John Hamilton

William McGrath

Gurbani Swamni-Leach

PAGA is a group of pension professionals who set out the case for growth needed for pensions to pay what people need to live on in later life. It has through many meetings looked at the economics of running a pension scheme. Initially it focussed on how a defined pension could run on on low dependency, latterly it has concluded that the future for collective pensions is to offer a wage for life targeted to increase by inflation.

The message of yesterday’s meeting was that  our pensions and economic growth are dependent on each other (as Roy Goode taught us two decades ago).

The problems for pension are a lack of growth and this will increase in the years to come if total Government Revenue from the UK economy does not match the projected Government spending.

The Big Picture

What we discussed at a meeting yesterday was how Government Revenues can be increased so pensions can be afforded. Ironically , for Government to look after us in decades to come, it will need the capital of funded pensions to grow the economy and its revenues.

The Pensions Schemes Act and the UMES CDC legislation have allowed trustees and sponsors to own the solution to the pension problems of the last quarter of a century. PAGA was set up to promote the taking of informed decisions.

The pieces of the Pensions Act are falling into place. What had seemed vague and insubstantial for the surpluses of DB schemes has, since the twin papers of the DWP and TPR this week, become tangible secondary legislation that will release surpluses for the benefit of sponsors to grow and for pension scheme members to have invested pensions in decades to come. These pensions can contribute to the Government revenues as revenue is circulated back to the Treasury from people’s retirement wages.

PAGA has adopted thinking from Hymans Robertson at this high level, publicised in this report which gives links to the full report

While the Chatham House Rule forbids me from quoting what individuals said at

yesterday’s meeting, I can say that the meeting was chaired by John Hamilton and convened by William McGrath and Bob Compton, it was hosted by Gurbani of M&G.

The little picture

The one person that I can quote is me, I led a discussion on how we can build pensions for the future using the Collective Defined Contribution rules laid in parliament last October. There were potential proprietors of these schemes together with likely trustees and some who might be involved in their investment.

I am happy to share the presentation I made to the Group which can be downloaded here.

We had representatives within the room from TPR, employers and all the major influencers other than the unions (who I reckon most influential at this stage.  I hope that the information will be helpful to all. It is embedded in this presentation if you want to go no further.

To view this press the “accept” button that appears when clicking on the text below.

The big picture and the small picture come together

Remaining CDC that has not been bought out still amounts to £1.2 trillion – big picture stuff. CDC is a start up with only Royal Mail in existence. Yet Massi Delle Donne of Black Rock has said that CDC taking a third of DC assets in the near future is within his expectation.

That was last week but this week we have heard from DWP and TPR the intention that the substantial surplus that DB schemes find themselves in , could become available to people who have not enjoyed DB’s secure pension but who are building up a pot within DC workplace schemes.

This will happen if large DB schemes in surplus have a CDC scheme to offer to their staff. This could be a single employer scheme as Royal Mail have created for their employees, it could be a multi-employer scheme as made available last October.

The prediction of growth in CDC is coming from a number of sources and yesterday DB and CDC people in the room (and on web screens) were as one in seeing the future of CDC as the future for DB – at least for employers who want to accrue pensions and not “pots” for their staff.

A thank you

My best way to say thank you to the PAGA “rabble” is with this blog which gives I hope a feeling of the optimism of a group of progressive people who see growth and pensions as interlinked and see the big picture of DB linked to the start up which is CDC.

We were all convening the day after the publication of two papers from DWP and TPR that potentially free up a lot of money that would otherwise sleep in DB plans.

This is thank you for all who were at the meeting and on the call for a 3 hour session that will inspire many of us to keep pushing for future growth and future pensions.