This was a week when Aon brought employers “all things to all private sector employers” All private companies run workplace pension schemes so Aon run a product for every pension saver.

The net accessible market for Aon is every employer that isn’t accruing a defined benefit pension by an employer. Sounds good? I wrote on the day the plan for its introduction in 2028 was announced that this approach creates confusion.

This reminds me of the early days of corporate DC when an employer could offer a DC scheme for some people, a DB scheme for others and no pension – only pay – to those the employer didn’t value. The skill in pensions was  to use them to maximise reward for those most valuable to the executive.

The word that never got mentioned was “conviction”, not what you get when you commit a crime but conviction that drives you in a certain direction. If you are all things to all pension savers you have conviction for nothing. Paternalism was replaced by commercialism.

We are now at a stage in the pension cycle when “paternalism” as “commercialisation” is returning. Many large employers see it as both commercial and paternal to offer staff a pension.

A hybrid proposal as has been put forward by Aon , is neither a DC scheme or what Kerstin Parker calls a “collective pension”. It is for employers who want to offer both DC and CDC as if they both were pensions, both equally useful.

All things to all men/women

This is sitting on the fence – it’s “woke commercialisation” that treats tax-payers money not just to pay pensions but to fund savings pots. No wonder the Director of Private Pensions wants to put distance between the two, pensions are useful to the “Department of Work and Pensions”, savings pots rather less so.

It’s even more complex for an organisation  who have a successful master trust it can offer CDC from 2029. If you are offering a DC scheme and a CDC scheme in a hybrid arrangement then the workplace pension scheme might offer a  Retirement CDC scheme for employers who choose to wait and see and staff who might have done better. Doing better could have included being shifted to Whole of Life CDC or staying in DC with guided retirement.  Try explaining the choices you are offering to staff!

If you are all things to everyone then are you taking a position on anything? If all things are to you as one then perhaps you are missing the point of “pensions”.

I wonder if the DWP are talking with HMT and HMRC about continuing the pension tax relief for DC pots when collective pension are a “more useful thing” they’re an income for retirement.

What is more, you will always be internally conflicted. Because some people in your organisation  will be for pots and some for pensions. Some will want to give everyone pension freedom while others will want to offer a wage for life.

That sounds awkward. That does not align with unions nor does it make sense to employers making it simpler for their staff. A house view has its advantages.

A Fiduciary Duty to act impartially?

Here is the Pension Regulator on the subject

Act impartially

You must consider the interests of all the classes of beneficiary covered by the trust deed and rules, and act impartially between them. You have to act fairly between individual beneficiaries too, weighing the interests of the particular individual against the need to protect the security of the beneficiaries as a whole.

Acting impartially does not mean that each type of member needs to be treated in the same way. But it does mean that the trustee will need to weigh the differing interests of different members against each other.

How do you manage this? Is a pension pot equivalent to a pension? Is the DC default –  a guided retirement – much more than an ISA paying into an annuity, a dereliction of impartiality when you offer a retirement income elsewhere?

I think we are at a point when we have to decide whether we provide pots or pensions and we can’t provide both. As employees and trustees we must have some conviction, we owe it to our staff who are already confused by the lack of conviction from the experts.

A recent survey of 2000 staff by Hargreaves Lansdown found two thirds of employees reckon they are relying for their pension on the state. That is because they have pots and not a retirement income. Aon should show conviction and promote a collective pension or guided retirement. Otherwise Government could use incentives to get what’s “most useful”.