Two amendments are going through the House of Lords, framed by Baroness Altmann of Tottenham. I am proud to have played a part in this work but recognise the bulk of the momentum has been created by Stagecoach’s DB Pension, Aberdeen Plc and the C-Suite of William McGrath. Here are the amendments
The likelihood is that these amendments will be debated on Monday but that is not to diminish their importance.
We are in an age where value for money counts in pensions. But there has been no VFM assessment of the buy-outs and buy-ins that have followed the uptick in the funding position of DB plans since the 2022 budget fiasco. As William McGrath presented to those of us interested in TAS 300, it is the VFM assessment of any deal done as the Defined Benefit End Game.
Until the Stagecoach/Aberdeen deal, the credible alternatives to an insured buy in and then out were confined to kicking that decision down the road. It has not been till the path the Stagecoach trustees and the Aberdeen management went down, that we understood what “putting policy into practice” meant. Now, no decision will be quite the same
I am very proud that those within William’s C-Suite have got this far and created a credible alternative. We sat yesterday in a posh room and spent two and a half hours thinking about what best to do with the past (Defined Benefit). We got s better understanding of run-on and other alternatives
We talked to of the future for pensions and discussed growth in a CDC world. CDC is projected to improved member outcomes by at least 50% versus DC. It does so by investing in more growth for longer.
DC is very expensive , the cost of certainty in DB is 35-40% higher than CDC. We left the meeting ponder which is better for a saver. Do you want £10,000 pa (certain) in DB when it could be with £13,000 pa in CDC (invested in growth). There are some big conversations to go on beyond the room we were in , involving key players in private and public pensions. The next of those big discussions is now expected to go on in the House of Lords on Monday night when TAS 300 will (we hope) be discussed.