A representative mega fund is (for HMT) owned by an insurance company
This diagram, borrowed from HMT by DWP is around 300 pates in. It is frustrating and fascinating because much is good but how to get to it?!
Welcome to the Impact Assessment
This document from the DWP is over 400 pages long. You can download it here but try it from this share to get a feel of what we are up against. I have read 50 pages if that and feel blown away by the amount of time that has gone into it and the lack of time I have to read it. But as this Bill is important, I will use it as a reference point as I hope to ready Pension SuperHaven to help DC schemes provide DB pensions as Torsten wants us to.
All is not right with the drafting of this Bill and I suspect that most of the worries will be about the impact on defined benefit pensions.
My reading of the Impact Assessment, such as I’ve had time to read it, suggests that Civil Servants in the DWP are still living in a world where DB needs to be neatly packaged ready for early buy-out,
An article in the FT on Saturday suggested that only 5% of the surplus would be distributed. This was infact an assessment from this document rehearsed. The £160 bn DB surplus (if measured on a low dependency basis) or £97bn surplus as it is and will be for three years, is based on TPR numbers. These are the numbers in the Assessment even though they are challenged by the ONS and by Clacher and Keating.
If we are assessing the DB world , as the Impact Assessment does, as buying out and the numbers in this over comforting night, is it any surprise that superfunds are doing no trade and the capital backed journey plans have no firm basis for trading.
As for DC, the diagram above, from the Treasury, shows pensions as simply a means of extracting the right kind of investment to keep the economy going in the way they want it going. The representative pension provider is of course an insurer with a sub-scale master trust and a mess of GPPs.
This is the harsh reality of much of the Pension Bill’s drafting. The Impact Assessment is the harsh reality of Government thinking and there is very little scope for an expansive pension policy if we hand it to a world that wants to de-risk.
