In this episode of V-FM Pensions, hosts Darren and Nico chat to The Pensions Regulator’s Ben Gunnee. As well as being an Arsenal fan, Ben is TPR’s Executive Director for Market Oversight and is responsible for TPR’s engagement and interaction with industry.

In a wide ranging discussion we chat about TPR’s Corporate Strategy, DB endgame and surplus release, Collective Defined Contribution, and some of the key themes in DC, picking up a discussion on private markets. We also hear how Ben ended up at TPR and, of course, find out what value for money means to him. – (Podcast between Nico, Darren and Darren)

Well I thought we wouldn’t hear about Value for Money and have to plead for TPR’s definition! We actually get both and  a wide ranging session and if I am a little racy in my response it is not because I’m not engaged! I respond in the spirit of all English football fans, delighted and depressed in the same breath!

I am fascinated that Ben has two accounting degrees and is an actuary and an Arsenal fan. These all begin with A – we won’t go further – adoring or otherwise!

The actuarial profession and TPR have a lot to crow about, obviously it is down to them that 80% of DB schemes that are in surplus and they are asking schemes to do something by way of “end-game”.

Here’s the podcast. It’s one of the best this year.

Surpluses and alternative strategies for DB

If I could be a little critical of actuaries and regulators,  I might point to the almost total failure of superfunds, capital back journey plans and the FAA to get out of the traps. The trap-door is now open and  as Henry V put it in his play

I see you stand like greyhounds in the slips, Straining upon the start.

With TPR  and surplus it’s “strategy first and surplus second.” Members must be to the fore!

We should remember CDC pays pensions but does not carry a surplus or a deficit. That’s one less for “pensions” in the future.

Curiously, the efforts of getting unhedged DB schemes in 2022 to surplus is referred to as “more by luck than judgement”. I suspect that not all DB schemes feel this way, I will not mention who for fear of putting them in trouble.

“Run on” is not a strategy?

Here there will be a few DB schemes who have not closed and have no intention of doing so, is that not a strategy? LGPS, USS, UKAS, Unite and several other union schemes step forward. We have comments on Stagecoach which are less contentious. It is good to hear TPR support the deal swapping the sponsor with Aberdeen.

The “right way” should be “members first“, but not first second and last;  are there are sponsors to be considered  and the danger  is that a  new de-risking  for  members and the PPF eliminates anye thirst for growth from the fund

CDC whole of Life Code is nearly out (sounds like a code too far for Nico)

Up front I should say how pleased I am that TPR  have been consulting on the CDC Code,

The CDC Code should be out in the next few days and by the end of July. No surprises here, I hope! Some appetite has come from the provider side and TPR are enthusiastic and raring to go. Ben confirms that the TPR reckon Whole of Life should be part of the pensions landscape (as a workplace pension).

Nico’s a CDC sceptic and his latest moan is that people will have not one (DB) or two (DB and DC) but three ways to run an occupational pension (DB, DC and CDC).

The unions are  as one in saying that a DC savings scheme is not a pension while TPR are telling us that DB is in an end game so he can ease his concern, CDC is the obvious pension scheme going forward.

On to DC

“We need to Segway to DC” says Nico in case CDC gets controversial and despite the advertising for the podcast we do get an idea of what TPR thinks it’s for. It’s for us to make better decisions. This is rather what I had hoped for from Pension PlayPen when it started in 2013 and I certainly hope that employers will choose to make the best choice from DC and CDC as suits members. But I can’t see how “people” as in members will make better choices when all they can do is opt-out of a workplace pension. They have no say in the workplace pension as they would be in Australia.

and VFM

“Not everybody will be happy with VFM” says Ben though Nico and Darren have suggested in the past that only the regulators are left happy with the current formulation. Feedback has been listened through the “correct channels“, I suspect that those are the channels that agree with TPR.

and Small Pots

which Ben doesn’t know very much about yet and he’s got time as regulation won’t be needed till next decade….

and Private markets in DC

which haven’t taken off as they should as trustees don’t feel up to make choices. Providers should start to make productive assets more accessible and TPR needs to be making sure that it all works. Ben is worried that the cost of asset management when purchasing from private markets is a concern. Well how will commercial providers be incentivised to pay more, I wonder? We worry about this in CDC too Ben!

All of the DC issues above are on Nico’s territory now that  he’s moved away from ESG,  but I’m surprised this ESG has dropped out of the conversation with TPR.

Hard stop?

This is an hour long podcast which goes on for 75 minutes. We lose 5 minutes at the end and 10 minutes at the beginning so perhaps we can still call it a 60 minute pension conversation. Perhaps we can have a way of knowing when pensions start as well as stop.