Dalriada and Smart – do you know why people still invest rubbish AVCs?

I saw this advert and received this invite and accepted.

AVCs and small DC pots may be small in value — but their governance, data, and compliance risks are anything but. In this exclusive webinar, Dalriada and expert partners will unpack why these arrangements are becoming a regulatory and financial tipping point — and how Dalriada. DCC offers a smarter way forward.

The Smarter way forward is to invest your additional voluntary contributions (the ones you don’t have to pay to buy a pension. Of course the number of people paying this type of AVCs in the private sector is massively down as people have stopped being active members in private DB schemes.

So what this is about is focussing on the mess that has been left behind, the legacy of AVCs that Dalriada (the professional trustees) and Smart DC master trust have worked out a solution.  I was told

You’ll learn:

• What the dashboard deadline means for legacy AVCs
• Why decumulation duties require urgent attention
• Where governance failures are hiding in plain sight
• How VfM expectations will impact small arrangements
• What Dalriada’s scalable consolidation model delivers

I registered then  to take the first step toward better AVC governance and got a seminar from the five experts. I asked the two questions that came to my mind. There are a huge number of people paying AVCs in the public pensions, LGPS for starters but also in the Teachers, NHS and other public schemes. So I was interested in whether Smart would offer a better deal for them if they decided to top up their retirement saving using a personal pension rather than troubling the trustees or equivalent in a public DB scheme

I sent in this question (which I saved)

Henry Tapper (You) 10:57 AM
Could you explain why members should put their money into AVCs rather than personal pensions? There are some good personal pensions on the market, how does Smart compare?

I’d got it wrong, this wasn’t a call about getting a better deal for ongoing saving, there is no future saving, this is all about de-risking the past saving which looks like being awkward for trustees needing to deal with VFM assessments , dashboard disclosures and the payment of pensions from DC pots (AVC pots).

Public service pension schemes will allow DC pots to be swapped for extra index-linked public sector pension but in the case of LGPS there’s a different deal. Here you can swap your DC pot for tax-free cash you would otherwise have to swap for pension (lost on not very good pensions). This makes LGPS AVCs really valuable to members and they’re even more popular because many LGPS employers allow AVCs to be saved via “salary sacrifice” with the national insurance advantage shared between employer and members

I made this question (which I saved as well)

Henry Tapper (You) 11:11 AM
In my experience , the AVC is a way of saving for “cash”. This is particularly so in LGPS where the AVC.pot value can be swapped for tax free cash. I’d be interested to know whether this product is available to LGPS members yet?

I’d got it wrong again, this is not being targeted at LGPS, there may be reasons that LGPS can’t contract with a master trust like Smart or it could be that Dalriada don’t see it as an area where they can be trustees.

I am now sure that this initiative is really about cleaning up the mess of legacy AVCs which is good news in terms of VFM for savers who have deferred pots  and trustees (and employers) who need to get VFM, dashboards and pensions sorted out.

But it wasn’t quite what I’d hoped for those paying AVCs in the public sector.

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A seminar that left me wondering…

My questions weren’t really the right ones for the seminar, but they are the right ones for public sector schemes and I am putting them in my back pocket to pull out when I speak to people who think about these things (consultants, unions and most of all pension officers).

Yesterday , the Pensions Minister – speaking with one of the “DC pension” providers (L&G) client conference concluded

“We have basically built a system of savings pots, but we’ve told people we’ve built a system of pensions, and if we don’t sort that mismatch, people will start asking: ‘What is this system and why are you asking this much of me?'”

Anyone who is working in the public sector can transfer their DC pot into the scheme for more pension. If only we could consider AVCs as a means to do the same in the private sector.  We might find it catching on everywhere! There is a lot more DC in the public sector than people think and it needs renovation ,  just as workplace pensions did. AVCs, luckily for those in public saving, can be swapped for public sector pension and I hope that Smart and Dalriada find a way to get there product in place where it is most needed.

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I’ve left the five speakers , introduced to those on the Dalriada webinar, as I hope that they understand that what savers don’t care for , is what trustees care most about. We don’t want good governance and compliance with complex regulations, we want better pensions please! VFM is at the heart of this.

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Webinar Speakers James Fitzsimmons Co-creator of the DCC and Accredited Professional Trustee, Dalriada Trustees·Dalriada Trustees James Fitzsimmons is an Accredited Professional Trustee and joined Dalriada as a Client Manager for Defined Contribution (DC) clients. With a wealth of experience spanning a decade in the industry, James has been instrumental in the day to day running of both DC and hybrid schemes. Over the past three years, he has created processes that oversee the seamless transition of DC arrangements to Master Trusts. Additionally, James has seven years experience as a DC consultant. His expertise extends to navigating the complexities of unwinding DC provisions for Hybrid schemes, demonstrating his astute problem-solving abilities. Paul Tinslay Accredited Professional Trustee, Chair·Dalriada Trustees Paul Tinslay is an Accredited Professional Trustee for DB and DC Pension Schemes, including Chair for Sole Trustee positions, and EGLAS arrangements. With 38 years in the Life and Pensions Industry, Paul has the very rare, if not unique experience of having been a personal financial adviser, as a market leader in the at/post retirement market, a corporate pensions adviser for DB and DC pension schemes. Prior to joining Dalriada in 2020, Paul worked at one of the largest Employee Benefit Consultancies, responsible for delivering advice and services to Employers and Trustees, in respect of Occupational Pensions (Defined Benefit, trust & contract based Defined Contribution), where he was also Head of the Pensions Governance Proposition. Paul has been a Director of specialist pensions businesses, establishing market leading propositions. Paul worked with the Government Actuary’s Department to develop Income Drawdown in the Pensions Act 1995 and the Department for Work and Pensions in transposing the IORP II legislation to what we now know as ESoG and ORA. Gavin Collinson Business Development Director·Smart Pension Gavin has worked in the pensions industry for over 25 years. Initially in operations and consulting roles with Mercer and Alexander Forbes. Gavin moved into the Master Trust world in 2012 with time at The People’s Partnership and NOW: Pensions before landing at Smart Pension shortly after its launch in 2016. Building meaningful relationships with key consultancies and trustees is a passion of Gavin’s – ultimately always with the view of better serving employers and members. Outside of work Gavin enjoys cycling and fell running as well as spending time with a growing brood of grandchildren. Brenda Kite DC Platform Solutions Specialist·Hymans Robertson Brenda joined Hymans in 2014 and has many years’ experience in the pension industry including spells at a provider, fund manager, benefit and investment consultants. In that time she managed two investment platforms, worked on the introduction of new DC funds and development of lifestyle strategies as well as working on many AVC and DC benefit transfer exercises. Brenda has also been closely involved with AVCs and With Profits over the years and now specialises in consultancy exercises for schemes with legacy DC provision including AVCs, With Profits and buy-outs of AVC and DC sections of hybrid DB/DC schemes. Brenda has contributed to our responses on several government consultations including private markets and value for members and helped develop the SPP template for DC governance statements. Meanwhile, Brenda is actively involved in our Diversity, Equity & Inclusion programme and LGBTQ+ group. Jo Tibbott Partner·Gowling WLG Jo is a partner in our pensions team and helps her trustee and employer clients navigate the complex world of pensions in a pragmatic and clear way. She is based in our Birmingham office but works with clients (both defined benefit and defined contribution) across the UK and those with sponsors in different jurisdictions. Jo’s focus is on delivering excellent client service and building long-term relationships with her clients. She advises trustees of schemes in sectors ranging from financial services to the automotive sector. She also works with the boards of authorised master trusts. She leads our DC Excellence team and chairs our firm’s independent governance committee. Jo is also a trustee of a local charity Molly Ollys Wishes. In her spare time she enjoys running, walking her Schnoodle Pepper and her favourite pastime – watching her children play sport.