Politics and political news to stop please!
It is the first morning of the winter and of advent, it is the day of a memorial for Chris Sier, it is a morning to think boldly of the future, of 2026 a year of testing and 2027 a year of delivery for value for money, for CDC and most of all for pensions (not pots).
The newspapers, podcasts , blogs and posts whingeing that the country was lied to by a Chancellor of Exchequer (witness BBC on Sunday morning). We have an Office of Budget Responsibility that behaved irresponsibly on Wednesday, possible out of nastiness, most likely out of incompetence. Now we have a leader of the opposition calling for the Chancellor’s resignation and the memory of parliament making more noise than sense during the budget.
Politicians and journalists will you start focussing on the future, on growth (not enough focus) and welfare (not enough focus on getting it right). This is nothing new, it is just a repetition of the noise and nastiness we have had going back to Brexit and continuing ever since. Enough!
A Focus on the future! For us on pensions please!
There are some important things happening, On Wednesday the Pension Schemes Bill gets read in the House of Common. It has important amendments, especially for historic increases that haven’t been paid. The Bill needs to be an Act and then must follow quickly, secondary legislation to allow us to deliver on the big ticket items that will mean pensions not pots deliver the future.
There is also the final day of the consultation on the Retirement CDC on Wednesday (6 weeks from its launch in the City). The whole of Life (UMES) CDC legislation needs to go through parliament and be on the books so that multi-employer CDC schemes can be authorised in the second half of next year and ready to go early in 2027. There isn’t quite synchronisation between the Pension Schemes Bill and the CDC “roadmaps” but that’s for civil servants to sort out and parliament to deliver.
There will be work on limiting salary sacrifice (one for payroll and pension administration systems) but that is second order as there is three and a quarter years to get that done. More urgently, we need the Pensions Minister to say “go” for the Pension Dashboard which must be complete by the end of October next year and in action as soon after that as can be braved. 2026 is a year of testing and not of delivery.
The big ticket delivery is in 2027
There is a lot of testing in 2026 but the this time next year we will be anticipating our DC pots being managed to pay us a retirement income for the rest of our lives (unless we opt-out of that default position). That is a halfway step to CDC which will finish the job for many DC plans who will adopt Retirement CDC, the second stage of multi-employer CDC.
Many multi-employer workplace pensions will convert to fix and flex deferred annuity plans in 2027, some will find a way to partner with or adopt Retirement CDC and for some DC workplace plans, seeing sense in using a whole of life CDC arrangement that brings up to 60% more pension than a switch to the “fix” of annuity, there will be a move to UMES en masse.
Trust based schemes can already do this, there are “contractual overrides” that can allow GPPs to do it too (see pages 42-45 of this Hansard briefing).
Not much of this can be delivered in 2026, the secondary legislation will start being delivered but much of it will mean that needed changes for superfunds and pension surplus legislation may take longer. The DB endgame looks a very messy business, I am not getting into it, DC reforms are what takes us forward (DB for the private sector is a legacy issue). 2027 is DC’s year, a year for pension dashboards I hope (I hope , I hope). It will be a dashboard that will tell us the pension payable from a pot, before the pot itself.
Advent
Advent is a Christian season of waiting and preparation for both the birth of Jesus and his future second coming, observed for four weeks leading up to Christmas. The word “advent” means “coming,” and the period is marked by reflection.
Can we please stop the rancour of last week and the weekend and think of what’s to come – testing in 2026 and delivery in 2027.