It’s good to see Smart, Dalriada , Gowling and Hymans Robertson working together to offer  occupational schemes, a means to consolidate DC pots.

Holly Roach reports in Professional Pensions that a new arrangement has been set up so that poor value legacy AVCs and other legacy savings arrangements.

The disaster that befell the Equitable Life at the end of last century saw the end of with-profits AVCs where the insurer guaranteed an annuity rate , typically based on a 10:1 exchange rate. When interest rates and gilt yields fell , insurers found themselves guaranteeing to pay pensions they had no means to back, the result was the Equitable Life going bust and future AVCs being savings rather than pension plans.

From 2014, AVCs have been no more than alternatives to personal pensions unless trustees allow them to fund the tax-free cash from a DB plan. In practice , the vast majority of schemes  trustees such as Dalriada and Pi look after , have little opportunity to upgrade the AVC arrangements and with Value for Money assessments on the way, it makes sense to come to an agreement where this money is looked after within a specialised DC consolidator plan such as Smart’s Master Trust.

Now let’s hope that Smart will be able to offer those who invested in AVCs to boost the pensions they were in, more pension again. Smart have been making the right noises about wanting to create a default decumulator that looks like a pension and this money should increase the commercial reason to do so.

Alongside the books of AVCs held by insurers are a long tail of occupational DC plans, under the TPR and reported on once a year. From memory some 30,000 of such plans exist and very little attention they get.

Well done all parties for taking on this problem. Let’s hope that not too many of these DC schemes and AVCs still have complex promises built into their rules.