Why is WTW’s retirement CDC not getting the thumbs up?

Posted on March 25, 2026 by henry tapper

We always need analysis to help us make choices.  We are getting a lot from WTW about decumulation CDC and the numbers don’t look anything like 60% better for CDC if you wait to swap your pot for a CDC pension at retirement. Why not?

Well – take a look!

What is great about WTW’s work is that they have made the comparisons on a peach v peach basis. This is most important when it comes to increases on the pensions

All the comparisons are made with an inflation linked income or pension or annuity. This is fun but Retirement Line tell me that you can’t buy a CPI linked annuity so this is a bit “made up”. It does make you a little nervous.

The modelling includes some interesting features like a 10 year pay out from the single pot by the CDC (less whatever has already been paid). This would mean your R-CDC would pay  a partner a pension and the full amount paid to you would continue to be paid until 10 years from commencement after which the pension would  reduce  to 40% of what you got

Well done WTW.

Again thanks to Retirement Line for clarification. The truth is we don’t know what Retirement CDC will look like yet so we’re looking at guess work from WTW – no matter how smart the Maths!

There’s still good news but not as much!

The good news is that where an annuity would pay you £5,750 pa, CDC from a swap of a pot would give nearly £7,300 , 25% more than the annuity and 15% more than flex and fix.

The figures are lower than whole of life CDC because you’ve hung onto your pot till you retire. The “up to 60%” is what you get over the whole of your life buying pension and not saving in a pot.

The choice between flex and fix and CDC is still meaningfully in favour of CDC for pensions . But WTW are fair in pointing out that some people will prefer flex and fix to R-CDC as this picture explains.

It is very helpful that WTW do this hard work when it will be at least two years and probably three before you can buy a Retirement CDC.

We have yet to have the results of the consultation , the high level consultation or the Pension Regulator’s Retirement CDC Code- there will be authorisation after all that.

And at the end of it all, the prospects of getting access to growth assets for most of your life depend on you not living overlong

The scheme starts de-risking when you are at 7o and is mainly in bonds from 85, better than flex and fix and annuities – if in a collective fund- but it means a mature scheme will look much more like 60/40 in favour of growth and a scheme with just older folk in it may start looking more like an annuity. There is no spreading of risk over a wider group of people who may be as young as teens!

Herein the problem with waiting till retirement to collectively invest. What your DC pot has been invested in,  in the years leading up to retirement may not be matching the growth assets of drawdown or R-CDC illustrated above.

In reality, we think that retirement is the Straits of Hormuz of pensions, the point at which the  nastiest financial problem in pensions is presented as “choice”. Better and simpler to be in CDC for the whole of life or at least what remains of it!

 

Posted in pensions | Tagged , , , , , | 2 Comments

Your Pension Needs an Effectiveness Screen using Five Simple Questions

Posted on March 24, 2026 by henry tapper
Ashok Gupta
Henry Tapper

If you’re saving into a workplace pension, you’ll have no idea whether your retirement savings are being managed well or badly. The costs might be reasonable or extortionate. The investment strategy might be serving your interests or someone else’s. Your trustees might be making sophisticated long-term decisions or simply ticking compliance boxes. You have no way to tell.

The UK pension system has evolved into a complex web of schemes with managers, platforms, and intermediaries, each pursuing their own interests. The system works remarkably well—for everyone except for the saver.

There is, however, an opportunity emerging for that to change. Regulators are developing a Value for Money framework that promises to make pension schemes transparent and comparable, enabling you to see whether your scheme is genuinely serving your interests or just extracting fees while delivering mediocre outcomes.

This is potentially transformative. But there’s a real risk that the framework will be watered down so that nothing gets better.

What Actually Matters for Your Retirement

Investment systems think-tank, New Capital Consensus, has spent years researching how the UK investment system actually works. It’s often heard how money should be invested, but witnessed something else.

What they found is troubling. Despite the UK having one of the largest pools of pension savings in the developed world—roughly £400 billion in defined contribution schemes like yours—we achieve relatively low returns compared to other countries and invest minimal amounts in productive UK businesses, infrastructure, and innovation.

Your money could generate both economic growth and better retirement outcomes. Improving conditions for savers and the places they choose to retire in.

The problem isn’t that your pension scheme is run by bad people. It’s that the system creates incentives that push even well-intentioned trustees toward strategies that serve institutional interests rather than yours. Your scheme is winning prizes for box-ticking compliance, benchmark hugging, and cost minimization—none of which actually translate into the retirement income you’ll need thirty years from now.

Five Questions Your Scheme Should Answer; your Effectiveness Screen

New Capital Consensus have developed something called an Effectivity Screen—five straightforward questions that reveal whether your pension scheme is genuinely working for you or just working to keep the regulators off its back:

  1. Does your scheme match its risk assumptions to your actual time horizon?

If you’re many years from retirement, the “risk” you face isn’t the pot’s value going up and down this week or month —it’s having insufficient income when you retire. Yet most schemes de-risk you away from growth as you grow older, so that you’re holding defensive investments when you’re middle aged. Your scheme should explain whether it’s managing your risks or its own.

  1. Does your scheme measure what actually matters?

Most schemes use risk metrics designed for professional traders managing daily positions—things like “value at risk” and “maximum drawdown.” These are misleading for long-term retirement savings. Your scheme should be measuring whether it’s on track to provide adequate retirement income and investing to beat inflation and providing assurance you have income if you live longer than average

  1. How much of your money is invested in the UK economy you depend on?

The nation’s pensions for the elderly are secured by the productivity and resilience of the UK economy—that’s what determines employment, wages, tax revenues, and the viability of state pensions and pension credits. Yet the typical UK pension scheme invests roughly 70-80% in international markets, predominantly shipping off across the pond to buy shares and the debt of US technology companies using global financial services. Your scheme should explain how its strategy balances prioritise international diversification against supporting the domestic economy your retirement depends on.

  1. Is your money creating new productive investment or just following everybody else’s?

There are two fundamentally different types of investment. Primary investment creates new productive capacity—funding startups, building infrastructure, enabling business expansion. Secondary investment trades existing securities on stock markets—necessary for liquidity but not creating new economic value. At least 95% of UK pension capital is deployed in secondary trading. Your scheme should disclose what proportion of your money actually supports new productive investment versus just following the herd.

  1. Is your money in genuine risk-bearing investments matched to your time horizon?

Young workers with multi-decade time horizons should be overwhelmingly invested in risk-bearing assets—equity in productive businesses, direct infrastructure, venture capital—that generate real returns over the long-term. Instead, many schemes hold substantial defensive positions in cash and government bonds even in what they call their “growth” allocation. They are shielding you from short-term volatility when you have decades to diversify through while sacrificing the returns you’ll desperately need.

Why This Matters Now

Regulators are finalizing the Value for Money framework that will determine how your scheme gets measured and compared to others. If that framework focuses only on costs and past performance, schemes will compete to have low fees and benchmark-hugging strategies that protect trustees from criticism while delivering you mediocre outcomes.

But if the Value for Money framework incorporates forward-looking questions about strategy, governance, and effectiveness—schemes will face pressure to genuinely serve your long-term interests rather than satisfy a compliance test.

The difference is enormous. Under a cost-focused framework, your scheme wins the compliance cup by cutting costs, even if that means eliminating the investment capabilities needed to evaluate productive opportunities.

Under a framework that focusses on schemes investing effectively, your scheme succeeds by demonstrably serving your retirement needs. This means maintaining the governance and stewardship capabilities required for intelligent long-term investment.

What You Can Do

You probably can’t directly influence regulatory frameworks. But you can ask your pension scheme these five questions. If your scheme can’t answer them clearly, or if the answers reveal it’s taking decisions for compliance rather than your retirement security, then you’ve learned something and set your scheme’s fiduciaries thinking.

The UK pension system manages your money, but it doesn’t always serve your interests. Getting schemes to serve your interest means taking a five step Effectivity Screen. The Effectivity Screen provides transparency. Whether regulators will require schemes to use it—or whether schemes will voluntarily adopt it to demonstrate genuine value—remains to be seen.

What’s certain is that without transparency and proper incentives, the system will continue doing what systems do: serving itself rather than the people it’s meant to serve. Your retirement security is too important to leave to opacity and institutional convenience. Demand answers to these five questions, your Effectiveness Screen. You’re entitled to them.

 

Posted in pensions | Tagged , , | Leave a comment

Pensions Mutual is looking for trustees for its CDC scheme

Posted on March 24, 2026 by henry tapper

We Are Looking for Trustees

As we move forward with the establishment of the Pensions Mutual Unconnected Multi-Employer CDC scheme we are looking for trustees to sit on the scheme Board.  We are particularly keen to appoint individuals who have experience of the Pension Regulator’s MasterTrust authorisation process and/or practical experience of working with CDC.

Candidates are invited to express their interest and share details of their relevant experience by emailing the scheme CEO at stella@pensionsmutual.co.uk before 2nd April  2026.

http://www.pensionsmutual.co.uk

Posted in pensions | Leave a comment

“Escaping the State We’re In” – Will Hutton

Posted on March 24, 2026 by henry tapper

Escaping The State We’re In

introduced by

Will Snell

Will Snell

Chief Executive at Fairness Foundation

Reflections from the parliamentary launch last Thursday of Fairness Foundation’s new report, written by Will Hutton

Last Thursday, the Fairness Foundation and the Policy Institute at King’s College London hosted the launch of Escaping the State We’re In at a reception in the Houses of Parliament.

The report, written by celebrated political economist, commentator and author Will Hutton, comes thirty years after the publication of Will’s seminal work The State We’re In (the best-selling economics book since the second world war). It sets out the changes needed to Britain’s politics and economy to build a more successful, fair and confident country, arguing that bolder action is needed to support great value-generating companies and repair Britain’s frayed social contract. Will makes the case for an approach to economic growth that rewards genuine entrepreneurship and innovation while tackling disabling levels of inequality and boosting the capacity of the state to achieve these twin fundamental aims.

Read the report

The launch event on Thursday brought together five speakers to interrogate that proposition, explore the state of Britain’s political economy, and consider how the country might rediscover a sense of direction and possibility.

Will Hutton opened the evening by acknowledging the shadow cast by current geopolitical instability.

“I’m keenly aware that the Iran war may last rather longer than President Trump expects,” he warned, noting that the conflict is likely to become “an energy war as much as a military war.”

That environment, he argued, sharpens the stakes of the economic debate. Questions about Britain’s

“productive capacities, national resilience, [and] defence capabilities”

are immediate and unavoidable.

These problems beset an already fragile economy that is marked by levels of wealth inequality not seen since the 19th century. There has also been an enormous shift in the pace and breadth of technological innovation, the fourth industrial revolution that spans photonics, robotics, artificial intelligence, digitisation and life sciences. But this revolution has been complicated by the increasing “privatisation of capitalism”: the growing share of economic activity taking place in private markets, private equity, private credit, private infrastructure, family offices. These structures can drive innovation, but they also risk

“monopoly… unaccountability… dense concentrations of wealth… [and] a new precariat.”

However, far from languishing in despair, Will used the occasion to make a powerful argument about a fairer economy and country, built on the inarguable strengths of Britain today. Britain is, in his words, “astonishingly entrepreneurial,” ranking third globally for innovation and first in Europe in a critical mass of frontier-tech companies. We possess at least 800 venture-backed high-tech scale-ups with turnover in excess of $25m. These firms represent the seeds of a future economy, even if Britain has so far failed to convert this entrepreneurial energy into durable national prosperity. The UK should be “five, six, seven times more ambitious” if it is serious about building the tech economy. Will quoted the economist Philippe Aghion:

“capitalism is a spirited horse; it takes off readily, escaping control, but if we hold its reins firmly, it goes where we wish.”

That these businesses need government ambition to match their potential was a point reinforced at the event by Ravi Gurumurthy, CEO of Nesta, who offered several powerful examples of how the state can play an active role in shaping the rails on which capitalism runs in order to meet the

“need to push forward the frontier of innovation with these 800 firms and do whatever it takes to unblock the barriers to growth”.

Ravi pointed to the example of India’s digital ID programme, which now covers 1.4 billion people and underpins a payments system through which more transactions flow than the whole of the global Visa network. Ravi also encouraged more confidence about Britain’s own achievements, pointing to the energy transition as an example. He noted that in 2010, only 20% of the electricity system was decarbonised; today the figure is around 65%, a product of strategic policy, public investment and clear direction. His conclusion was clear:

“The state can set a direction… it can solve these coordination problems, but it has to be quite active in driving competition as well.”

Similarly, Michelle Ostermann, Chair of the International Centre for Pension Management, encouraged the UK to look at international best practice when thinking about how to use the lever of pension reform to boost growth – a topic explored at length in Will’s report. Britain’s pension ecosystem, she argued, is not yet designed to generate the “patient,” capable capital needed to support productive investment at scale, but other countries, such as Canada, Australia and the Netherlands, show what is possible. Michelle cited OECD evidence that the difference between successful and failing pension systems is design, that

“it’s not just about piling in more money; we need institutions properly equipped to create wealth at scale.”

Julian Richer, founder of Richer Sounds and of the Fairness Foundation, echoed Will’s central argument that if the reins of capitalism are gripped tightly, it can deliver growth that can benefit society as well as the economy. Julian encouraged a greater understanding of “double-edged capitalism” and of the distinction between ‘good’ and ‘bad’ business, and made the case for government action to distinguish between them. He framed this as both a moral and an economic issue: capitalism requires standards. Businesses should be accepted and respected only if they behave responsibly, paying taxes, paying fair wages, avoiding exploitative contracts — and bad businesses should be vilified.

Bobby Duffy, Director of The Policy Institute at King’s College London, framed these contributions within the narrative frame of fairness, highlighting the “sense of unfairness across generations” and the “loss of sense of a possible brighter future” as central to Britain’s political malaise. Bobby argued that what is often described as a “young people’s issue” is a whole‑of-society issue, because most people live in webs of intergenerational connection. When progress stalls, the social fabric frays, and “populist and authoritarian appeals and cultural division thrive.” He argued for fairness not as an add-on to an economic strategy, but as the precondition for its success.

Thursday’s event made clear that a stronger economy and a healthier society is within reach, if the UK is willing to be more strategic and more confident about shaping the economy rather than merely observing it. The prize is a fairer and richer country, more at ease with itself and proud of its place in the world. Closing his contribution, Will Hutton ended the evening with a call to agency and ambition.

“It’s in our hands to build a 21st‑century economy… to build a much more solidaristic society… to reinvent our public realm. It’s achievable. It’s feasible. Let’s do it.”  – Will Hutton

 

Others commented;

Rain Newton-Smith, Chief Executive of the CBI:

“A relentless focus on investment and measures to promote competition will pay dividends for our growth, productivity and prosperity. Escaping the state we’re in will require bold ideas which nurture our world-leading universities and ignite the innovation which stems from them, from quantum start-ups to clean energy scale-ups. From tax simplification to innovation in public procurement, Will Hutton sets out ideas to challenge our thinking and unlock the business dynamism needed to deliver sustainable growth.”

Andy Haldane, President of the British Chambers of Commerce and former chief economist of the Bank of England:

“It is only by enhancing business dynamism, in particular among its flourishing scale-up companies, that the UK can break free of its growth malaise. This compelling report provides some practical steps for doing so”

Lord Neil Kinnock, former leader of the Labour party:

“Yet again, Will Hutton offers urgent, practical ways to connect Britain’s financial capabilities and fresh productive potential to advance economic strength and social resilience”.

Posted in pensions | Tagged , | Leave a comment

“Is this Government really interested in Pension Superfunds?” – asks Gupta

Posted on March 24, 2026 by henry tapper

Ashok Gupta – a young looking 71

 

New Capital Consensus are a group of thinking people including my friend Ashok Gupta who want to see policy through to action.

I’m not quite sure why I and AgeWage are included on this post, but I’m pleased they are reminding Government (here pictured as Torsten Bell) that pension superfunds are part of the agenda (though they don’t seem to be happening very fast).

We haven’t had a pension playpen meeting this week, perhaps I’ve stopped recommending people to speak to Steve Goddard, but I’ll drop these guys a note and see if we can have them on one Tuesday morning!

Here is the Pension Age article they are referring to. Though I can’t see the Pensions Minister any more interested in pension superfunds than the Government has been these last ten years!

Pensions UK IC 26: Superfund access is ‘not a free-for-all’ – Bell

By Callum Conway

Pensions Minister, Torsten Bell, has defended the current gateway framework for superfunds amid concerns about its restrictiveness, emphasising that it’s “not a free-for-all“.

Responding to a question from Pensions Age at the Pensions UK Investment Conference 2026, Bell said:

“I think that people will always say that [the gateway rules are restrictive for superfunds] and they probably should always be saying that, because there’s a tension in the system and that’s what it’s set up to do – that’s why it’s a gateway, not a free-for-all.”

“They should focus on what the actual numbers are,” he added.

However, industry experts have warned that the current rules could make superfunds a “niche” option and push more defined benefit (DB) schemes towards buyout, arguing that regulatory changes may be needed to ensure superfunds become a meaningful part of the endgame landscape.

New Capital Consensus parliamentary liason, Francis Bell, said the current moment represented a key turning point for the future deployment of DB capital.

“This is a really important moment because such a huge amount of pension scheme money is at a crossroads between the different endgame strategies,” Francis Bell argued.

“If the regulatory framework isn’t right, there is a risk that all of that money ends up moving into insurance strategies that prioritise ultra-low risk assets, which fail to improve the economy and society that pensioners retire in.”

With this in mind, Francis Bell suggested that the proposed gateway tests governing entry into superfunds could inadvertently limit their role in the DB landscape.

“There is a risk that the gateway rules make superfunds such a niche part of the market that they are only used as a bridge to insurance buyout,” he warned.

“The pensions reforms are broadly very positive, but unless the regulatory package is right, it won’t move the dial.

“If the regulation doesn’t work as intended, it will simply lead to more schemes defaulting to insurance buyout.”

Echoing this, New Capital Consensus chair and founding director, Ashok Gupta, noted that the investment approach adopted by schemes would differ significantly depending on the chosen endgame strategy.

“If we were to shift towards self-sufficiency and consolidating into superfunds, then we have far more potential for assets to be allocated to productive investments,” Gupta suggested.

He explained that schemes operating on a long-term self-sufficiency basis would typically maintain greater exposure to return-seeking assets.

“If you have a large pension scheme operating on a self-sufficiency basis, or a superfund on a self-sufficiency basis, then those pension funds would invest in a range of risk-bearing assets such as infrastructure, illiquid alternatives and other return-seeking assets,” he continued.

“Those are exactly the types of investments the government wants to see – infrastructure, business investment and other long-term assets that can support economic growth.”

However, Gupta warned that regulatory design would play a decisive role in determining how superfunds invested.

“If superfunds are regulated like insurance companies, then they will end up with a similar asset mix,” he said.

“If they are regulated like pension schemes operating on a self-sufficiency target, then there is no reason why they should have the same asset allocation as an insurer.”

Gupta also suggested that broadening participation in the superfund market could support a more balanced endgame environment.

“The way the gateway has been framed needs to be reconsidered if superfunds are going to become a significant part of the DB endgame landscape,” he added.

“Allowing insurers to establish superfunds could help create a more balanced market between buyout and consolidation.”

Gupta highlighted that current models already demonstrated different approaches within the emerging superfund market.

“Some superfunds act effectively as a bridge to buyout, enabling schemes to exit earlier by warehousing them until they are ready for buyout,” he explained.

“But the original intention was to consolidate schemes where the goal was long-term self-sufficiency, rather than simply preparing them for insurance buyout.”

Posted in pensions | Tagged , , , , , , | Leave a comment

Civic minded pensioners don’t come cheap; future generations need pensions (even more than houses)

Posted on March 24, 2026 by henry tapper

Stephen Bush’s brilliant article was inspired by him sitting in on trials and discovering magistrates in their seventies, he looks at  the board of the flats he’s a leaseholder of and he finds grandparent pensioners looking after children so that their children can go to work and save money on childcare. Steven is talking about a society functioning at present because by and large those in their sixties and seventies are pensioned householders with time , energy and the financial means to help out rather than work.

This generation of helpful parents are in danger of not being replaced, in Bush’s estimation.

But now even the volunteer gerontocrat is under threat. Although generation X is no less civic-minded than the baby boomers, they have worse pension provision. In the United Kingdom they are less likely to have a generous “defined benefit” pension and more likely to have a meaner “defined contribution” one — and they are also more likely to enter the final third of their life still not on the property ladder or with higher housing costs. Both these things increase the amount of time they will have to work for financial gain and will cut into the amount of time that they spend keeping the country’s civic fabric from unravelling.

This is the same argument as the Unions make for pensions to provide adequacy. This may be a liberal and middle class version, but it says the same thing.

When we give up on proper pensions and exchange pensions for pots which look good but do not last, we erode the security of a generation. There is a generation of younger people who do not have an expectation of the kind of pension that people in private DB pensions are enjoying today. What is worse, we have a class of people who work in the public sector who will have pensions while those who work in the private sector won’t.

Steven Bush has the genius to look at pensions from outside the bubble that pension people have created for themselves. He is asking questions that are deeper than whether we can increase contributions to AE’d workplace pensions and I’m with him.

His argument may sound naive to those in the bubble but it’s what those who aren’t pension people are asking

What can be done?

In the short term, the prospects for the next wave of retirees are very hard to fix in time. But one reason why the UK needs more social housing in the future is that a higher number of people will retire without being owner-occupiers.

Both the direct cost of subsidising retirees in private housing, and the indirect cost of losing out on the volunteer work of pensioners with security of tenure, are reasons to want more, cheaper housing for people at the end of their working lives. It is also why we need to do more to boost the incomes and saving habits of people at the start of their working lives — healthier occupational pensions means that millennial pensioners will be better placed to replace today’s volunteer gerontocrats than unluckier Gen X.

This is why we need to establish a whole of life pension that accrues pensions not a pension-less pot and which is paid for by employer and employee with contributions that are defined and sustainable. We need to work out what these contributions are to give people deferred pay so they too can be “civic minded pensioners” as we have today.

Posted in pensions | Tagged , , | Leave a comment

We will get VFM when IGCs and Trustees are independent.

Posted on March 24, 2026 by henry tapper

This blog argues that advisers have no business interfering in the IGC’s and Trustee’s analysis of VFM.

Jonathan Parker: Value for money back under the spotlight

I have since their formation in 2015, thought IGCs in the pocket of the providers who pay the wages of their “independents”. In all the time that red amber and green has been declared by IGCs, we have only seen one “red” ever declared by an IGC chair. That was the Virgin IGC’s reports from 2018 to 2020 .

How independent are IGCs and commercial pension trustees?

I am pleased to see that TPR has issued in its CDC code a requirement that Trustees do not act to promote the scheme to anyone, including the regulators.

CDC (Phase 2) Code – Consolidated modules document

The trustees are prohibited from conducting any promotional or marketing activities on behalf of the scheme. However, they are not prohibited from meeting with prospective and existing employers to provide factual information regarding the scheme or general information about how a CDC scheme operates. This would include details of the following:

  • number of members and assets under management
  • details of how the scheme is administered
  • how they interact with the scheme proprietor and monitor the effectiveness of the scheme’s governance

  • differences between a CDC scheme and a DC scheme

Trustee meetings with employers or prospective employers do not need approval however the use of any promotional/marketing material is prohibited for these meetings

For multi-employer CDC schemes only, the following must also be included with the application

  • a statement signed by the trustees of the scheme confirming that no trustee promotes or markets the scheme or acts as the chief financial officer of the scheme

I hope that this will equally apply for Trustees and IGCs in time and that they will be empowered to say what they see not what they are asked to say by the people who pay them.

How independent are consultants?

Already we have consultants advertising their capacity to help trustees and IGCs carry out their duty. Who pays these advisers and what are the adviser’s motives?

If every report renders the scheme or personal pension plan VFM, where are those aren’t?

I do not say that Jonathan Parker of Gallaher is planning to help his clients to declare their GPPs , master trusts and own trusts as delivering VFM. But I am quite sure that we will see with DC schemes and maybe in CDC schemes to come, advice that ensures that everyone is in a narrow band of outcomes that ensures that no-one gets closed down.

And here we will see herding to what TPR and the FCA determine VFM. If what is required is to determine what the schemes and groups of plans have delivered, it is fairly easy to work out how people have done. Take the entire data set (millions of data points) and work out the Internal Rates of Return of all the savers in a DC plan (there are well over 10m of them in one master trust).

That will tell trustees what has happened and from there they can determine (against a benchmark) whether the scheme or group of personal pensions has delivered value.

You do not need an adviser to work out how people have done, you need good data managers and a system that benchmarks how your members and policy holders have done against the average return for these people.

You do not need an adviser nor do you need advice. If you have the results of the data analysis you’ve commissioned on you people’s experience, then you can say with certainty if you have or haven’t delivered value for money.

If you don’t use data but depend on advice , you end up with this twaddle, which we’ve had for 10 years from IGCs and Trustees

Even if I use the Corporate Adviser “Cap data” , I can get a proxy for the proper way. It shows that some schemes and group of plans have done well, some have not. Some of the plans pre-date the start of Auto-Enrolment in 2012, some started recently but all have data which should give trustees and IGC members the answer to the simple question

“Have our savers got value for money”

The answers that we are looking for right now are not about pensions but about saving for them. When we start measuring VFM for pensions then we will be faced by the Government’s claim that CDC delivers up to 60% more pension than a DC pot.

We long ago stopped expecting members to read an IGC or TPR report;  employers aren’t interested either. They are not considered a true report on Value for Money. VFM reports are now just for regulators (and advisers).

Posted in pensions | Tagged , , , , , | Leave a comment

I know I shouldn’t laugh but I did – sympathy for Iranian people

Posted on March 24, 2026 by henry tapper

There is something to laugh about in everything and this cartoon is the way Iranians are finding to laugh about the horror that is happening in the Middle East.

We have seen what is happening to the people of Iran before, it is what happened to the people of Gaza and the people of Ukraine and what they all have in common is that it is people who have no part in the quarrel who pay its price.

I find this cartoon funny as it feels like a reaction from the Iranian people, not its leaders and any moderate people around the world are brought to sympathy with them.

 

 

 

Posted in pensions | Tagged , , | 2 Comments

Higher payroll payments for deferred pay; Webb and Bell should work together

Posted on March 23, 2026 by henry tapper

In a recent talk to the Association of Member Nominated Trustees, Steve Webb was savage about the lack of progress in pension policy. Thanks to Callum Conway for this report last week

We need the straight talking of Webb on contributions and that of Bell on deferred pay if we are going to get employers to take pensions seriously again.

Here’s  Webb

2020s have been a ‘complete waste’ for pensions policy – Webb

The 2020s have been a “complete waste” for pensions policy, LCP partner, Steve Webb, has said, arguing that the failure to build on auto-enrolment (AE) risked leaving future retirees with inadequate incomes for years to come.

Speaking at the Association of Member-Nominated Trustees (AMNT) Spring Conference, Webb said projections for future retirement incomes showed the decline of defined benefit (DB) provision was still outpacing the build-up of defined contribution (DC) savings, meaning overall outcomes were set to weaken before recovering.

Setting out his view of the long-term outlook, the former Pensions Minister described the projected fall in DB income as the “ski slope of doom”, as successive cohorts retired with fewer years of DB accrual and smaller average entitlements.

Although DC saving is expected to grow as AE matures, he warned it would take many years before it filled the gap left by the decline of DB.

Therefore, Webb argued that “the 2020s had been a complete waste”.

He added: “We’ve achieved nothing in pension policy in that 10 years in terms of the thing that really matters, which is the size of the pension.”

Webb argued that, while AE had succeeded in bringing millions into pension saving, policymakers had then “wasted a decade” by failing to move ahead with contribution increases.

Webb suggested the government’s new Pensions Commission now represented the main opportunity to reset the agenda, particularly if it set out a post-2029 timetable for higher pension contributions.

However, he expressed frustration at the limits placed on the commission’s remit, noting that it was not expected to consider issues such as the triple lock or pensions tax relief.

Alongside this, Webb argued that ministers should think more broadly about how short-term savings and pension savings interacted, warning that some lower-paid workers could be pushed into debt if pension contributions rose without greater flexibility.

He pointed to ideas such as sidecar savings as one way to balance short-term financial resilience with long-term retirement savings.

Webb also suggested that official estimates of under-saving may understate the scale of the problem, particularly if the triple lock is eventually weakened.

He stated that the state pension currently played a crucial role in underpinning retirement incomes and reducing inequalities, whereas a greater reliance on private pension provision risked reinforcing gaps, including those between men and women.

In addition to adequacy concerns, Webb highlighted the implications of an increasingly consolidated DC market, arguing that the rise of pension megafunds could leave too much influence in the hands of a very small number of decision-makers.

While he acknowledged that larger schemes may be able to deliver scale benefits, he cautioned that the sector risked drifting towards “groupthink” and a lack of challenge unless governance kept pace.

Looking further ahead, Webb said he expected contribution rates to rise over time, more innovation to emerge in post-retirement solutions, and technology to play a bigger role in helping savers navigate increasingly complex choices.

He also stressed that stronger defaults would remain essential, arguing that the system could not rely on individuals becoming ‘pension experts’ to achieve decent outcomes.

More money spent on deferred pay

Had I been in the room, I would have been nodding assent, it is nearly 10 years since we considered a mandatory increase in minimum AE rates and we are still awaiting movement from Government over enactment of the proposals (which should be happening now- the middle of the 2020s).

What we have got is a movement towards workplace pensions being considered deferred pay and I suspect that this is the most realistic way for employers to voluntarily increase contributions for those engaged in saving for their retirement.

The movement towards guided retirement from DC and better still CDC pensions , replacing DC and supplementing it (Retirement CDC) is a start.

But it will take member representatives (mainly the unions) to demand that pension contributions are presented to staff as deferred pay and for the setting aside of pay , leads to a better understanding of what their deferred pay will be.

I suspect that this is what this Government is trying to do right now . But the Pension Schemes Bill and CDC legislation are  not enough on their own. We need to sort out adequacy by improving the conversion of contributions to pensions and we need employers to commit  more to deferred pay.

Torsten Bell – Pension Minister

 

Posted in pensions | Tagged , , , , , , , | Leave a comment

Gilts back on the naughty step

Posted on March 23, 2026 by henry tapper

Thanks to Katie Martin of the FT for this striking assessment of the state of gilts. Those readers who run schemes primarily invested in gilts will find this interesting as will many readers who watched in horror in October 2022. Were hedge funds part of the solution then? Are hedge funds providing a market today?
‌
 ‌

One of the most striking market moves last week was in UK government bonds. Gilts tanked on Thursday, led by the shorter maturities, after traders and investors caught a sniff that the Bank of England is leaning towards raising interest rates, not cutting them as it had indicated before the war in Iran kicked off.

The facts changed and the Bank changed its mind. No shame in that. And it has not committed to any particular course of action from here. But all the same, the scale of the hit to gilts was just enormous. On Thursday, the two-year yield added 0.3 percentage points (!). Lots of countries’ bond markets are shifting, but no one does it quite like the Brits. German Bunds and US Treasuries added about half of the UK’s extra slug of yield that day. On Friday, it got worse, somehow; gilts added another 0.2 percentage points or so. A contact of mine texted me Friday afternoon with one word: “HELP”.

The market had taken one cut off the table going into Thursday’s BoE decision. But now it says there is an 85 per cent chance of a rise in April, making it three rises fully priced for this year and a chance of a fourth. Seriously? In an economy that grew 0.1 per cent in real terms in the fourth quarter?

It is worth asking why the gilts market has become the global whipping boy. Our indefatigable colleagues on the news side did just that on Friday. Here are some additional thoughts:

One: The long, dreary shadow of Liz Truss and Kwasi Kwarteng. It may sound slightly silly, three and a half years later, to keep blaming late 2022’s mini-budget of mass destruction, but gilts investors, particularly those outside the UK, still cite it to me as a reason for additional caution in this market.

Two: Picking off the stragglers. As I wrote in my column for the weekend, the UK does have certain vulnerabilities around debt levels and fiscal wriggle room that other big economies don’t have, or at least not on the same scale. If anyone can make stagflation happen, the market is betting it’s the UK.

Three: Blame hedge funds. They are an easy target, but let’s unpack that idea: First off, it should be noted that sovereign debt management offices around the world actually like hedge funds. They have a bad rep, but actually the hedgies show up when debt is issued, they often act quite similarly to so-called “real money” (insurers and pensions), they provide liquidity to secondary markets (which was particularly useful in the “mini”-Budget shock of 2022). Also, they help to make up the void left behind from certain types of pensions that are just not hoovering up long-term debt in the same way any more.

As the OECD noted in its big debt report the other day, “price-sensitive” investors are an increasingly important part of the investor base in both government and corporate debt markets. On that front, hedge funds are right up there. Here is a nice OECD chart that maps various buyers’ tendency to hold bonds to maturity against their appetite for long-duration bonds and their sensitivity to price:

Salman Ahmed, global head of macro at Fidelity International, told me this may be a problem when markets get tricky, as they clearly have done here.

“The composition of the gilts market has weakened,” he said. “There’s a lot of hedge fund participation and the price is paid in periods like this. The market function is under stress.”

If Salman’s right I’m still not sure there’s much we can do about this. Like basis traders in the US Treasuries market, hedge funds may be flighty but we’d miss them if they were gone.

Posted in pensions | Tagged , , , | Leave a comment