John Lappin is a great pensions reporter, I’m seeing him next week because I want to quiz him on his research for this article.
This is the nub of John’s article
Transfers, without member consent, have been allowed in the trust market since 2018 after amendments to the Occupational Pensions Schemes Preservation of Benefits Regulations (1991) and associated TPR guidance.
Now, as set out in the latest Mansion House pension reforms, announced in May 2025, and due to be enacted in the Pension Schemes Bill published in July, bulk transfers of GPPs without members’ consent will also be allowed.
John looks at GPPs and sees structures of individual contracts held together by employer contributions. described as workplace pensions but being no more than tax-efficient savings plans conveniently funded by payroll. The FCA are clearly concerned about Value for Money for savers who will be pensioners.
The FCA raised the issue in its consultation on the Value for Money framework in 2024. That paper said: “The Government may choose to explore legislative changes to enable providers to transfer pension savers without consent, internally or to another provider, with appropriate protections built into the process.” That is what is happening.
GPPs are awkward, when used as workplace pensions they offer freedom from pensions to people who will be seeing their personal pension appearing on pension dashboards as an income in retirement. Unless the personal pension offers an income then would be pensioners will have to buy an annuity, appoint an advisor to advise on cashflow management or do drawdown themselves.
Neither the staff or the employers are generally in the business of personal financial management. Put simply there is an expectation of a pension with no means to fulfil it.
Law firm Denton’s analysis of the bill included this summation. “The bill introduces a contractual override that enables contract-based pension providers to transfer pension pots out of underperforming and legacy arrangements without obtaining consent from each member if it is in the members’ best interests. Detailed rules on the use of the new regime will be developed by the FCA, including how a ‘best interests test’ is to be formulated.”
This is not quite fair on high quality GPPs such as those offered by life companies and the new wave of GPPs that have been set up since the outset of auto-enrolment in 2012. There problem is not VFM or member service (they can be very good) , their problem is that they can’t pay pensions.
If they are offering multi-employer workplace pensions they are also facing the impending Scale rules meaning they need to manage £10bn in 2030 and £25bn in 10 years time.
Is is any surprise that the owners of the GPPs are looking at authorised master trusts
“DC schemes appear to be increasingly using these provisions to consolidate into well-run arrangements, such as authorised master trusts.
“The processes for transfers without member consent enables consolidation where appropriate, but trustees and managers must still carry out robust due diligence and communicate clearly with members.
“We expect the upcoming value for money framework and broader measures in the Pension Schemes Bill to further support this ongoing shift.”
Can a master trust solve the problems facing all DC plans at retirement? Well yes they can absorb the GPPs through consolidation but what about that other requirement on all DC plans coming from the Pension Schemes Bill – that they offer a default solution to savers reaching “pension age” , with the default of a retirement income till they did – very much what the dashboard will say they are getting from their personal pension.
John’s argument is that employers will make decisions on legacy DC plans and bulk transfer to new plans. There are a variety of employee benefit consultants who contribute.
However this is no answer to most employers in GPPs for whom there is unlikely to be a willingness to pay substantial fees and advisers being unwilling or simply no longer trading.
I suspect that what we will see is the GPP providers taking action to stay in business. The mature ones will do so by buying into a mature master trust and getting to Scale by consolidation. Royal London look as if they are looking at purchasing NatWest Cushon to do this. The immature GPPs including Hargreaves Lansdown , True Potential and Penfold may sell their book of workplace personal pensions to a master trust. I Know of one workplace pension looking at becoming the Proprietor of a UMES CDC and transferring to that. This looks an opportunity to scale quickly and to use technology without legacy issues.
Most importantly, CDCs will not be subject to Scale assessment, they can build independent of a need to get big quick in terms of assets under management.
I suspect that it will not be employers who will call the shots but the GPP owners. It will be an interesting three or four years as we see GPPs , DC Master Trusts and now CDCs – vie for Scale.
John Lappin and I are going to have an interesting conversation next week!
John Lappin – freelance journalist