It is intriguing to consider what Cushon’s workplace pension (let’s put aside their ISA) to the three named suitor. There are many others who might have been on the suitors list, where the prospect of the master trust achieving Scale in five and again in ten years is far from certain. But I do not include on that list either WTW’s Lifesight or L&G who both have scale and little prospect of losing it.

Royal London

Royal London have been adamant that they are in pensions that offer financial advice and are personal. Their workplace offering is a personal pension, organised as a group personal pension but as far a way from a collective arrangement as can be imagined. There are other GPPs reliant on employers to fund them through AE but only Royal London has pinned its colours to its IFA following.

They have never promoted themselves to large employers directly , they never went to the NAPF or the PLSA but this year they appeared in depth (with a stand) at last week’s Pensions UK Conference. Royal London have entered the bulk purchase annuity market and while I do not see it as a collective provider (as in Retirement CDC), I can see it transferring its £30bn GPP portfolio to comply with the Pension Schemes Bill. It is perhaps an admission that mass marketing advice as Royal London’s approach has done, is looking untenable.

For me, the Cushon approach, heavily marketed for its investment sophistication . is perhaps the most attractive to Royal’s IFA followers. The master trusts Cushon has consolidated (Salvus, Creative and Workers) were all generated by Employee Benefit Consultants. Employers who originally bought a vision of advice may feel more comfortable with Royal London that they might with NatWest.

Lifesight

The extraordinary feature of Lifesight is not its size (it has a lot of assets) but the very small of employers (only 30 in a scheme with over £25bn in it already – of which £22 bn is in its default fund), Cushon would change that – it has a lot of employers but is short of assets – (presumably a problem for NatWest).

If Lifesight want balance of employers , Cushon would make sense , but I can’t see it working. I will be surprised if the deal will work , even if the price does.

Legal & General

I am an L&G client, I have a lot of contact with them liking them very much and admiring how they have grown up from being the market leading GPP and master trust at the opening of auto-enrolment. But it quickly became clear to them that master trust was the way forward and taking 220,000 employees of Tesco into two master trusts (one for net pay , one for RAS) they have become the leader of the second raft (the first having Nest, People’s and Now-just) .

Tony Filbin has commented and corrected my inference that Tesco was the making of L&G’s mastertrust. Nest and Now were attractive to smaller companies and had few large employers in their master trusts when L&G were growing fastest.

L&G’s Mastertrust (s) were pre eminent at the start of autoenrollment in 2012 (largest employers first) winning Sainsburys (credit to David Brennan their pensions head for driving the need for net pay), M&S (the first employer to choose their provider) Asda Boots Co-op etc.

Tesco came years later. Nest Now and Peoples were not involved with the first companies to auto enrol.

I have no idea why L&G want to take over Cushon, it doesn’t make sense to me. They can do what they like and they should be concentrating not on consolidation but on getting its savers into pensioners. I am sure that NatWest aren’t concerned about them as a suitor, but I’d be most surprised if they take on Cushon.

Tony Filbin, architect of L&G’s initial workplace success has made his views  clear;  they are similar to mine.

[I] Agree with you that Cushon would not seem a relevant fit for them and would  appear to be a somewhat desperate move if executed

What’s happened at NatWest?

Nat West have just turned in some excellent results and seems to have stayed clear of the Car Finance problems of Lloyds (the other player in workplace pensions with Scottish Widows). With HSBC pulling its hopeless master trust and Barclays not getting involved, we can fairly say that banking is hardly setting the pace.

I spoke with a former NatWest insurance analyst during the week and he could only explain that strategy was changing with an emphasis on loans to SMEs to grow rather than pensions.

Right now they are going to have to explain to the market why they are reversing out of Cushon.

An update to this blog has been made since a comment made by Tony Filbin has been published on Linked in- you can read the original here.

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