It’s five years since WTW produced this research and it’s only now that the Government is taking it seriously. This second advert for CDC is rather easier to understand and is from our Pension Minister.
Torsten Bell
If you run a workplace pension as a GPP , your future looks difficult. Perhaps the prospect offering 57% more income than through drawdown might get customers excited?
You need a game-changer!
Because like master trusts you need to meet the scale requirements (£10bn in five years and £25bn in ten) that’s fine if you have a legacy like the old insurers or access to a consultancies DC clients like WTW, Aon or Mercer, or you’re just Nest or People’s Pension! But there’s not a lot of scale in SMEs which is why there aren’t many workplace pensions after their business.
The following commercial schemes have told the Pensions Regulator they are open to small employers: the ones I’m most interested are the ones that need a game changer.
- Collegia Pension
- Creative Pension Trust
- Cushon Master Trust
- The Lewis Workplace Pension Trust
- National Employment Savings Trust (NEST)
- NOW: Pensions
- Penfold Auto Enrolment Workplace Pension Scheme
- The People’s Pension
- Smart Pension Master Trust
- Standard Life Workplace Pension
- True Potential Investments
I think master trusts have their own way forward, they may use CDC because if you are a consultancy you’ve been promising it your actuaries for ages (WTW, Mercer/Now Aon). NOW may be such a hopeless DC master trust that CDC may be its only hope. The wonderful Lewis master trust is an IFA run scheme which undoubtedly sees the future with consolidation, Creative is part of Cushon which is up for sale.
The GPPs are something else…
Of the above, only Collegia, Penfold , Standard Life Workplace Penson and True Potential Investments are workplace GPP plans and of these, Standard Life does not have concern about scale as it has a well funded master trust and considerable legacy. Other insurers such as Aviva, Legal& General, Royal London, Scottish Widows and Aegon are no longer offering GPPs to employers looking to stage or switch providers.
Collegia has an arrangement with HMRC which has seen it rocket to some 8,000 employers but it is at the same early stage as schemes like Now, Smart, Peoples and Nest were 10 years ago. , Penfold and True Potential are dynamic
What we are left with is a group of three plans Penfold , True Potential and Collegia who have three options
- Consolidate with someone bigger as a means to getting the two to scale.
- Convert into some other type of GPP – Pension Bee is the model -not a workplace pension
- Convert into something which has an exemption. The only exemption available while remaining a workplace pension is a CDC scheme.
I have s admiration for all three of these GPPs which have kept alive their original aims despite headwinds being against them.
Minnows to monsters!
Obdurately contrarian
I wonder if any of them will continue to be obdurately contrarian and demand to be different by becoming a CDC. My thinking is that they have five features that make them potentially CDC schemes.
- They are technology based schemes with low cost base and flexibility in how they meet safter needs
- They have found ways to attract new business
- They do want to sort out pensions
- They see a way to transfer existing savers without consent to CDC
- They have a business plan
I am not at all sure that any GPPs will seek CDC as a way forward but I can’t see any of the aims of this video being beyond the wit of the managers of Collegia, True Potential and Penfold
