It is good to launch a good news story and I can today. Last Monday, while talking “small pots” we got news from the FCA that the Pensions Mutual had been registered and sealed

What is the Pensions Mutual?

We have registered this society for employers who want to participate in a CDC scheme for which Pensions Mutual Limited will be the proprietor. As proprietor it will make sure that members introduced by the employers will have workplace pensions for the whole of lives. They will build up pensions when people work and pay a retirement income in later life.I have placed details of the 62 page document that governs our Mutual Society at the end of this blog for those who are interested in either investing into it or participating for its workplace pension.

The FCA explained the variety of Mutual we were after as like a dairy to which farmers bring milk. At the end of each year they will get a share of profits rebated to them for their co-operation. We see the management committee of Pensions Mutual as acting solely for members and their employers. This is in the long tradition of pensions and we hope that Pensions Mutual will be promoted by pension consultants and by trade unions together. We hope that large and small employers will want to participate and ultimately we want it to be owned by those who use it as well as those who fund it.

What is the CDC pension it intends to launch?

Last October the DWP launched in parliament that allows employers to participate in multi employer (UMES) CDC plans. Till then they could only set up a pension for themselves and only Royal Mail has done so.

We had been approached by employers who wanted to offer a better pension to their staff than they could using DC . They wanted to have  control of its delivery. The Pensions Mutual is the delivery mechanism and a better pension comes from the CDC pension that is delivered.

Details of the CDC pension are laid out in a simple way on our website

Press  to visit Pensions Mutual’s CDC Scheme

The Government launched this type of CDC as a way for any employer to improve the pensions it offers staff by up to 60%. Some , such as the PPI think it will be higher, others such as the LCP’s Sam Cobb argue lower and we say that the exact amount it improves will depend on what it’s measured against. But we think that it is better value for contributions if what people save for is a pension!

We share the view of Pensions UK and the Pensions Minister that we are saving for pensions and therefore a CDC should be an advancement which we hope is adopted in time by all DC saving schemes. We hope too that employers who would like to offer DB but can’t afford the risk of contributions going through the roof, will use  Pensions Mutual CDC scheme.

From discussions we have had with large employers and their unions we know there is a wish to progress pension provision. We know too that there are many smaller employers who have an aspiration to provide a pension with the VFM of a large one. We think that is a fundamental fairness that whether you work for an employer small or big, you are entitled to an equal pension , pound for pound contributed.

This does not of course , deny that our Pension Mutual may not build sections for certain employers who have strong beliefs or whose workforce are likely to have different retirements to the nation as a whole.

Fairness is critical and where “sharing” cannot be fair, we will consider sectionalising. But by “we” I do not mean a few cronies on an executive, I mean a management committee who guides Pensions Mutual.

We need to bring together young generations who can build the operations of the CDC to enjoy the best things of modern technology with old folk like me who have experience of pensions going back to the last century before the closure of much private sector pension accrual.

We need to tap into the great asset managers we have in Britain. We hear the Pensions Minister for active management to bring good governance and we would like Pensions Mutual to follow the successes that we have had and will have if we see through the principals of Mansion House. We strongly believe that pensions should encourage better management of our environment and society and we want our Pensions Mutual to appoint trustees of its pension scheme who understand good governances.

As we make appointments over the coming months, we hope you will see our commitment to doing the job well. We will by the end of July be in a position to approach the Pensions Regulator for authorisation. Within six months we hope to have not just a Pensions Mutual Society but a CDC scheme in place so employers can begin contributing for their staff.

There is nothing difficult about this for employers. They will simply have to comply with the auto-enrolment rules. There will be no demand to pay more than the basic amount.  We hope that many employers will choose to pay much more for the sake of staff’s welfare in older age.

If you would like to find out more or meet with us, you can make a request through the website. I will be in Edinburgh next week if you are too. I am having some drinks with some who have helped us get this on Monday night and if you are in the City on Monday night you can join us using this link.

Thanks for reading to the end. Below are the rules of the Pensions Mutual Society