My DC pot was established with L&G by First Actuarial, my employer at the time of auto-enrolment. We were going to use Prudential but that large insurer which is now offering pensions through M&G had recently withdrawn from writing new business, L&G were second best! We chose our pension on the low charges offered and the reputation of L&G for providing larger employers with workplace pensions. They had a Master Trust which was for the likes of M&S and GPPs for smaller fry like us!
The GPP with L&G was informally known by staff as the company pension. Contributions were made through payroll into pots. We had reports on this section of the GPP but we knew that our charging structure had been established for us and we knew that we would be treated as deferred members of the L&G First Actuarial plan (how it was referred to).
Now , 13 years later, I still have my First Actuarial pot and it’s still charged at the same rate. I wonder if First Actuarial move to a Collective Pension (which they might do) if I will find me and my pot offered access to the Collective Pension with my pot converting to a lifetime income by whoever they choose as proprietor and trustees.
I think it unlikely, at least before 2028 when we can expect an override that might enable employer to exercise their wish for employees (and former employees) to have a pension rather than a pot by default. I would of course expect the option of staying in the L&G GPP and get in due course guided retirement from 2029, when I will have reached state pension age.
It would be nice to think this could be on the horizon either as an option or as a “no consent” transfer , if I don’t request to do my own thing (including staying with L&G).
We have little idea how GPPs will transfer but the Pension Act was clear that they could be bulk transferred and we have had more since the the Pension Schemes Act from the FCA on how occupational pension schemes can consolidate into other schemes – including Collective Pensions (whole of life CDC).
This is the June update on bulk transfers
Not a snappy title and it only gives us an indication of the direction of travel to my kind of workplace pension.
This is John Lapin’s best estimate of what can be done with GPPs, including some legal input.
My reading is that member consent will take across some personal pension money and that clarity on whether transfers can be made to trust-based plans will follow in due course. John Lappin’s article writes for employers reviewing their GPP workplace pension and asks about. Peter Glancy, speaking as a member of the Pensions Administration Standards Association DC Working Group, says the change has brought a key issue into focus:
“In this context, the variation involves transferring the bundled administration of assets from one pension provider to another, without transfer of ownership. As it is not possible to guarantee the change will benefit every member in all future scenarios, obtaining consent would ordinarily be the prudent course.”
The provisions in this new Act are designed to enable bulk transfers between products or providers without this member consent. “This effectively introduces a limited override of contract law, where it can be demonstrated to regulators and an IGC that the transfer is expected to benefit the majority members in a range of plausible future scenarios.”
Glancy says the change is unlikely to see movement from contract into trust arrangements.
“These provisions relate to changes in contractual terms, rather than the ownership of assets.
The difficulty has been that personal pensions are only owned by the policyholder. The provider and IGC will be directed by the FCA in due course, but it looks likely the employer will control future contributions while for GPP unclaimed pots Pete Glancy thinks they are going nowhere but another personal pension. He has doubts about “no-consent transfers” happening any time soon.
“whether the current legal and regulatory framework provides sufficient clarity and protection for those expected to implement them”.
“Under contract law, assets are owned directly by the scheme member, with an individual contractual relationship between each member and the pension provider.
“While contract law generally allows one party to vary terms in favour of the other without consent, eg a price reduction, any change where the benefit is not unequivocally clear, would require the agreement of both parties.
Sonya Fraser, partner at Arc Pensions Law says:
“Detailed rules on the operation of the override will be made by the FCA in due course and it’s likely we’ll see this come into play in tandem with the new Value for Money and and small pot consolidation regimes.”
Gareth Doyle, senior investment consultant at Barnett Waddingham, says:
“Increased regulatory focus on VFM, along with the wider consolidation agenda, is creating stronger expectations that trustees and providers will actively consider (or be forced to consider) bulk transfers where outcomes are weak.The question is shifting from ‘are we permitted to transfer?’ to ‘can we justify not transferring?’”
My guess is that VFM will become an interesting subject. Over this weekend I have published some thinking on it by Brian Henderson. There is a lot of discussion over whether transfers from DC to occupational pensions (including CDC collective Pensions) can be made without member consent. It would need employers . providers and IGCs to agree it does. With TPR authorisation in place , Collective Pensions may stand a fighting chance of taking on GPP pots without consent.
