulk transfers from the secondary market.
Standard Life has in recent years become a major annuity provider, both of bulk and individual annuities. It has brought in Claire Altman from Smart to run its decumulation business and she is building a formidable capability. Claire and Donna report through to industry stalwarts Colin Williams , Andy Curran and Andy Briggs. It is easy to see a Phoenix and Standard Life with a female C-Suite when they retire, it would be a good succession.
So in answer to my first question, Helen Dean is chairing a master trust with a strong and stable Funder, with an innovative team to work with to build on its current proposition.
Competing with the best
The car-crash which was GARS and the false start in the early years of auto-enrolment when Standard Life bet the house on under-priced GPPs , has left Standard Life looking an under-achiever. It is having to come from behind the pack but this is a marathon not a sprint, it could easily achieve more, especially if some of their rivals take it easy at the front.
The DWP has let it be known that it considers £50bn to be the scale a master trust should be achieving to be considered sustainable. Cushon’s Julius Pursail recently announced new-owner NatWest expected it expected to have £100bn of assets within 10 years.
For Master Trusts to achieve this level of growth they need to increase core contributions (which is why the 2017 AE reforms are so important to them). They also need to take on new employers in the secondary market, and consolidate sub-scale and failing DC schemes (including other Master Trusts).
They need to increase pots per member by getting members to transfer into the master trust their other pots (Standard Life’s TV marketing focusses on this).
Finally they need to hang on to their existing assets to and through retirement.
Being the best means beating the rest
Donna Walsh has recently written a thoughtful article on consolidation which looks at the matter through the eyes of “ceding trustees”. Many of the Trustees of DC schemes she will be talking to will have a history of providing Defined Benefit pensions. In my experience, there is nothing that so comforts a pension trustee at handover, as to know the members transferred will be promised proper pensions.
With its long history of providing with profit pensions as well as annuities, Standard Life is now in a position to start thinking seriously about what it means for a master trust be offering a “full service” to those in its workplace pension.
I hope that when Donna and Helen get down to serious business, they will be thinking how they can renew Standard Life’s commitment, not just to workplace savings but workplace pensions. I hope that Claire Altman should be a part of that discussion.
To beat the best , Standard Life will need to be more than “me-too”, they will need to be the best. Convincing ceding trustees , employers and savers that they are serious about pensions is one way to do it!
